It’s not unusual for new customers to have lower scores than expected—but it can seem counterintuitive. After all, they just selected your company – why are they so low? You’ve gone through and removed barriers, but your customers aren’t showing the love.
It might not be what you’ve done. The problem may be their reference point.
The more time you spend in a company, the more your perspective shifts. We all try to maintain the “beginner’s mind,” where we see things as if they were fresh.
But here’s the thing. Your customers don’t really have a beginner’s mind, either. They don’t actually judge your experience on its own merits, but by a separate reference point – one you might be aware of.
In the Harvard Business Review article “Eager Sellers and Stony Buyers,” John T. Gourville writes, “Consumers evaluate new products or investments relative to a reference point, usually the products they already own… [They] view any improvements relative to this reference point as gains, and treat all shortcomings as losses…” He also reminds us of that “Losses have a far greater impact on people than similarly sized gains.”
In other words, customers may be rating you low not because of what you do – but because of what they had to give up in order to select you.
One exercise we take our clients through is asking, “What do customers gain by selecting you?” We follow this with, “What do they lose?”
We find that brands have a biased viewpoint – they focus on rational features and product specs. But customers focus on the experience.
If your new customers aren’t showing the love, it might not be about your product as such – it may be about what they’re giving up from their previous experience.
This is especially true in B2B relationships. New customers face inevitable tradeoffs between your experience and what they’re used to. From your viewpoint, these tradeoffs aren’t a big deal. Sure, your interface isn’t quite as simple, because you provide so many more options. Or perhaps your customers have less flexibility, because you’ve simplified the process.
You see the gains. But Gourville’s research shows that executives overestimate the value they offer by a factor of 3. You see the potential – but you’re looking through rose-tinted glasses.
Your customers see it differently. Biased by previous experience, they enter the relationship tentatively, using their previous experiences as their reference point.
Even if they never used your competitor, they’re using something as a benchmark. Amazon’s user interface, or something from a previous company. There’s something they’re expecting, but not getting.
So, what do you do about it?
- Learn new customers’ reference point. For one B2B relationship we studied, customers’ reference points were the incumbent. Even though out customer offered better automation – which the decision-maker wanted – the employees who used the system were frustrated because they lost control.
Another client found that their customers had no experience with competitors, which should be good. But instead, they used other suppliers as their benchmark. Our client was at parity with their competitors, but it didn’t matter – because that’s not who their customers compared them with.
A B2C client was fortunate in that their customers didn’t typically work with competitors. But then discovered that this actually made it worse, because customers then based their expectations off of other products, which had many more features.
Understanding your customers’ reference point is the first step towards improving the experience.
- Close the gap – at least partway. There’s a reason your experience differs from your customers’reference point – you offer lower pricing, more capabilities, or a completely different approach. You don’t need to mirror their reference point. But acknowledging it and matching it – at least in superficial ways – will lessen frustration. You don’t need to add significant costs – but a targeted communication or similar approach can help fill this void.
- Deliberately manage the change. If you can’t match the old experience, then manage perceptions. Once you know the reference point, it’s much easier to manage the change. You probably offer training and guides. But what we’ve found is that most of these are written in a generic fashion – now that you know the reference point, customize these to match your customers’ preconceptions. Show how things were done on the old system first – then how it’s done in your system. If you’ve ever seen an Android user try to hit the back button on their phone you know what we’re talking about. Show your customers how to accomplish those same things they’re used to doing, but with your system.
If your new customers are frustrated, look at where they’re coming from. That’s the best way to determine what you need to do in order to build their loyalty.
[Originally posted on the Heart of the Customer blog.]