May 22, 2023

Traditional customer service wisdom says you should direct your resources towards unhappy customers. In this increasingly social age, one or two bad reviews can have a disproportionate effect on your business. But Alexis Allen’s research shows, as the popular meme says, “You’re Doing It Wrong.” 

“If you look at the financial data, you find that the highest value customer is one that is ‘highly satisfied’,” she explains. “But many companies invest most of their resources in people they have no hope of ever raising to the ‘highly satisfied’ level.” 

Making the shift from defensive marketing, where the purpose is to prevent customer defection, to proactive marketing, where companies engage in conversation to build their customer base, has a powerful effect on success. Allen, assistant professor of marketing in the Gatton College, and her co-authors examined the benefits of “extending the dialogue with customers by acknowledging positive customer feedback.” In other words, they found that it really does pay to say “Thank You.”

Developing new strategies to enhance relationships with consumers who are “already delighted” can lead to substantial gains. Allen’s team conducted a field experiment with a large, upscale restaurant group that sends surveys to all their customers. A “treatment group” of customers who gave top scores to the restaurant were sent a “thank-you” email from the president of the company, while a control group was not. 

After tracking the customers’ subsequent visits to the restaurant for 12 months, the researchers discovered that those who received the “thank-you” message increased their spending by 51% over those who did not.

And they even found this doesn’t cost the company more than the price of an email; adding a reward coupon to the note had no effect. “This suggests that sincere, simple gestures are enough to drive feelings of gratitude among customers,” Allen says.

The team continues to work with the restaurant company as it implements this research into its brand. “Because of that relationship, we’re getting more data and pinpointing ways to improve, such as the ideal time to send the ‘thank-you’ for the most effective response,” says Allen. “It’s awesome to see them actually using our research.”