Customers are willing to pay more for a better customer experience.
It’s this simple: customers are willing to pay more for a better customer experience. For years I’ve looked at surveys that indicate customers will pay more for better service. Not one survey has ever said the opposite. We confirmed this, once again, in the 2021 Achieving Customer Amazement report. We surveyed more than 1,000 consumers and asked, “Would you be willing to pay more if you knew you would receive great customer service?”
Fifty-two percent said, “Yes!” If that’s not motivation to deliver better customer service and a better CX, then I’m not sure what is. But, I know some of you may be asking, “How much more?”
We asked about different industries, including hospitality, retail, healthcare, automotive, insurance, airlines and financial services. One in four customers is willing to pay up to 10% more in almost every industry if they know they will receive excellent customer service. The big winner is the hospitality industry, where 31% of customers will pay up to 10% more, and 10% of customers are willing to spend over 30% more.
Just a few years ago I interviewed John Venhuizen, CEO of Ace Hardware, for my book Amaze Every Customer Every Time. The information he shared was timely for the book, and as it turns out, his ideas are timeless as well. We discussed how Ace stores are recognized for a high level of helpful customer service. That’s what makes them different. They don’t just offer friendly service; they offer helpful service. Customers come in with questions about how to complete their home improvement projects. This is where Ace outshines its big-box store competitors, such as Home Depot and Lowe’s, which may be 10 times bigger in size, offer a wider selection of products, offer lower prices and outspend Ace in advertising (in some markets) by 30 times or higher.
I asked Venhuizen about Ace’s higher prices. He responded that Ace offers competitive prices, but they aren’t always the lowest prices in the market. I can live with that. Apparently, so can Ace and its customers. As an Ace Hardware customer in Seattle said in a review, “Even though the prices can be, but are not necessarily, higher … the convenience and help are worth it.”
So, customer service counts in a big way when it comes to price. And, when that service incorporates a level of convenience, the payoff is even greater. When we asked our consumers if they would be willing to pay more for convenience, the number increased to 70%.
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It might be interesting to note that income makes a difference, and common sense might dictate that. If you make more, you can afford more. On top of that, you may not be as sensitive to price if you make more money, although if that were always true, I wouldn’t see Mercedes and BMWs parked in front of Walmart—but I digress. The survey found that 50% of consumers who make less than $75K are willing to spend more for excellent service. This proves that, regardless of income, exceptional service—especially if it includes convenience and delivery—is a premium that customers are willing to pay for.
Prior to COVID-19, you could find many businesses that would deliver for free. While there were services that charged to deliver, many businesses found free delivery to be an incentive to do business with them. Today, there are surcharges and extra fees. There are also businesses such as DoorDash, Uber Eats, Grubhub and others that make their revenue based on charging for delivery. Customers want the convenience of having the merchandise or food they buy delivered to their front doors, and they are willing to pay.
Service plus convenience is a winning combination that can secure customers’ continued business. It’s a proven way to compete even if you don’t offer the lowest price.
