Insights from MSI

The Value of Saying “Thank You” to Satisfied Customers

“If it ain’t broke, don’t fix it.” Leaving well enough alone seems to be the prevalent thinking today among firms with regard to their satisfied customers. While many service companies solicit and are pleased to receive positive feedback regarding their services, they see no reason to take further action with regard to happy customers. New research has shown, however, that responding to positive feedback may build stronger relationships and encourage greater business.

In their study, “Managing Post- Purchase Moments of Truth: Leveraging Customer Feedback to Increase Loyalty,” Clay Voorhees, Michigan State University, Paul Fombelle, Northeastern University, Alexis Allen, University of Kentucky, Sterling Bone, Utah State University, and Joel Aach investigate the effect of acknowledging positive customer feedback on future customer patronage and perceptions of communal relationships with a firm.

Extending the dialogue

“We talk a lot about ‘moments of truth,’ those critical encounters that significantly affect customer impressions,” says Voorhees. “We thought that positive feedback from satisfied customers gives firms an opportunity to create a new moment of truth, one most firms are failing to capitalize on. More specifically, we asked whether a firm ‘extending the dialogue’ with its most valuable customers increases retention, positive word-of-mouth, and profitability.”

In a field experiment, the authors collaborated with a large, upscale restaurant group renowned for its excellent service and customer experience. This group tracks customer patronage through online reservations and surveys all customers within twenty-four hours of their dining experience. From a pool of customers who gave their restaurant experience the top score possible in all categories, the researchers sent a “treatment group” an email from the restaurant group’s president thanking them for supporting the company and taking the time to complete the survey. This group received the thank-you note within a week of submitting their responses. The control group of subjects did not get this acknowledgement.

Two weeks after their restaurant experience, both groups were sent another short survey that measured the strength of their communal relationship with the restaurant (i.e., the extent to which consumers would go out of their way to support the restaurant in the future) and the likelihood of them visiting it for their “next important dinner at an upscale restaurant.” The authors then tracked the patronage of all subjects for twelve months.

“We found that acknowledging positive customer feedback had a powerful effect,” Bone observes. Specifically, in the year following the acknowledgement, the subjects’ patronage was 51% higher than that of the customer group that did not receive an acknowledgement following their survey. “In short,” says Aach, “both men and women significantly increased their business with the restaurant after the acknowledgement. And interestingly, we also noted an increase for the women in how positively they perceived their relationship with the brand.” The males in the subject group did not exhibit this result. The researchers ascribe this to the restaurant already having a “strong masculine brand personality.” So the moment of truth created by the thank-you email, as Voorhees describes it, “gave the firm an ideal way to strengthen its connection with female guests without damaging the connection with its core male customers.”

Timing is important, but rewards are not

Also as part of their research, the authors conducted an online simulation that suggested that the benefit from the acknowledgement decreased if it arrived too quickly following the submission of the survey. They also discovered that adding a reward to the thank-you note did not increase or decrease the subjects’ gratitude for the acknowledgement. “The fact that social or financialrewards had no significant impact,” explains Allen, “suggests that sincere, simple gestures are enough to drive feelings of gratitude among customers and that offering a reward might even ‘cheapen’ the acknowledgement.”

“By acknowledging pleased customers with an expression of gratitude, firms can encourage repeat business and draw in additional customers.”

The results of these two studies indicate that managers of firms that provide exceptional service can enhance customer relationships by responding to positive feedback. To that end, the authors offer several recommendations. For example, for those managers who actively solicit and collect feedback from customers, it is critically important to respond to the highly satisfied customers in addition to the dissatisfied ones. “By acknowledging pleased customers with an expression of gratitude,” Fombelle observes, “firms can encourage repeat business and draw in additional customers through positive word of mouth.”

The authors also advise managers to target their positive feedback carefully. “One interesting takeaway from our research,” Aach notes, “is that, in our restaurant setting, acknowledgements strengthened patronage for both men and women, but the communal relationship only increased for women.” This suggests a bigger return when targeting women, but this effect may not be universal across all firms. “The fact that the relationship only increased for women is likely due to softening the strong masculine brand personality in the focal restaurant context,” explains Fombelle, so activating preferential targeting to women may not make sense for all firms. However, the idea that customers will react differently to acknowledgement suggests all firms that pursue this strategy should segment their customers and identify the best targets for these gestures of goodwill to maximize the return on these initiatives.

“Overall, our results demonstrate the powerful effects of crafting and managing new moments of truth during and following customer experiences,” Voorhees concludes. In this case, creating an unexpected and pleasing moment of truth by acknowledging positive feedback improved relationships and increased spending among a firm’s most satisfied customers. What this means is that firms that move beyond an “if it ain’t broke, don’t fix it” attitude toward customer relations to one of “if it ain’t broke, you can still make it better” stand a very good chance of improving their customer retention and increasing their business.

By Kim Pederson

Managing Post-Purchase Moments of Truth: Leveraging Customer Feedback to Increase Loyalty
Clay M. Voorhees, Paul W. Fombelle, Alexis Allen, Sterling A. Bone, and Joel Aach (2014)

Insights from MSI, 2015, Issue 1

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