Service Essentials – Service experience design as a key strategy to maximise life-time value of the customer

In a nutshell…

  • Many businesses are like “leaky buckets” – they spend a lot of money to win new customers, but then pay too little attention to keeping them…and customers “leak out” silently, often never to return
  • We build profitable businesses by maximising the life-time value of our customers.
  • Designing the end-to-end customer experience is a key strategy to maximise life-time value. This should include:
    • focusing on both the functional and the emotional customer experience.
    • Training people to deliver
    • Systemising it with the aid of technology

It costs a lot of money to win a customer, and much less to keep her. So our focus should be on keeping our existing customers. Smart businesses work hard to maximise the life-time value of their customers. Simple, common sense, right? Simple perhaps, but not as common as it should be.

I’d now like to introduce to you a company that is building its business, one life-time customer at a time. I’d like to start with a typical customer. When she is not happy as a customer, she does the same thing that most of us do – she walks away, never to return. And the business is no wiser for the loss. This customer is my wife, Poh Lan.

A few years ago, our bank offered, Poh Lan a special deal.  The offer was a very cut-price facial with Estee Lauder in Mid Valley Mega Mall, a very large shopping centre near our home.

Now, we all know what these “deals” are meant to achieve, don’t we? On-sell, up-sell, sell, sell sell! Despite knowing what would probably lie ahead, Poh Lan took the offer. The bait must have been very attractive indeed! And some years down the track, Poh Lan is a loyal Mid Valley Estee Lauder client. Poh Lan is now a life-time customer who has no intention of leaving.

So what does Estee Lauder do that many companies seem to overlook? Let me explain.

It was the day before Poh Lan’s first facial appointment. Her mobile phone rang. It was someone from Estee Lauder, introducing herself, and confirming the next day’s appointment. As the saying goes, “you never get a second chance to make a good first impression.”  Estee Lauder no doubt called to make sure that Poh Lan would show up. However, in doing so, they created a positive first impression.

Next day. Poh Lan goes to the facial. As we part company, I could hear her say, “Don’t worry, I won’t buy any of their packages. I’ll just take advantage of the good offer.” Famous last words…

The Estee Lauder salon is tucked away in a large department store in Mid Valley. The reception area is small, but very bright and comfortable. You are warmly greeted by at least one of the beauty therapists, dressed smartly in white. There are nice magazines waiting for you. If you are early, they will offer you a nice cup of herbal tea.

Nice second impressions.

Then it’s time, as a first-time customer, to have the condition of your skin examined. The Estee Lauder beauty therapist gently breaks the news to you that there is some work to be done! And it is all carried out with great diplomacy and care.

Then it is time for the facial. The customer gets into a comfortable robe, in a comfortable room, amid soothing music, and the treatment begins. The steamer gently wafts nourishing herbs into your skin. The beauty therapist gently weaves her magic on your face, then gives you a light massage. She will talk to you and sense if you want to talk.  She mentions that, perhaps, your skin could do with certain creams – but there is no hard sell. In fact, there is no sell, apart from a suggestion that your skin needs some daily help.

One and a half hours of bliss.

The customer then dresses and floats back to reception. She feels great. She is offered a cup of tea before she leaves. And, like Poh Lan, she buys her treatments 12 months at a time.

Let’s decode what Estee Lauder does that other companies  should do.

Design the end-to-end customer experience

Estee Lauder has designed the end-to-end customer experience.  It starts from the phone call the day before to confirm the appointment, and it ends with the cup of tea and warm farewell.  The Estee Lauder experience is not an accident.  It has been deliberately designed, and has been consistently delivered from the time that Poh Lan first spoke with Estee Lauder some years back.

There are two elements to any customer experience.  The functional elements are non-personal in nature ie it’s about what you get. Was reception clean? Were you offered a cup of tea? Was it a relaxing facial?  Did it start on time? The emotional elements focus on how the customer is made to feel. Poh Lan told me that she is a loyal customer because she is made to feel special. Going for a facial is like going for a treat – because of the way that she is treated. And herein lies a key to creating long term customers – it is the emotional experience that builds long term loyalty. Poh Lan had been for facials to other salons.  The focus of these salons was the customer’s skin, rather than the customer’s emotion. In short, their lack of focus on the emotional experience was repaid with lack of repeat business.

They trained people to deliver

Companies like Estee Lauder understand the value of training their people to deliver a consistent customer experience. Poh Lan had a simple expectation when she went to Estee Lauder – to have a consistent experience. That is what she got, irrespective of who treated her.

Compare this with many companies that minimise their costs on customer service training. In doing so, they create inconsistent, even poor customer experiences. The result is that the customer walks away, quietly, never to return. These companies are like leaky buckets, where significant sums of money are spent attracting customers, only to see those customers leak out due to inconsistent customer experiences. These companies save on training costs, but pay dearly in loss of life-time value from their customers.

Systemise it

During her first treatment, Poh Lan indicated that she preferred a particular cap rather than a band, to hold her hair back. On her second visit, with another beauty therapist, she was given a cap. This company is in the business of treating every customer as an individual – and uses technology to record customer preferences.  Simple, common sense…but not that common.

You can do it!

You may say that this is okay for a company like Estee Lauder, but not for you.

My response is that this is just an excuse. No matter what business you are in, whether you are a bank, insurance company, retailer, dentist, doctor, movie theatre, restaurant etc etc, you can map the customer’s journey with you, starting from them  walking in, going on-line or phoning in. You can design a customer experience for each step of that journey. You can make people feel important – even by the way that you greet them, welcome them, and, important, welcome them back. Each customer experience has a Beginning, a During and an end, and, no matter what sort of business you are in, you can design for this. You can design a functionally correct and the emotionally satisfying customer experience.  And you can use technology to be your memory aid.

And when you think like this, like Estee Lauder, you will grow your business, one life-time customer at a time. Until next edition.


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