The Harsh Reality:
- Each year the average company loses 10-15% of its customers;
- 84% of customers who leave, say it is due to poor service;
- On average, only 4% of dissatisfied customers tell the service provider; 96% leave with no explanation, 91% of which, leave for good.
Why Customer Loyalty?
- It costs 5 to 10 times more to attract a new customer than it does to keep existing customers.
- Just a 5% increase in customer retention typically yields 25-95% increases in profit.
Every sane company executive would raise their hand and say they believe having loyal customers is a key to business success. But what are executives really doing about it? Most will point to their customer care training or CRM system and say, “That’s how we take care of loyalty here.” Some will also point to their monthly newsletter or discount program to demonstrate their efforts. All of these are good attempts. However, when competitors can easily mirror such activities, one-way communications is simply not enough.
Fostering true loyalty and engagement with customers starts at a basic level. These three principles should guide you in your efforts to create greater loyalty and engagement within your organization. Now is the time to retain more of your customers and accelerate business growth.
These are 3 fundamental concepts related to customer loyalty that must be understood before successful relationship building can occur.
1. “WOW” your customers with greater-than-expected product/service quality.
Satisfaction is the difference between your customers’ expectations and their perceptions of your product/service performance. Know your customer’s expectations and be prepared to evolve your product. This is basic business 101, but often it is ignored. People try all sorts of loyalty and sales gimmicks, yet ignore the fundamental business concept that business exchanges need to be balanced transactions: the customer pays for something they consider of VALUE and look for those expectations to be met. Expectations of product quality come from many sources including, previous quality levels set by your organization, value propositions set in the competitive landscape, and impressions in the media.
2. Build loyalty by exceeding expectations and by creating opportunities for repeat business.
Today’s customers are quick to switch to the competition. Remember, your competitors are often just a mouse click away.
a. Be acutely responsive to customer questions, comments & complaints (yeah, that’s right, complaints.) Often, complainers are your MOST loyal customers. Its costs them time and effort to tell you how they feel and not just anyone is willing to go through the complaint process. If you resolve a complaint quickly, you can actually increase satisfaction and loyalty (i.e., the service recovery paradox).
b. Deliver products and services that offer greater value
c. Give your customers a chance to be loyal by offering products for repeat business
3. Engage your customers using several two-way communication tactics for great dialogue.
Engagement strengthens your company’s relationship with your customer by providing an open channel for communication and feedback. An engaged customer is more than satisfied and more than loyal. They go out of their way to show their association with your company. They also support you during both good and bad times because they believe what you have to offer is superior to others.
Engagement takes your customer beyond passive loyalty to become an active participant and promoter of your product. And engaged customers will want to give you more feedback – and you should be ready to handle it! All this translates into a more engaged customer who will spend more money with you over time. So how do you become a company that actively engages its customers? Follow these simple rules:
a. Listen to customer feedback from comment cards, letters, phone calls, and surveys
A simple survey of your customers is a cost effective way of truly understanding your customer’s thoughts a feelings. This is vital to an organizations ability to constantly improve their product offerings and to invest in resources that provide added value to their customers. To many customers, surveys show companies genuine interest in their thoughts and feelings, and their commitment to meeting and exceeding expectations. There are many do-it-yourself software’s available on the market that will do just fine for a simple satisfaction survey. For those serious about collecting legitimate and actionable data, you may consider the assistance of a research firm. For a small-fee, research professionals can formulate questions to ensure that statistically meaningful data can be collected.
If you are interested in attempting to create your own customer satisfaction survey, here are a few pointers:
- Make sure your surveys are short, bias-free and well structured.
- Use random sampling to gather feedback continuously without over-surveying.
- Create summaries of your results that can be displayed graphically and tracked over time.
b. Respond quickly and personally to concerns of high interest to your customers – If you respond quickly, you can actually increase loyalty. Compensating a wronged customer in a way they perceive is fair a just, can enhance the level of satisfaction and trust in that consumer to levels higher than before the problem ever happened.
c. Organize unstructured feedback for tracking and trending over time
d. Listen to your customers when they tell you about problems/concerns
e. Use statistical techniques to discover which action items will have the most impact on your business outcomes.
Statistical analysis can be a daunting task, especially for small businesses. Consulting a research firm that is highly trained in research and analysis is the best method for getting the data you are looking for.
Keep in mind, it is estimated that 70% of the reason customers leave a company has nothing to do with the product. Executives are finding that winning customers is not an outcome of product or price, but instead on the level of customer engagement, and in the end, the service they receive relative to the competition.
This may not be the easiest process to do by yourself, but stay focused and keep your eye on the goal: increasing your engagement and loyalty equals increasing profits and a strong competitive edge. Don’t feel like you need to do everything yourself. If you want to make it happen, choose a partner or vendor with the technology and experience necessary to meet your needs.