More cloud computing organizations are “onboarding,” implementing processes to ensure customers experience a smooth transition to their technology product or managed services right after the sale. Managers intuitively recognize the need to begin new customer relationships on a positive note.
Their instincts are well-founded. Research shows creating and maintaining positive customer experiences, especially at the very beginning, pays dividends. Ruth Bolton studied customer satisfaction and churn in the cellular phone industry1 and found:
· Negative experiences in the beginning are a major factor in short-term customer exits
· The longer people have satisfactory experiences, the less likely they are to churn
· Customers who have many months of positive experiences weigh cumulative satisfaction more heavily than any occasional, negative experiences that occur later
Researcher Ho Huy Tuu confirmed that specific factors affect the satisfaction–loyalty relationship in a combined and interactive way: 2
· Involvement: an individual’s long-term evaluation of importance and significance consuming a product
· Ambivalence: an individual’s emotions towards consuming a product (Tuu proved ambivalence was negatively correlated, i.e. Caring is the factor in satisfaction)
· Knowledge: a person’s evaluation of their familiarity, expertise performing a task, and consumption of a product in a specific transaction
· Certainty: the consumer’s confidence evaluating their satisfaction with a product
Tuu also verified that actively mitigating customer’s perception of risk is essential. Fear, he demonstrated, trumps positive loyalty gained from high satisfaction.
What’s more, along with Svein Ottar Olsen,3 Tuu confirmed the effects between satisfaction and loyalty are nonlinear—at high levels, small increases in satisfaction have a disproportionate impact on customer loyalty. That means there’s no point of “diminishing returns” when it comes to continuous improvement; above certain levels, loyalty impact from customer satisfaction multiplies. They suggested offering ‘delight’ or ‘exceeding expectations’ explains these nonlinear loyalty behavior effects.
Research shows cloud computing companies are on the right track; onboarding is indeed an important strategy for reducing customer churn. An effective process engages the customer, increases their knowledge, and gives customers reasons to care about the product and the people behind it. Orientation should not simply be a “data dump” of technologies and product features—feelings matter! Companies should pay close attention to allaying customer fears, such as emphasizing data security, privacy, system reliability, and responsive support. To put the customer experience into orbit, companies should surprise customers, showing them extra benefits in exceptionally positive, personal interactions. First impressions linger, and maintaining and improving service increases customer certainty, reducing the potential for customer churn down the road.
Footnotes:
1. Bolton, Ruth. “A Dynamic Model of the Duration of the Customers’ Relationship with a Continuous Service Provider: The Role of Satisfaction.” Marketing Science, Volume 17, No. 1, 1998
2. Tuu, Ho Huy. “Moderators in the Relationship between Satisfaction and Loyalty of Vietnamese Fish Product Consumers,” a thesis for the degree of philosophiae doctor, University of Tromsø, February 2011.
3. Tuu, Ho Huy, and Olsen, Svein Ottar. “Nonlinear Effects between Satisfaction and Loyalty: An Empirical Study of Different Conceptual Relationships,” Journal of Targeting, Measurement and Analysis for Marketing Vol. 18, 3/4, 239–251. 2010 Macmillan Publishers Ltd. 0967-3237