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How Home Clearance turned its bad reputation around

 

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On average, a satisfied customer will refer four others to a retailer, with about a five per cent conversion rate. While this doesn’t sound like much, look at it this way: if you have 100 highly satisfied customers, 400 potential customers will hear about you, and 20 will become new customers.

This was the message delivered by the Winning Group’s Trent Allan during his talk at the Seamless Australasia conference this week.

Allan, who joined the Winning Group as its third employee in 2006 and is now the head of e-commerce and marketing at Home Clearance, stressed the importance of keeping your customers happy and the tangible benefits this brings.

“The link between customer satisfaction, word of mouth, and business growth is real,” he said. “The happier you make someone, the more people they will tell.”

This also works in the reverse, as the Home Clearance team discovered last year. When the discount retailer failed to meet its sales target it did what any company would do: it went on sale and launched a big advertising blitz.

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The campaign had the desired result—the retailer sold more than ever before—but at the expense of customer satisfaction.

“By most metrics it was good but our Net Promotor Score (NPS)—which is more important than revenue because it is a prediction of future revenue—was bad,” said Allan. “We couldn’t keep up with demand, we weren’t able to answer every call, and so we really upset our customers.”

Home Clearance customers made their displeasure public, taking to forums like productreview.com.au and Facebook to leave negative feedback. As a result, Home Clearance’s conversion rate went down by about 28 per cent and its abandon rate jumped up.

Turning things around

To solve the problem, Home Clearance went back to basics—it spoke to customers. “We sent an email to every customer asking what the problems were and then tried to fix them,” said Allan. “We didn’t try to invent anything new.”

This strategy was successful and by February this year Home Clearance had an impressive NPS of nearly 80 and conversion was up 111.55 per cent year-on-year.

“This proves that more than ever before it pays to go above and beyond for your customer.

“Customer satisfaction is one of the most important things you can work on; advertising is not the only value proposition anymore.”

Rising expectations

Consumers now expect amazing service from retailers and are willing to pay a premium for it. In fact, a study by consulting firm Walker found 86 per cent of customers would pay more for a better experience.

“By 2020, customer experience will overtake price and product as the key brand differentiator, so why aren’t all retailers focusing on satisfying their customers?,” asked Allan.

The reason perhaps is that many companies believe they already are, but there is a huge gap between what businesses and their customers think.

According to Bain and Company, 80 per cent of businesses believe they provide a superior experience, while 92 per cent of customers disagree.

Allan urged attendees to go above and beyond for their customers and said retailers need to pay attention to the value of a fully connected customer.

“The customer matters more than ever…It amazes me how many companies out there don’t focus on customer satisfaction—these companies won’t survive and move into the future.”

 

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