With a combination of business intelligence and analytics, you may have figured out the lifetime value of a customer. If you’re using customer data wisely, you probably also know the highest acquisition cost you’re willing to pay, or even how much to spend to re-engage a customer that appears to be going latent. But here’s a metric you likely haven’t established: how much are you willing to pay for the damage control of a single customer?
In more ways than one, the voice of the customer is stronger than ever and businesses have had to face a paradigm shift. There are businesses that get it, like Zappos and Amazon, which continually reign over customer service and satisfaction. On the other end of the spectrum, companies that focus their efforts only up to the point of sale are being rudely awakened by a stark new reality: there’s no escaping an unhappy customer. With the internet at their fingertips, each and every customer can create staggering ripple effects that can do major damage to a brand. In the past, a miffed customer had little recourse outside of venting to his or her friends and family. This did some word-of-mouth damage, but it was generally contained. But today, a customer can instantly tap the internet and announce their dissatisfaction to an endless sea of consumers. One tweet or review can quickly go viral, accelerated by web-savvy competitors keen to exploit their rivals’ woes in whatever way they can (I once a heard a story about a repeat customer that tweeted about a negative experience with a florist. Soon after, they were contacted by 1-800-Flowers, who offered to make their delivery for free and offered a discount for their next order. Guess who lost a regular customer, and who gained one?).
So how much harm can a single customer actually do? Social virality is just one aspect of how quickly the damage can snowball. Customer reviews—which consumers trust 12 times higher than brand-communicated information—can live on the internet as a visible reference for years. Even one bad enough review out of a pool of several can lower the overall score by a significant margin over a competing product—with a measurable impact on sales. Furthermore, customer comments may appear in search engine results each time a brand or product is queried. Businesses can do little if anything about these comments, even if inaccurate, while search suppression efforts are both costly and lengthy (and never guaranteed).
With its effects both unpredictable and uncap-able, any smart business will recognize that customer damage has to be prevented, not controlled. A proactive strategy toward customer service, return policies, and quality are all helpful, but the bottom line is that businesses must truly consider the entire customer lifecycle, not just the sales cycle. If a company’s products or services don’t live up to customer expectations months or even years down the road, the internet will undoubtedly reflect it. With the ability to compare competing products so quickly and easily online, even marginal differences have a big impact on sales.
Of course, it isn’t all gloom and doom. While the evolving powers of the customer can put brands in an especially vulnerable position, they work the other way too! An unexpectedly positive customer experience can go viral too, building awareness and pushing sales, while great customer service is paying off like never before. At the end of the day, Google’s tagline sums it up perfectly: The internet is what you make of it.