Top 5 Customer Service Mistakes to Avoid

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I’ve said it before and I’ll say it again, customer service is very important for successful marketing. The companies that do customer service right are the ones that correctly identify it as a point of differentiation and spend time optimizing it.

Sadly, those companies are still in the minority. Most of us still do a terrible job at customer service.

Here are 5 of the most common customer service mistakes we’re still making:

  1. Complexity – we make it too hard for customers to get the answers to their questions, forcing them to jump through hoops or search far and wide for an email or phone number. The last thing you want when you have a customer who needs help is to frustrate them even more by making it hard to get in touch.
     
  2. Ignorance – we assume that our products and services are so good that customer service is not a priority. These companies simply have not acknowledged the basic fact that without strong customer service, you can’t succeed in a competitive marketplace.
     
  3. Complacency – we know we need customer service but we don’t want to invest the money to make it better, so we don’t monitor, analyze, report, and coach. We just let it flounder, knowing it’s not good enough but not caring enough to make it better.
     
  4. Disempowerment – we don’t give our customer service representatives the tools they need to make customers happy. Instead, their main job is simply to be the sounding board for angry customers, trying to save as many relationships as they can simply by talking people down.
     
  5. Disassociation – we silo our customer service department instead of fully integrating into other key areas of the organization. Sales and marketing, product managers and engineers, and top executives can all learn a lot by working directly with customer service – who are on the front lines and the only ones who can give real, honest feedback about how customers view the company.

Psychological Hacks for Marketers – Part 1

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Welcome to the first installation of our brand new weekly blog series – Psychological Hacks for Marketers. Each week we will introduce a new shortcut that the consumer’s brand takes and how the crafty marketer can take advantage.

This week we are discussing:

Scarcity

In psychology, the Scarcity Principle describes the urge to purchase, gather, or obtain something that a person feels that they may not be able to get in the future. When something is rare, or difficult to get, or its availability is limited in some way, our desire for it grows.

Marketers can use this to increase the value of their products – either pushing consumers to make a decision in a shorter time or pushing them to spend more money than they otherwise might.

A classic example of this principle is found in the diamond industry. The reason diamonds are so valuable is because they are so rare. But the dirty little secret is that diamonds are not rare at all. But suppliers figured out a long time ago that they could create an artificially inflated demand for them by simply limiting the supply. So they store them away, literally preventing them from becoming available, keeping the supply low and the prices high.

Now obviously not every business can operate this way. But there are a number of different ways that marketers can use the principle of scarcity to their advantage.

  • Apple uses scarcity in their initial product launches to perfection. Avid customers know that for a popular product, there will be a waiting list. Apple intentionally under delivers in their initial order, meaning that some customers will get the product right away while others will have to wait. This creates a mad rush through the door to avoid missing out on the next big thing.
  • Online travel sites use scarcity when displaying available flights and hotels. Consumers will see a note next to certain listings that tell them there is only “1 room left at this rate” or “2 seats left on this flight”. They know that if they hesitate, they will likely miss out.
  • Ecommerce stores like Amazon use the same idea to display how many items are left in stock. The lower the number, the more likely a customer will be to complete the purchase right away.
  • Online clothing stores take this a step further, actually displaying products that are “out of stock”. When people find something they want, they have to take the additional step of requesting something that is not currently available. That signals to the store that there is more demand for this specific product and they should make/order more.

By limiting the supply of something, and making that known to consumers, you are sending them a signal that this product is desirable. Those same consumers will be more likely to buy simply for fear of missing out.

Scarcity sells!

Stay tuned next week for another installment of the Psychology Hacks series. Have a suggestion? Let us know.

Zach Heller Marketing Week in Review

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How much transparency can you handle? That’s something companies need to decide for themselves when thinking about how they communicate with their customers. When you air on the side of transparency, you are able to build trust. That means owning up to mistakes and disappointing people from time to time. When you air against transparency, you take control of your brand. But you may miss out on opportunities to make stronger connections with the marketplace. So what is your transparency threshold?

Here are last week’s posts for your reading pleasure:

  1. New Blog Series – Psychological Hacks for Marketers
  2. Price Testing Explained
  3. How Marketing Impacts Returns and Refunds

Happy Saturday!

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How Marketing Impacts Returns and Refunds

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Nothing in an organization happens in a silo. That’s important to remember in the metrics that we track.

A good example of this are cancellations, returns and refunds. These metrics – items returned, dollars refunded, accounts cancelled, etc. – are used by companies to measure the relative satisfaction of customers.

Standard thinking assumes these numbers will never be zero. Not every customer will be satisfied. But the lower they are, the more likely you are serving their needs and keeping them happy. So we aim to keep them as low as we can, and when they go up, we scramble.

While it may not be obvious at first, sometimes our marketing impacts these numbers in a negative way. Marketing can make returns and refunds rise. But that does not necessarily mean there is a problem.

Here are some things marketing might do that can cause refunds, returns, and cancellations to rise:

  1. Marketing promotes the refund policy because it is a customer friendly policy that increases conversion rate by eliminating fear. Research shows that the more people are aware of return policies, the more they will use them.
     
  2. A limited time discount increases sales in the short term. Research shows that price sensitive shoppers are more likely to change their minds and request a refund.
     
  3. Marketing launches a new product that makes some existing customers decide to trade in their old one.
     
  4. Marketing wakes up dormant customers with an onboarding program, causing some customers to realize they never used this thing they bought.

In all these scenarios, and many others, marketing is taking an action that benefits the company while at the same time increasing the rate of returns or cancellations.

If we only measure returns, it looks like something bad has happened.

But when taken with the increase in sales or new customers or active users, the net outcome is positive.

Price Testing Explained

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Price testing is a very simple concept that can be carried out in a thousand different ways, from least complex to most.

The basic idea is this: rather than using the tools at our disposal to choose the right price, let’s allow the customers to tell us what the right price is.

We all know price is a major lever that marketers can use to improve performance. What most people don’t know is the extent to which price matters, and all of the different ways you can impact the price.

How do we set a price to begin with?

Even in price testing, we need a starting point. There are two ways to set a price that make any sense at all. The first is the most common. Start with costs and add a margin on top of it. If it costs us $10 to make something, and we want a 20% profit margin, we charge $12.

The second one is less common, but many would argue more appropriate. The reason it’s less common is because it’s more difficult. Here your starting point is value. What value does this product or service offer relative to the alternatives? For example, if we’re launching a new state of the art pen that lasts twice as long as the longest currently on the market, perhaps we’d set the price at double whatever they charge for theirs. Since ours lasts twice as long, all other things equal, we can assume the value to consumers is double.

There are many different ways to test.

Companies can and do test prices all the time. One of the best examples of this is Amazon. Amazon is constantly using algorithms to try to find the “right” price for all the items it sells.

Five different people might log on at exactly the same time and view the same products but see slightly different prices. The volume of merchandise that Amazon sells and the amount of traffic their site gets allows them to test and find meaningful results in a short amount of time.

We aren’t all so lucky. Here are a few of the common ways of testing prices that you can use:

  1. Use discounts and offers on your website to measure the impact of lower prices
  2. Show different prices to different users and measure the relative performance
  3. Revise the price of your products over time, adjusting them weekly or monthly to see if that impacts sales
  4. Create different versions of your products and offer them at different prices to see which performs better
  5. Use an email or call list to sell at different prices and measure conversion rates

The key to successful price testing

We use price testing to determine the “best” price, often the price that creates the greatest total revenue (sum of revenue from all purchases). A lower price might lead to more sales vs. a higher price. But a higher price means more revenue per sale. So it’s about finding the right mix.

Like other forms of testing, this process can continually repeat itself. We won’t all be as intelligent in our testing and pricing as Amazon, but there is no reason why we ever have to be done testing. Once we find a winning price, we make that the new baseline and then continue to try and “beat” it.