The Clean and Green Club

Another Recommended Book: The Customer Delight Principle: Exceeding Customers’ Expectations for Bottom-Line Success, by Timothy Keiningham and Terry Varva (McGraw-Hill/American Marketing Association, 2001)

This rather academically-written, MBA-oriented book emphasizes that merely satisfying your customers isn’t enough to build even loyalty, let alone the fervent ardor necessary for customers to recruit more customers on your behalf; you have to delight them. And the bar on delight keeps getting higher, because one of the factors leading to delight is that it’s unexpected.

In other words…when a new, delightful practice is successful, it is adopted by the organization, and then becomes an industry best practice–and then it stops being delightful, because the customer begins to expect it as part of a minimum service standard. So innovation plays a key role.

This I think is a crucial insight, and one that makes perfect sense.

Keiningham and Varva also point out a number of other interesting observations, all based in research (and many accompanied by various charts and graphs):

The ROI on improving delight is non-linear; certain little improvements may make a huge improvement in profitability, while others that cost more may have little effect, and the returns may shrink over time
It’s relatively easy to figure out which initiatives will offer the greatest return; just identify factors in the customer’s experience that the customer sees as of critical importance, but where the current satisfaction rating is low
Profitable delight initiatives often target high-dollar-value, low-cost clients
If your customer survey is self-serving and focuses on your wants rather than the customer’s, you won’t get the data you need to improve
Not everyone is delighted in the same ways, so segment your markets accordingly
Multiple touches, when handled correctly, can make a customer feel appreciated and welcomed and special (the importance of which I discuss in my own book, Principled Profit)

• To delight customers, you need employees who are at least satisfied
• Marketing’s primary role is not to shove products down people’s throats, but “to understand the wants, needs, and expectations of current and potential customers, feeding this information into the  business organization to help it create and distribute products or services that more closely address and answer these inherent needs,” and its secondary role is to form and nurture connections with customers
• Customer delight strategies look at a customer’s lifetime value and not so much at the current transaction
• Delighted customers not only proselytize to friends and colleagues on your behalf, they also spend substantially more

The book ends with three extended case studies of companies that benefited by long-term thinking and a delight-based retention strategy: Roche Diagnostic Systems, Toys “R” Us, and Mercedes-Benz USA. Roche and Toys “R” Us both needed turnaround strategies, but the case of Mercedes is especially interesting to me, because that wasn’t about fixing a broken system so much as incorporating delight into the corporate culture with a true focus on serving the customer–and creating an entire business unit, in its own building, to do so. This wasn’t cheap, in other words.

Among other things, Mercedes integrated eleven different databases, collecting different types of customer data, into a single system that anyone could access before interacting with a client (the company stopped using the word “customer” and stopped referring to its franchises as “dealers”). It also developed a strategic separation between client acquisition and retention functions (something Keiningham and Varva strongly advocate). Delight factors entered in not just providing emergency road service but also pre-trip routing services similar to AAA…a line of branded merchandise for sale…multiple touchpoints including anniversary of vehicle purchase and mileage awards at 100,000, 200,000, and 500,000 miles.

Does it work? After initiating the program, Mercedes was projecting an astonishing 86 percent repurchase rate! Even if their projections turn out to be inflated by 100%, a 43 percent repurchase rate is going to look mighty good for the bottom line.

For more on delighting your customer, see Shel’s award-winning book Principled Profit: Marketing That Puts People First.