HESP October 2, 2017

From groceries to automobiles, merchants are turning their undivided attention to retaining existing customers, rather than to attracting new ones. The reason is simple: cost-cutting is the key to profit making. Every time you try to attract a new customer, you spend more money on product or service promotion through campaigns and advertisement. These costs can be avoided by encouraging positive reviews from existing customers. New customers will believe in your product or service more if a positive review comes from somebody who knows the product as well as the company. But what if a customer leaves a negative review for your company, possibly on social media? It would be a nightmare! The following are some examples of the impact an angry customer can have on your company through social media posting and some suggestions of how such situations can be tackled:

Situation one: A customer who posted good reviews about your product on your Facebook page a year ago has recently lashed out at the company for poor after-sales services. The impact of the post is that new customers are confused about your services; they trust your product but not the after-sales services. Existing customers may be considering buying another product from you, but, because of this situation, they are skeptical about their next purchase from you.

In such a situation, ensure head office issues a prompt reply apologizing for what has happened by replying to the same post on the Facebook page. This post should be acompanied up by follow-up service to the customer within 24 hours. It will be better if the service provider’s contact details or how to track the person are shared on the original post. The impact of this prompt reply will resolve trust issues, and the existing customer will feel relieved as their problem was resolved within 24 hours. This customer may even feel delighted as you acknowledged the inconvenience caused to them, and your prompt action will reassure new customers as they think that you are keeping track of after-sales services, and your primary concern is customer satisfaction.

Situation two: Delay in delivery of products and services, faulty products, and exchanges are some of the issues that stop customers from staying loyal to the company. A furious customer may take this to the next level by sharing posts on Facebook and Instagram, along with pictures of the product. This may have a deeper impact on prospective customers who are on the same page. A company in such a situation must share proof of delivery of the product and promptly offer discounts or quick replacement of the product to generate customer delight.

Situation three: Big businesses operating in different cities of the same country, or different countries altogether, often design their customer retention strategies via zone. This creates the problem of discrimination because customers want to avail themselves of all benefits. Offering a 10% discount to zone A or having better, newer product line promotion strategy for Zone B may create competition between customers. The customers, existing and prospective, may be connected through personal channels like Whatsapp Messenger, and they may discuss this discrimination. Moreover, do not forget your rival may be following you in disguise on social media, and you may be ‘spilling the beans’ on your strategy or giving them new ideas to consider. The company can limit disclosures about forthcoming attractions or strategies, and it should plan to discuss these in detail with customers via more private channels f(or example by asking them to share an email address or contact numbers). Controlling this information will save the company from negative publicity spread by existing customers because personally, an employee can better explain why a particular discount is being extended to limited customers. This problem is quite common among airline operators because more discounts can be provided to the longest route and customers must be told why such a discount is being extended. Companies must have a clear policy regarding information discretion, which should be enforced by ensuring the right person has the right information. A balance must be maintained in terms of information spread: it should not be so little as to mislead your customers and should not be too much to let your competitors know all your strategies.

Situation four: The most critical situation arises when a company is involved in the manufacture and/or sale of food products because it deals directly with the health of customers. For example, Nestle Maggi Noodles in India, which is India’s most popular noodle brand, was accused by the northern state of India, Uttar Pradesh, of not complying with food safety standards and laws. The accusations were later condemned by the Bombay High Court as Nestle Maggi was tested and proven safe by the laboratory. Meanwhile, Nestle Maggi, through various digital channels (especially YouTube), ensured they maintained regular contact with customers by posting “We miss you too” videos. This is one of the leading examples of customer loyalty. Talking about rivalry, other noodle brands in India like Patanjali, Sunfeast Yippie, and Top Ramen also tried to win over Maggi customers, but customer loyalty for Maggi defeated the rivalry here.

Tips for companies to ensure customer retention:

Customer retention becomes even more important when we consider Michael Porter’s Five Force Model. The Five Forces, buyer power, supplier power, competition rivalry, threat of new entry, and the threat of substitution, are critical factors in the success of any business. This concept becomes inevitable when social media influences a brands image and customer loyalty and when buyers, employees, and customers are all treated as customers of the organization. Retention of customers (customers, buyers, and employees) and positive reviews from these customers on social media drives away competition seamlessly. Efficient handling of a complaint or negative review can be achieved through the following ways:

  1. Know your organization first: When you are handling negative reviews from existing customers on social media, you, as a representative of your company, must be in possession of the most accurate and up-to-date information about the situation. Do not jump into problem-solving till you are fully aware of the real problem.
  2. Provide proofs and be polite: One of the most effective weapons in killing negative reviews is the process of accepting blame, apologizing, and providing proof of rectification. This helps in rebuilding trust and makes existing customers feel special. They will feel their concerns have been heard, and you have provided a prompt remedy.
  3. Do not try to over convince the angry customer: However, apologies and discounts to retain the customer should not be overdone. Customers may begin to doubt your sincerity and start to lose trust in you, often thinking your offers are not practical or real. Play a fair game. Do not lure the customers with unrealistic promises as these will further damage the brand image resulting in loyal customers fading away and existing customer keeping prospective customer away from the company with negative publicity.
  4. Your loss is your rival’s gain: Always be aware and try to curb negative publicity on social media by winning over angry customers because your rival is keeping an eye on your strategies and looking for your weak point. Therefore, always ensure you address customer’s problem on social media.

Sometimes customers come up with unrealistic problems just to gain attention on social media, though this happens in rare cases. Nonetheless, this should be handled tactfully. The customer is king, even in the digital era. An angry customer who leaves your brand’s army and joins a rival can do serious harm. It is better to try to keep them onside, where they will remain calmly in your army and contributing a little every now and then to the battle. More such soldiers will attract more soldiers by showing their power online. One positive review on social media by an existing customer can do wonders for your business.

 

Author: Dr. Neeti Mathur

Leading with Finance (Nov-Dec 2016)

Assistant Professor (Management)

National Law University, Jodhpur (India)

Email: mathur.neeti@gmail.com

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