It goes without saying that the degree of satisfaction our customers experience with us and our services plays a vital role in our business’s bottom-line. However, it's also important to appreciate the fact that the satisfaction we feel towards our customers is also a major contributor to our personal and financial success. I'd like to share how this is so.
About 25 years ago, researchers at Harvard University examined the dynamics at play between vendors and their corporate customers. Their findings showed a very high correlation between the satisfaction and productivity in the vendor’s employee group and the satisfaction rates experienced by that vendor’s corporate customers. In other words, if a vendor had high employee satisfaction rates, that vendor's customers also tended to have high levels of satisfaction with the vendor’s products/services. The research findings became the foundation for a customer-relationship management model called "the Service-Profit Chain", that to the best of my knowledge is still in practice today.
In a previous career, I was charged with implementing this model within our group of customer service reps (we called them "Account Managers"), servicing over 2,000 corporate customers. At the time, the CEO (to whom I reported) kept talking about two particularly intriguing findings within the research that prompted his decision to make the shift to the model within our company. These two findings were:
(i) The research gave indication as to what turned a satisfied customer into a *loyal* customer. The researchers found that whenever a vendor scored higher than 90% satisfaction on customer service, those customers were far more likely to be “loyal” customers. Upon further review, it was discovered that what moved a customer from "satisfied" to "loyal", was the vendor’s commitment to "delighting" their customers rather than simply satisfying them. That is, the service goal was to go so above-and-beyond, the client would end up experiencing the vendor's customer service as an unexpected pleasure.
(ii) It identified tangible return on investment data from turning a satisfied customer to a loyal one. In short, the research found that not only was a loyal customer far more likely to renew their contract with the vendor, the contract value at renewal went up, on average, by 11%. On top of this, a loyal customer tended to become what the researchers referred to as an "apostle". That is, they spread the word about what great service their vendor provided them and thus, they ended up directly/indirectly sending referrals and new business to the vendor.
IDENTIFYING YOUR BEST CUSTOMERS
While I'm sure that you're committed to providing excellent customer service to all your customers, the reality is that not all customers are equal. Some have far more value to you and your business, than others. To identify these high-value customers, I'd like to offer the following "2 x 2 rating grid" that I adapted from an article I found recently, in which two variables (i.e., profitability and relationship maintenance effort) are used to organize your customer group. Analyzing your customers in this way allows you to more easily see which customers are most valuable to your business.
Here is an overview of each of the quadrants:
Zone 1 - Low Maintenance / High Profit (The Target Customer!)... They appreciate your service. They pay on-time, every time and never quibble about pricing. They trust you completely, always leaving you alone at the property to complete the shoot. They love your work and ask very little of you. These high-value clients are the ones you should give a disproportionate amount of your time and attention to.
Zone 2 - High Maintenance / High Profit... They pay well but often make you jump through hoops. These clients are tolerable, so long as they keep paying well and on time.
Zone 3 - Low Maintenance / Low Profit... They treat you well but always purchase your lowest-priced service package. They provide quasi-steady income but are not viable for the long-term growth of your business, as they either give too few shoots in a year to impact your revenue goals or request too many low value shoots that serve to eat up calendar space that could've been given to higher revenue/more profitable customers.
Zone 4 - High Maintenance / Low Profit (The Customers to Avoid!)... Very low ROI on the time/effort you give them. They are often very demanding, giving little/no appreciation in return. They often try to negotiate lower pricing for the promise of more work (that never seems to materialize). They can also be emotionally draining for you, insofar as they're often either quick-tempered and/or judgmental. They certainly don't see you as a strategic partner in their marketing efforts, nor do they value your work, as evidenced by the fact that they always seem to be giving away your photos to third-parties (e.g., builders).
For those who've been in this business for some time, I'm sure that intuitively, you've sensed that certain clients have more value than others and you've acted accordingly. So, using the language of this model, what do you do in your customer service practices to "delight" your customers, so as to ensure their ongoing loyalty?
In the near future, I’ll be posting Part 2 of this article on customer service, in which I’ll be examining how to spot those truly high maintenance customers (e.g., those that drain our “resources” whether it be time, money, enthusiasm, etc.) and those variables that might prompt us to "fire them".
Finally, in Part 3, I’ll be reviewing the types of questions we should be asking our best clients. Not only does asking these questions have the potential to strengthen our relationship, the answers we get from them often informs future decision-making regarding the direction of our business.
Tony Colangelo is a residential and commercial photographer, as well as a photography coach, based in Victoria, BC, Canada. He is a long-time contributor to PFRE and is the creator of The Art & Science of Great Composition tutorial series.