Customer Relationships: When They Start Right, They Stay Right

April 15, 2016 Ed Powers

Managers intuitively recognize new customer relationships should start on a positive note.

Their instincts are well-founded. Creating a beneficial customer experience, especially at the very beginning, pays dividends. A study of customer satisfaction and churn in the cellular phone industry several years ago found:

  • Negative experiences at the outset are a major factor in short-term customer exits

  • The longer people have satisfactory interactions, the less likely they are to churn

  • Customers who enjoy many months of positive experiences weigh cumulative satisfaction more heavily than any occasional, negative events that occur later1

Why? At the core, humans naturally make snap decisions and tend to stick with them. What happens up front tends to set the stage for the entire relationship.

That’s especially true when it comes to perceiving another’s intentions. Neuroscientists studied how people learn to trust each other through an experiment called The Trust Game2. Players were given funds and instructed to invest cooperatively with other players. Researchers then rigged the game so certain players acted in a more trustworthy manner than others. As expected, over multiple trials, test subjects learned to adjust their investment strategies according to partner.

But scientists discovered something very interesting. When they subtly suggested certain players were more honorable than others at the start, test subjects readily accepted and acted on the information. When false notions were planted, subjects continued trusting bad actors and distrusting good actors despite evidence to the contrary. This was further proof of a phenomenon called confirmation bias: humans tend to stick with their initial beliefs, regardless of the facts.

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Human nature, in turn, affects the nature of business. Researchers have found that trust is a significant driver in customer loyalty, particularly when customers perceive buying risk.3 When trust is high, so is loyalty. It’s especially true when renewal decisions involve risk. How customers come to trust a technology, a brand, and the people behind it matters. And once again, first impressions linger.

By nature of its role, Customer Success has a profound influence on customer loyalty from the outset. Customers are in their most vulnerable state after they ink the deal. Anxious to learn if their decision was the right one, customers yearn for a deep sense of certainty and security. When CSMs provide early assurances and demonstrate the company can be trusted, greater loyalty comes as the result.

To achieve world-class performance, however, all interactions along the customer journey must be carefully orchestrated to bolster the customer’s trust. The key to success is overcoming natural silo-ism, the tendency for functional groups to look inward to please the boss instead of outward to please customers. Nothing can be left to chance. Cross-functional teams of marketing, sales, support, Customer Success, UX and even accounting must collaborate to define and implement a superior customer experience, ensuring promises made are systematically kept along the way.

Technology makes a critical contribution. When essential data is shared freely between groups, internal handoffs become more effective, efficient and friendly. And when technology allows CSMs to focus on exactly the right customer at exactly the right time, trust is built when the customer needs it most: right from the beginning.

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1Bolton, R. (1998) A dynamic model of the duration of the customers’ relationship with a continuous service provider: The role of satisfaction. Marketing Science, Volume 17, No. 1, 1998
2Chang, L., et al (2010) Seeing is believing: trustworthiness as a dynamic belief. Cognitive Psychology 61 pp. 87–105  
3Ruyter, K., Moorman, L., and Lemmink, J. (2001) Antecedents of commitment and trust in customer–supplier relationships in high technology markets. Industrial Marketing Management 30, 271–286

About the Author

Ed Powers

Ed Powers runs Service Excellence Partners, a company on a mission to increase customer loyalty and business performance in the cloud computing industry. The firm helps clients diagnose root causes across the enterprise and then helps systematically improve products, processes, management systems and customer experiences. Their innovative Mindful Customer Experience Design incorporates the latest advances in neuroeconomics to help clients build customer trust and loyalty at scale. To learn more, visit www.se-partners.com or call (970) 235-0078.

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