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Will customers pay more for a positive experience?

In spite of the ongoing recession and general belt tightening by consumers, the fact remains people will still pay more for better customer service. But, even a good experience has a price point. So, just how much more would they be willing to pay?

 The answer: 10 percent more! That’s what a surprising 70 percent of the responding consumers said in a survey recently conducted by The Strativity Group and reported by Stacy Straczynski in Progressive Grocer magazine. Even more interesting was the fact that about 33 percent of the 2,000 consumers polled between April 13, 2009, and May 4, 2009, were willing to pay 25 percent or more for exceptional customer service!

Not so surprising, the study noted that satisfied customers were three times more likely to repeat their business for at least another 10 years. Conversely, those who had a negative experience were 10 times more likely to cease doing business with the company within 12 months.

No surprise here, either: Employee interaction was the top contributing factor to a good customer experience with the business. Effectively resolving problems, exhibiting common sense, and instances where employees exceeded expectations topped the list.

“The initial assumption that we had was that customer loyalty is dead, that the only loyalty is to price,” said Lior Arussy, CEO of Rochelle Park, N.J.-based Strativity. “But it’s not only about price sensitivity. The verdict from the consumers is very clear: if we see an exceptional customer experience, we’ll pay more for it, we’ll stay longer, and we’re going to give you more business.”

Interestingly, customers who appear to be unhappily “headed for the door” may not always be lost. It may be possible to keep them from bolting. In the survey, 52 percent of respondents said they’d be willing to continue their business if a discount of 5 percent or more was offered! 

We’ve always known that the customer’s good experiences with our dealerships and the products we sell them have been the first building block of customer loyalty and repeat business. As an industry, we have been making customer service our highest priority in recent years. But, it never hurts to be reminded of these basic facts through studies and surveys that reconfirm it all for us.

Here’s today’s “How I Discovered Boating” video. Enjoy: http://www.youtube.com/watch?v=_4qcnT9IB3Q

Comments

4 comments on “Will customers pay more for a positive experience?

  1. Jim

    Having grown up in the marine business I have seen the issue of “customer experience” raised in every form imaginable. Todays buyer expects, or maybe assumes, that their buying experience will be, at minimum, satisfactory. Given that assumption price still becomes the deciding factor unless the dealership personnel really makes a lousy first impression. Todays customers know that they are supposed to value the dealer relationship so any survey results today are skewed by years of survey analysis, reporting, and advertising. In short we are surveyed to the point that surveys are of limited value. I believe that an “in field” survey of Industry Certified dealers (of which we are one) would show that today it is all about price. I also believe that this is a temporary anomaly due to the excess and distressed inventory available – “deals too good to pass up”. In a normalized environment the dealer relationship will become more important again

  2. Jeff Siems

    I think you will have both the price shoppers and the type that understand the value of a dealership. I see their being more price shoppers in years to come. We are already seeing it with the internet, where customers will shop you vs any dealer selling the same brand within 500 miles of you. They will travel to save a couple hundred dollars, not realizing the value of the local dealer. I hear it from dealer meetings from all four brands that I sell. From my prosective, the customers that understand the value of a dealership and allow us to work with them seem to have a more positive experience in boating.
    I think most people want the perception of paying less, really at any cost. I have sold a boat to a customer that lived 500 miles from me and saved $200.00. Yes he saved that money on the boat, but it cost him more in gas and time to pick-up the boat. We have people that will drive 3 miles down the road to save a $1 to purchase an item at Bass Pro Shops. We have people that will buy the same item online that initially is less expensive, but when you add shipping onto the price is more expensive.
    We all receive the phone calls from customers only wanting to know our price for our 18-20 runabout or pontoon. They don’t want to know the brand, or engine size—The true price shopper.

    On the flip side, the customers that allow us to sell them the correct boat and accessories for the particular activity they want to do on the water, or allow us to perform the correct maintenance that their boat needs are less likely to have the on the water frustrations and have a more positive boating experience. This seems to be the customers that are buying their second boat, and understand the value of our knowledge.

  3. arch

    JIM is dead on here. But something I didn’t see in the article is this. PEOPLE DON”T KNOW WHAT KIND OF SERVICE THEY ARE GOING TO GET WHEN THEY DECIDE TO BUY. They buy on price most of the time. Then they find out what kind of service they are going to get. The article doesn’t mention t his very important fact. Now, there are exceptions. People will go back and buy from dealers that provided excellent service in the past, or one that is referred to them by a friend, but they won’t pay much more for it.
    There are exceptions….such as Marine Max. IN their case, it’s product and marketing that brings them in the door.

  4. Sunshine State

    A vessel transaction is “hands on” and therefore presents a dandy stage for creating customer loyalty.

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