We live in a reputation economy, right? So why do so many businesses keep thinking customer interactions end when the phone hangs up or the customer physically leaves the store? Word of mouth (WOM) marketing, as Glenn Gabe writes, “is one of the most powerful ways to grow your business.” Conversely, it also can be one of the most powerful ways to inhibit growth of your business. I’m currently dealing with an issue with New York Sports Club that made me think about just how clueless some managers are in today’s reputation economy, and given my interest in data analytics, how simple data could help foster positive WOM.
The Incident
I’ve been a member of NYSC for almost 2.5 years. Like many other members, I have recurring payments set up to charge my debit card each month so I don’t have to remember to manually pay. For 2.5 years, there hasn’t been an issue and my bill has been paid on time every single month. However, last week when entering the gym, they told me that my account had been canceled. Apparently, my recurring payments had stopped and I hadn’t paid my bill in 3 months. I’ll spare you the details, but not only did I have to pay the 3 months that I missed (which is obviously fair, but very annoying considering I had thought I was paying the whole time), but I had to pay a $50 fee because my payments were late.
Now, considering a) I have never been late with a payment in 2.5 years, b) I was never contacted to be notified that my payments had stopped, and c) my bank said they never received requests for payments during the 3 months nor did my debit card expire, I was at least expecting the manager to be sympathetic to my situation and offer to drop the late fee. Instead, I encountered an unsympathetic and standoff-ish manager who refused to even acknowledge that NYSC may have been at fault. The manager offered to “see if he could” cut the late fee in half, which frankly was unacceptable to me.
The Implications
Any smart business manager must recognize that in a reputation economy, every single customer touch point has to leave the customer satisfied. If not, you risk a bad experience permiating through that customer’s social graph and influencing other current or potential customers. To date, I’ve spent over $2700 at NYSC if you add up all my months of membership, and it’s likely that I’ll spend thousands more so as long as I live in Manhattan. I certainly don’t have social networks as big as some, but even with my modest 200+ followers on Twitter and small blog readership, let’s say I have the influence to sway 10 people in NYC who are currently looking to join a gym to NOT choose NYSC. Let’s also assume that the average NYSC member is a member for 5 years. That means that my negative experience has caused NYSC to lose over $55,000 in potential revenue (and that’s obviously a rudimentary, conservative cost analysis).
In fact, taking another cue from Glenn Gabe, I wanted to see what type of online reputation NYSC had. Alas, in a simple search for “New York Sports Club,” a consumer complaints site appears on the FIRST PAGE of Google results. What’s more, all the complaints are about recurring payments issues! I’m obviously not the only member experiencing it. ALERT TO NYSC: This despicable area of customer service is generating terrible WOM for you.
The Lesson (and where analytics fits in)
This incident got me thinking of how analytics could be used to foster positive WOM. What if every business had an analytics tool that identified “valued customers.” As mentioned above, I’ve been a member for 2.5 years, have paid every month on time without issue, and I’m willing to bet that my actual visits to the gym are above the average. I think that makes me a valued customer. If only the manager could see this data when looking up my account, perhaps he’d be more inclined to trust me that it wasn’t my fault, offer to drop the late fee, and as a result, make me a very happy customer that would go off and recommend NYSC to every person I know who wants to join a gym.
I’m not saying customers should be treated differently. I am saying that in a reputation economy, businesses better damned be sure they know who their best customers are and be ready to energize them through recognition and great customer service. Analytics offer the power to do this.
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