Top 3 Customer Experience Building Blocks to Grow Your Business!
My last blog, Three Tips to Fire Up Your Customers to be Your Best Sales Force!, included how to encourage your customers to be a vital part of your B2B company’s sales and marketing. One key takeaway is that first-rate service is essential to getting customers to talk to others. Only having great products won’t get you there. Service must be part of the package. Here are the building blocks to grow your business with excellent customer experiences.
I have had several discussions with our clients about the central role good service can play in improving sales and marketing. The question they all had was, “just how significant?” So I will address it in this blog and provide an essential suggestion on how you can measure the impact of referrals on your business.
What Do We Know?
From our customer experience work, we have learned that customers who like the service they receive are more likely to come back. There is much research confirming this point. For example, from our research, we know that very satisfied customers are far more likely to refer your products and services to others than less satisfied customers.
I recommend an excellent article in the Harvard Business Review, Net Promoter 3.0 (November-December, 2021) about customer loyalty’s impact on other business outcomes. Fred Reichheld, the developer of NPS, was one of the authors. The authors discuss several points in the article, including the idea of earned growth. I encourage you to read the article as it is quite helpful. One point that Reichheld made caught my attention. He was preparing a presentation for a group of executives at a First Republic Bank. He noticed that information provided by the bank “……showed that existing customers accounted for 50% of the growth in deposit balances and referred customers another 32%. In other words, 82% of the bank’s growth in deposits came from delivering great customer experiences. In loans, 88% of growth resulted from making current customers happy.”
First Republic has this information because they ask each new customer what brought them to the bank. They want to track this information because the bank has been growing loans at 15% annually in an industry where the growth rate is 2-3%. Investors want to make sure the rapid growth is sound.
Customer Experience Building Blocks to Grow Your Business
I suspect there are a lot of marketing and sales managers who would like to have 80+% of their growth coming from existing satisfied customers and referrals whom these satisfied customers urged to join in. Then, everyone would sleep a lot easier! What do you need to do to get there?
First Block: Measure Customer Satisfaction
The first building block is to measure customer satisfaction. Do it formally! Don’t rely on the “I think it is good” approach.” Ask your customers! Yes, measure where you stand with them.
Second Block: Identify Referred Customers
The second building block is to identify how new customers came to you. If you are not asking for the reason why they chose to do business with you, start now. Was it your website, a sales representative, or an existing customer? If possible, get the name of the customer. There is nothing like a thank you note from someone to let them know you appreciated the referral. Understanding how customers came to you is essential to understanding which marketing and sales elements are paying off.
Third Block: Track Referrals and Revenue
The last building block is tracking those new customers that came from referrals AND how much revenue they generate for you. Understanding the amount of revenue generated is critical. Over time, comparing revenue generated by referral customers (Reichheld refers to it as “earned revenue.”) and comparing it with total revenue allows you to build the case even more for better service.
A New Way of Marketing for B-to-B Companies
Creating great service experiences for your customers is a proven way to get them to return again and again and refer others to you. Remember to track your referrals and the income generated from these referrals. Expand your earned growth and your business will grow sustainably.