Raising the Service Ante: Location Analytics Validates A Wow Experience
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Raising the Service Ante: Location Analytics Validates A Wow Experience

Raising the Service Ante: Location Analytics Validates A Wow Experience

Customer expectations today are dramatically higher, thanks to the likes of Amazon, Zappos, Southwest Airlines, Starbucks, Ritz-Carlton, and Chick-fil-A, to name just a few of today's customer experience leaders. Once your customers have exceptional experiences dealing with companies like these, their expectations are permanently raised. This means your business is evaluated in the customer's mind in comparison with the best businesses in the world. If you deliver just an ordinary customer experience, rather than a highly satisfying (wow) experience, your business is just average in the customer's mind. And your customer's repeat visit behavior will reflect that judgment.

SMG recently demonstrated how much more effective highly satisfying customer experiences are in driving return visits by using location analytics. We first created a precise geo-fence around each of the 45,000 restaurants where we wanted to study customer traffic. Then we invited consumers to join a research panel. They downloaded an app, told us about themselves, and agreed to share the GPS data on their smartphones with us. That way, we were able to detect whenever they visited a particular restaurant. Using this visit-detection technology, we observed the actual return behavior of more than 19,000 consumers over three months.

From those visits we were also able to trigger a mobile survey shortly after the customer experience. We asked the customers why they visited each restaurant and to rate the experience they just had. The result? SMG found casual dining guests were 28 percent more likely to return within 30 days when they had a highly satisfying experience. This is not simply intent to return 28 percent more often; it means they actually did return 28 percent more often within 30 days. Fast-food and fast-casual segments also saw a big bump in actual return--emphasizing the concrete value of creating highly satisfied guests.

On average, only 51 percent of all restaurant guests return to the same restaurant within 30 days. But the "A" players in SMG's Benchmark Database deliver a wow experience more often than average performers--by double digits. The revenues from that extra repeat business are extraordinarily profitable because they require no additional promotional costs or advertising expense.

It is almost a cliché these days to speak about the need to wow customers. But what difference does it really make to the bottom line this month, or to the growth of your business in the years ahead? Why not just serve customers adequately? This new research, based on location analysis and mobile surveys of restaurant consumers, makes the answer clear: Wow is worth between 12 and 28 percent more repeat customer visits. And we find customers behave much the same in retail, convenience stores, and personal services industries. (Visit www.smg.com/research for more information.)

Wow is the emotional reaction people have when they experience something out of the ordinary. It makes a big difference because when you wow customers, you accomplish what all great marketing sets out to do: you stand out above competitors; you make a remarkable, memorable impact; and you create a powerful customer preference. All of these "positive prejudices" can override the rationality of price and convenience for many customers when faced with competing choices. We saw it time and again: customers will drive right by several competitors to choose a preferred restaurant that is farther away!

Understanding the impact of that kind of customer loyalty comes from repeatedly testing a hypothesis, using a process that other independent researchers and business people can replicate. When the results repeatedly prove the accuracy of a particular marketing hypothesis, we stop calling it a hypothesis. We start calling it a principle of marketing science.

Principle: Customer loyalty drives profitable sales growth. Not a theory. Proven fact. Proven tens of thousands of times. Same-store sales growth, in particular, is built on the backs of loyal customers.

Customer loyalty researchers have repeatedly demonstrated that customers who are highly satisfied with the experience of doing business with you will return more often, spend more with you, and recommend your business to others. If there is nothing special, extra, or different about doing business with you, the best you can hope for is to perform about average for businesses like yours.

If you aspire to perform above average, more customers must perceive you as above average. Sounds obvious, but guess what? Average doesn't mean what it used to mean. The bar on what is average, on what is expected, is much higher than it was when you first got into business.

SMG Chief Evangelist Jack Mackey helps multi-unit operators improve loyalty and drive growth. Contact him at 816-448-4556 or jmackey@smg.com.

Published: September 15th, 2014

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