Episode 4: Investing in Customer Experience
Have you ever wondered why advertising is considered an investment, but customer service is a cost?
Many merchants are happy spending tens of thousands of dollars on advertising reaching new customers, but if customers try to reach them, they make it as hard as possible to connect. In this video we’ll see why we need to switch this thinking.
As a small business, your competitive advantage is your customer relationships. Generally speaking large brands treat their customers like transactions. So small businesses like you need to treat your customers like assets.
Why? One of the last remaining frontiers for brand differentiation is customer experience. In today’s world of Dropshippers, Amazon, and Shopify entrepreneurs, it’s easy for your customers to find substitute products from competing brands. Everyone’s product quality is going up, prices are going down, so what makes your brand different!? It’s Customer Experience!
Zappos is a perfect example. Zappos is an online shoe store selling billions in revenue. There is nothing special about WHAT Zappos sells, they sell the same shoes you find everywhere, but their differentiator is customer service. Their service is so good, 75% of their customers return to buy again. Ultimately, Amazon acquired Zappos for $1 Billion dollars.
How did they achieve this? Instead of funneling budgets into paid ads, Zappos re-invests revenue towards customer experience. For example, putting their paid ads budget into things like surprise overnight shipping for first-time customers, surprise pizza deliveries to returning customers, and zero wait times on customer service calls. This strategy seems to work, considering I’ve never heard any paid campaigns resulting in 75% repurchase rates.
Tony Hsieh’s audio clip was taken from this video of a conference talk: