Retaining your customers can be a constant source of anxiety for business owners. Sometimes there’s just an overwhelming number of things to get done, it feels difficult to know where to start.
Let me use an experiment to demonstrate where you should be focusing your efforts in order to maximise your CX – your customer experience – and therefore increase retention and reduce attrition.
So if in your testing and measuring you are finding that the biggest challenge in your business is customer retention then here are the two areas where you can start in tackling that issue.
We can help with robust customer experience strategies
Just serving up a good and useful product or service is sometimes not enough. Customer experience can often be that cinching factor that takes you away from sales that seem to bounce up and down with a change in the wind direction to a predictable flow of customers, excited to come back for more.
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Prefer to read rather than watch and listen? Below is everything in the video in text form!
You’re constantly thinking and wondering what to do to improve the customer experience and retention in your business and a lot of the time there is so much to do that you don’t know where to make a start. And that is exactly the reason why so many businesses suffer from client attrition, and therefore are not able to reach their growth potential.
Today I’m going to talk about the key distinction that you need to make so you know how best to optimise the customer experience by focusing your energy on the right places.
Daniel Kahneman’s Psychological Experiment
Let me talk about a very interesting experiment that was done in 1996 by two psychologists, one being Daniel Kahneman and his colleague Don.
They got patients who were having a colonoscopy in a room and these two psychologists said, “You need to monitor the level of pain that you’re experiencing every minute and rate it on a scale of one to ten.”
Towards the end of the experiment, Daniel asked his patients to also rate the overall experience of the treatment.
Did The Entire Experience Affect the Overall Rating?
Now the psychologists expected that the overall rating would be based on the duration of the treatment and how the experience was rated throughout the process by the minute-by-minute ratings.
Surprise, surprise – the overall rating was based on two important figures: one right at the start of the experiment when there was peak intensity of pain, which is called the peak, and then the second one was the highest pain intensity towards the end of the experiment.
The average of these two determined the overall rating that the patients gave to the treatment.
The Peak-End Rule in the Business Context
How is this relevant for businesses? This is the Peak-End Rule – a very famous rule proven again and again through different experiments.
In the business context, if you think about it, yes you can focus your energy on everything that’s happening as far as the customer is concerned and that’s the experiencing self of your customer.
But what really determines the overall rating is the remembering self of the customer.
And that memory, or that remembrance, is based on two critical moments: the start and the end.
Therefore, what you need to think about and where you need to focus your energy on is
- How is this starting experience of my customer and
- How is the ending experience?
Once you know that these are the two zones that you’re properly focusing on, it should help you maximize the customer experience and therefore the customer retention.
So, the question is what needs to happen right at the start, which is the peak, and what needs to happen right at the end. Maybe this is a good topic for you to discuss in your team meeting or something to reflect on.