Common knowledge tells most business executives that happy customers are the best customers. In fact, there's even a slogan for it: "The customer is always right." But how much value does a satisfied guest actually bring to a business? There have been numerous studies done on this exact topic, and the results are pretty impressive.
Happy Guests Drive Sales
When a guest is satisfied, they'll come back. Obviously, this means more revenue for the company. However, until now, there was no quantifiable way to judge how much more these guests will spend. A study by the Harvard Business Review states that it's much higher than previously estimated: Customers who have great experiences spend roughly 140 percent more than customers who have poor experiences. Experiences were ranked on a scale of 1 to 10, and the numbers work on a sliding scale - the higher the satisfaction rating, the more the customers spend. The largest jump happened when customers were most satisfied. At a level 9 rating, customers spend about 1.9 times more than those with a level 1, 2 or 3 experience.
Happy Guests Are Repeat Customers
Studies also show that happy guests tend to be repeat customers. After all, why would they go somewhere else when they had a great experience at the last place? This is obviously represented in the sales figures above, but it has another benefit as well: It's much cheaper and easier for a business to retain customers than it is to find new ones. The White House Office of Consumer Affairs states that it costs 6 to 7 times more money to attract a new customer than it does to retain an existing one.
How Do Businesses Know If Guests Are Happy?
The statistics speak for themselves: Happy guests are valuable. But how do executives know if the guests are happy? It may be harder than you think. Ruby Newell-Legner, a customer satisfaction expert, states that businesses only get feedback from 4 percent of dissatisfied customers. What happens to the other 96 percent? Well, 91 percent of them never come back. However, that doesn't mean they aren't telling others about their experience. Though only 4 percent will tell the company, over 13 percent tell 10 to 20 other potential customers. In addition, for every negative guest experience, it takes seven to 12 positive ones to make up for it. That's why companies need to be proactive and prevent negative guest experiences in the first place.
Handle Dissatisfied Guests Before They Leave
Obviously, all negative experiences aren't preventable. The next best action is to handle the situation before the guest ever leaves the premises. This will require regular monitoring to ensure guests are happy, and it will also require standard procedures for handling complaints. It may sound like a lot of trouble, but it's much easier today than it was in the past. Thanks to technology, there are numerous ways to keep track of guest complaints, so personnel can remedy the situation immediately. There are also ways to track satisfied guests, giving hotels an opportunity to further increase revenue.
It's clear that a happy guest is incredibly valuable to any business, and that may be even more true for the hospitality industry. Hotels that strive for high customer satisfaction should implement a strategy for finding dissatisfied guests and solving the problem before it affects the company's reputation and bottom line.