- They are more likely to buy
- They are more likely to stay
- They are more likely to refer
So we were very intrigued by the reaction of this particular client when we fed back their results at segment level. Their segments are based around product lines and our feedback presented the customer scores (out of ten) for each of the segments:
The slide was met with a slightly furrowed brow. By way of explanation, it appears that the chart mirrored the profitability profile – but the wrong way round ie. Category 1 is the least profitable yet most satisfied and Category 5 is the most profitable but the least satisfied with the service.
One interpretation is that the business is delivering service excellence to the 'wrong' customers. In discussion it was easy to see why this was. Category 1 includes their corporate clients, their big accounts and well-known names, while Category 5 are personal consumers.
Not only are larger corporates generally more demanding, staff also tend to react because of their understandable perception that the client is 'valuable' because of who they are. This is clearly reflected in the above average customer scores for Category 1.
Arguably there is absolutely nothing wrong with providing high standards of service for these clients and in fact the challenge is to improve the customer experience for more profitable segments and bring them up to that level, and beyond.
The risk in not focusing on the service being delivered to Categories 3, 4 and 5 is that the business will alienate those profitable customers and potentially lose not just their business but also damage the referral income stream derived from those customers as well.
It will be interesting to see what happens next year when we run their 2012 IIC assessment for them. Hopefully we will find the kind of pattern that we encountered with a different client last year:
Here the client has developed different service propositions based on customer value and the impact of that is reflected in the different customer views of the service experience.
For the client, this suggests the strategy is working – their profitable 'Gold' customers are receiving a premium level service and are recording 'Gold' level scores.