Interview: Peter Shankman on Driving Lifetime Loyalty Through Customer Experience.

This is the third in a series of interviews with thought leaders, which we’re conducting as part of our new book project exploring the theme ‘Beyond Customer Centric’.

This time I caught up with angel investor, entrepreneur and bestselling author Peter Shankman. Peter’s insight also covers creating loyal customers and how to keep them for a lifetime. But he’s not talking about loyalty beyond reason, based on the idea that you should aim to do business with people who believe what you believe; or at least not when this is framed as a Maslow-like progression whereby brands reach the highest level by developing a social purpose that’s beyond profit.

For Peter, the way to prevent your customers from being tempted by other brands regardless of what they do is to become obsessed about the customer experience of what you offer:

Is customer experience now more important than ever?
As Peter explains, customer experience as we know it has fundamentally changed because customers have never before had such an easy way to communicate to the world about whether their experiences have been positive or negative:

I think brands need to be very aware that what they do in the customer space has never before had such a great impact on their ability to bring in or lose customers.

He thinks it’s only going to get easier for customers to share their experiences, and this is going to become more automated to the point where they won’t even have to post a review. In future, he predicts we’ll know enough from the sentiment of user posts, or even through GPS tracking such as when customers go to the same restaurant more than once. That’s why Peter believes that customer experience is going to drive the next 50 years of the economy:

It’s not going to be about advertising, not marketing, but the customer experience. I don’t believe that the price differential is going to be that important in the end either. What will be is the experience customers have!

How do you turn a loyal customer into a lifelong loyal one?
The simple answer for Peter is to do things that make customers’ lives easier, but it’s also about doing little things that have a big impact on their experience. For example, making a reservation at the American steakhouse restaurant chain Morton’s:

When you make a reservation they ask a simple question: ‘Are you celebrating anything?’ If you say, ‘Yes, it’s my wife’s birthday’ they ask her name, and then they don’t mention it again until you get there and you sit down at your table and the menu says happy birthday with your wife’s name on it.

Peter thinks that it’s these kinds of expectation-exceeding experiences that drive loyalty and advocacy because people think it’s incredible and end up telling everyone about it. This is linked to the premise of his bestselling Zombie Loyalists book which is about us wanting to do things that other people recommend to us because we want to be able to trust them:

We trust people we know, which is why we are fundamentally uncomfortable with the likes of Yelp and TripAdvisor. We want to know that the people we take recommendations from have some accountability.

This is the insight that he believes is the driver of change over the next 50 years.

How do brands start becoming more customer experience-obsessed?
Peter thinks that business people are making a mistake by assuming that Big Data and social analytics are going to be the answer to all their challenges and change the world. That’s because these technologies can exist in a vacuum, and are unlikely to be the catalyst for the creative spark that brings about what Peter calls “the little hacks” like Morton’s personalised menu he mentioned earlier.

Instead, Peter recommends starting by teaching employees why customer experience matters, but he also thinks empathy is an important trait:

Ritz-Carlton hires for people, not for their skills. They can train someone to do something like make a bed, but it’s much harder to train someone to care about people. That’s why I think we are seeing more and more corporations hire for people.

He mentions how some of the bigger airlines have also started doing this because they have realised that they are in the customer service business not just the travel one, so they need to hire people who value the service being offered and care about the customers’ experience of it. This means brands need to look at very specific things when they’re hiring, such as what potential employees do, what they care about, and what’s important to them.

What would help drive the adoption of better customer experiences?
Peter points out that no shortage of studies and statistics show how important customer loyalty is, for example, “It costs X less to keep a current customer than it does to gain a new one,” or “A loyal customer is Y times more likely to be believed, as opposed to an advertisement, when they say how great you are.” But he thinks that the real tipping point happens when CEOs and managers realise that customer service is a profit centre when it’s done correctly:

They have to stop thinking of customer service as a cost, and if they can do that then they can start hiring people for the right reasons, such as bringing in people who care, and things like that.

It’s when CEOs realise how much money is on the table that the penny drops and Peter has conducted studies that show revenue increases from between 8-22% just from having employees smile.

What’s interesting about what Peter is saying here, compared to previous interviewees, is that it’s not about brands having to think differently about how they reach the hearts and minds of their customers; it’s about winning both through making things easier for customers, implementing little changes that make a big impact on customer experience and simply hiring people who help show that you care.

This might not bring about the kind of ‘Cool’ brand that Anouk Pappers and Maarten Schäfer talk about, or a ‘Significant’ one as described by IBM’s Jeremy Waite, but it does form part of the journey to becoming one and is certainly part of what it now takes to make a brand successful.

Further reading:
Check out Peter’s Zombie Loyalists book and follow his blog for more great examples and inspiration. Previous interviews in this series include one with IBM’s Jeremy Waite, and another with Anouk Pappers and Maarten Schäfer of CoolBrands. Next up will be an interview with Stephen Waddington.