Customer expectations and their importance to business value
Whilst revenue and profit are of course related to the value of your business, don’t underestimate customer expectations. Business value isn’t necessarily monetary. Without meeting customer expectations, it’s unlikely you’d have any form of revenue.
When considering customers the main questions you should be asking yourself are
- Who are your customers?
- Where do they come from?
- What do they come for?
- Why do they come to you?
Without knowing the answers to these questions, it’s difficult to gauge how to progress your business. By progress, we are talking product and service development, marketing strategies, forecast spending.
Know what your customer expects of you
Successful businesses don’t base their efforts on guesswork. They take the time to research and gain an in-depth knowledge of their customer base. Once researched a company tailors their products and services accordingly to meet and exceed customer expectations.
Take Sir Clive Sinclair whose earlier success was one of the first slimline calculators. That naturally moved into computers, with his ZX Spectrum considered pivotal for the British home computing market.
Then he moved into electric vehicles. The 1980s were a decade of excess and extravagance. Only Prince Charles was alerting us to the dangers of environmental issues and he was thought by many to be mad as a consequence. For the computer loving consumer, bigger was better. The aspiration were yuppies driving top end sports cars or Range Rovers. The Sinclair C5 was essentially an electric bike.
Market research for the Spectrum got it absolutely right and those customers had their expectations met and will have positively impacted company value at that time.
Market research for the C5 missed the mark. Expectation was for something groundbreaking, state of the art and you could argue it was delivered, but there was no check and balance that both company and consumer shared the same definitions of these things.
To some extent the company became a laughing stock that customers no longer wish to be associated with it. They no longer trusted Sinclair as a person or a company to get it right. Customer expectations and the fact they were not delivered, had a very negative impact on company value.
Customer loyalty and business value
The biggest brands in the world all started somewhere. An excellent customer experience ranked number one on what impacts levels of satisfaction.
” Customer experience is your customers’ perception of how your company treats them. These perceptions affect their behaviours, and build memories and feelings to drive their loyalty.
In other words – if they like you and continue to like you, they are going to do business with you for a long time and recommend you to others.”
As a business, if we meet or exceed the perception a customer has of us (their expectation) we have strong and loyal customers for life.
Take the meteoric rise of retailers such as Aldi in the UK compared to someone like Waitrose.
Before you set foot in an Aldi store, you are perhaps expecting the worst. It is a no-frills shopping experience. Less variety of product because the store space is smaller. Lot’s of own brands rather than recognisable names which makes you question quality. Cashiers that rush you through the checkout and send you to pack your goods on a shelf.
Compare it to Waitrose. Often there is a customer service desk at the entrance letting you know they can help. A cafe if the whole shopping experience exhausts you. Wider, more spacious aisles. A larger variety of branded goods on sale. I would, however, suggest that this is what you expected from Waitrose.
So between the two stores, it is often suggested Aldi exceed your expectations far more frequently that Waitrose does. If we decided on this aspect alone, we would shop at Aldi more, and many people have done.
Find out what your customer expectations are
The Founder of stationery giant, Staples Inc, Thomas G Stemberg once said; “Forget ‘branding’ and ‘positioning’. Once you understand customer behaviour everything else falls into place.” With that said, what can you do to tap into your customers’ expectations?
Take an inward view – what kind of service would you expect from your company if you were your own customer? Think in terms of products but also the wider picture, what’s the customer service like? How do the staff talk to you? Are queries dealt with how you expect them to be?
Make them a priority – if you’re not thinking of your customers as you operate your business, then how can you be thinking of their expectations?
Let’s get personal – Around the globe, 96% of consumers say customer service is an important factor in their choice of loyalty to a brand. Americans will pay 17% more to do business with firms with great reputations when it comes to customer service. Further statistics available.
Value in business isn’t always monetary. Being able to demonstrate a clear understanding of your marketing strategies, customer engagement and retention, will be invaluable. Knowing where your customers come from and being able to clearly articulate this is key for success.
- What marketing activities bring in your audience?
- Why do they work with you?
- What’s your USP?
- Do you know your Net Promoter Score?
- What do you have in place to keep customers and clients on board?
How can customer satisfaction add value to your business?
Understanding this behaviour helps businesses to understand the types of people who need your products or services, and which they’re likely to want to purchase or use.
This knowledge allows businesses to;
- Create targeted marketing campaigns,
- develop new services and products,
- forecast spending and create an improved customer experience.
……all whilst getting the upper hand on your competitors.
Take time to build your relationship with your customers, understand their expectations and see this not only as a means of prosperity but also to demonstrate that your customer retention strategies are solid.
Now, we may have said that not all value in business is monetary. However, it is important to highlight how much of an impact customer expectations can have on your revenue streams. Happy clients and customers are more likely to develop loyalty to your company, allowing you to retain customers more easily.
Customer retention is the next step. Attracting a new customer being up to 7 times costlier than retaining a current one. And with 52% of consumers reportedly making an additional purchase from a company as a result of a positive customer experience, the figures speak for themselves.
Understanding customers and their importance to your business is one of the 8 key drivers of the coaching we offer. If you want to receive a short summary of the 8 key drivers of that program, click the link.