Powered by Customers
This is where we will share insight and observations from our experience with clients and colleagues. We welcome your comments and input.

The Power of Customers

Customer pays

Do you recognize the power of customers? Companies too often forget that their customers pay their bills and that any financial success they have or may achieve is from the simple fact that customers choose to buy from a firm or not. If you want to be a leader in your marketplace you need to understand the concept that customers vote with their dollars (Euro, Pound, Yuan, Yen etc.) It pays to have happy customers and it costs real money when you lose customers. In fact, unhappy customers cost a whole lot more than just their loss of business. They can damage your brand, your reputation and make the cost of acquiring customers or retaining customers go through roof. Research has shown that it costs 3-10x as much to acquire a new customer than it takes to retain a current one. That equals real money and real profit potential. Ultimately your Customer Equity declines which has direct correlation to the market cap of your company. It becomes a slippery slope that leads to business disaster.

Customer Rage Study

I would like to refer you to the latest data from the 2015 Customer Rage Study that was done by CCMC and ASU’s Center for Services Leadership. (http://www.customercaremc.com/2015-us-customer-rage-study/ )    While this study originated in 1976 and is in its seventh wave, the results are not improving and is in many cases seemingly in decline. Low customer satisfaction is costly but customer rage increases business costs and risk exponentially.

Companies go blindly on ignoring unhappy customers and slowly going out of business. The business declines and management is baffled as to why. Customer rage, especially in this day an age of social media and instant access to public opinion, can cripple a company quickly. Consider this; when I have a terrible experience with an organization I can walk away and they never know why. I can choose to give them feedback because I want them to get better or I can actively advocate against them depending on how I feel that they treated me.

Customer experience is very personal regardless if the experiences in a B2B or B2C environment and people react with very human emotions that must be understood in the context of your business. Sometimes just a simple, and sincere, apology is all that is needed to avoid a relationship disaster. Remember, we are talking about emotional experiences here so it is not just about providing some form of compensation or refund. It is about being accountable and giving assurance that the problem is recognized and will hopefully be prevented from happening again. I am sure you have seen bad experiences go quickly viral. For everyone that goes viral on social media, thousands of others are influencing other customers or potential customers.

The undercover boss


I like shows like “Undercover Boss” on TV. While it may be highly staged for TV it does show the power of getting out of the office and observing the business as others see it. Most Undercover Boss episodes deal with employees, good and bad. The undercover boss’ get to see the result of bad policies, lack of training, lack of empowerment and how that affects their customers. In watching the show you have ask yourself how could they not know it was this bad? Sadly, the drama on the television show is the reality in too many companies.

Companies often just focus on customer satisfaction and if the results are even slightly positive they tend to ignore the unsatisfied as outliers. Customer complaints should be treated like nuggets of gold and handled as such. If a customer gives you feedback, it means they care enough to take the time and energy to complain. They are hoping you will improve or otherwise they would just walk away and tell all their friends not to buy from you.

Several studies from both ASU’s Center for Services Leadership and Peppers and Rogers have also shown that positively recovering a customer from a bad experience can yield an even greater lifetime value from that customer. In fact one study showed that a customer that had a bad experience then had a good recovery experience actually increased the life time value over those customers that never had a problem.

One positive experience does not guarantee that a customer will be a customer for life either. Customers want to know that a company cares about them as much as those companies care about their own bottom line. Customers want a mutually beneficial relationship where both parties care about positive outcomes. When they have that kind of business relationship where they each have linkages to each other’s success, then that organization is what we refer to as a being powered by customers. It means they understand how to organize, align and innovate in a way that is beneficial to both customer and shareholders by having an embedded culture focused on customer success. Companies that are powered by customers greatly reduce the risk of customer rage.

In case study after case study we have seen where companies have had good profitable longevity it was not because they had the best product innovation processes but that they had the best customer relationships. In surveying 100’s of companies the number one attribute companies sought in services was relationship. They said that if they had a good relationship with a company or vendor and a problem occurred, they had more confidence that it would be worked out to their satisfaction. They felt that a good relationship meant that the vendor would know what made them successful and would help them achieve that success. When you treat customers as ‘transaction’ you ignore the relationship. When you ignore the relationship you will lose the power of the customer life time value.

Your next steps…

At ServTrans we can measure your level of maturity around customer success with our proprietary assessment. If you want to harness the power of customers contact the customer experts at ServTrans.

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