Posts Tagged ‘Customer Loyalty’
Wednesday, September 1st, 2010
Often times when companies have to squeeze the financial belt, developing employees and creating future leaders gets pushed aside. However building a sustainable company requires having a leadership growth and succession plan in place at all times.
In a recent study conducted by OI Partners, the data indicated that 54% of the companies surveyed do not have enough leadership successors in place and 14% of the companies are not sure if they have enough leadership successors in place. These findings confirm that many organizations are not prepared for the future, which means their organizations are not as sustainable as current management may believe. Closing the knowledge and talent gap needs to be a management strategy during good or interesting times in business.
The benefit of investing and growing employees for the future provides staggering long-term results for the entire organization. Some of the outcomes of employee development management should never lose sight of include:
- Maintaining or growing competiveness in the market
- Sustaining or increasing overall employee and organizational performance
- Building capabilities required to win when business circumstances change
- Sustaining the organization’s culture
- Shortening the time needed for an employee to make an important role transition
- Building strong leaders breeds sustainability
- Creating strategic alignment between the strategy, the employees, and the internal processes
- Innovation
- Creating loyal employees which in turn helps create a loyal customer base
The last point listed is particularly important. Revenue and profitability, albeit critical, are predictors of past decisions. Creating and growing a loyal customer base is a predictor of future success and sustainability. A key to creating and growing a loyal customer base is creating loyal employees. An employee’s loyalty to the organization is enhanced by working with each individual to create a personal development plan. Tim Shoonover, Chairman of OI Partners, said in a recent article “To sustain growth in your company, there must be a path to leadership. If an employee doesn’t have a leadership development plan in place and isn’t able to see her career progression she is less likely to be engaged or to expend discretionary effort.”
Right now organizations have a bit of an advantage, as employees are not as quick to pursue new career opportunities. But as economic conditions improve, disengaged employees will begin comparing and perhaps looking for new career opportunities. Therefore, creating and committing to an employee leadership and development plan is not only critical to organizational success it also plays a significant role limiting employee turnover to a minimum.
Employees who see a commitment to their growth and development are employees who give the organization 110%. That extra 10% is where innovative ideas come from that could propel your organization to new heights. What is creating an employee development process worth to your company?
Here are some questions that may be useful as you review your company’s employee development strategy.
- If you had to fill a key leadership position in your company tomorrow, is there someone ready and able to fill the position? Are you confident he/she has the right skills, knowledge, and attitude or are you guessing?
- Does your organization have a published employee development plan?
- Do you or your team of managers have a documented development plan for each employee they manage?
If any of your answers to the questions listed above cause you concern or you just do not know the answer, then perhaps it is time to make employee development a priority. The sustainability and success of your organization depend, on it!
Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in helping businesses achieve sustainable results through leadership development and executive coaching. For information on creating a leadership succession plan visit www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.
Tags: Customer Loyalty, employee loyalty, future leaders, Leadership, leadership succession, OI partners, Succession, sustainability
Posted in Customer Loyalty, Leadership, Succession | No Comments »
Wednesday, June 9th, 2010
 Significant changes in customer retention rates have resulted in extraordinary improvements in profitability. One survey found that a 5% increase in customer retention consistently resulted in a 25% to 100% increase in profits. These almost unbelievable results would suggest that there must be a powerful force, (your emotional connection to your customer) which needs to be understood and effectively managed.
Creating a new business model that focuses on loyalty would then suggest, in fact, a linkage between all elements of a business system: your employees, customers, and investors and the generation of profits. Providing customer value begins with a management philosophy that supports the cultivation of strong customer relationships and is implemented by having properly trained and motivated employees who know how to deliver value. Research has shown that customers who have an emotional connection and feel valued will repeatedly come back and do business with your organization as well as provide a strong referral base for new customers. Loyal customers repeatedly purchasing your product or service are what generate sustainable business growth and profit. However, your practices and processes that generate loyal customer relationships must be in place before you will begin to see a profitable impact. This model does not work in reverse, although many organizations by their actions appear to think the reverse is possible.
This new business model is important because it initiates a series of steps that can cascade through an organization as follows:
- Revenues and market share grow as your best customers (loyal customers) build repeat purchases and recommend you to others who also become loyal.
- Employee retention increases due to job pride and satisfaction, which in turn creates a loop that reinforces customer retention through familiarity and better service to the customers. Customers like doing business with people they know and your employees want to do the right things because it makes their job easier and far less stressful.
- As costs go down and revenues go up, profits increase. Improved profits provide resources to invest in employee development and compensation (further increasing retention), and in new features and products that enhance customer value. Profits are important not just as an end in themselves. They also allow the organization to improve value and provide additional incentive and reasons for employees, customers, and investors to remain loyal to your organization.
- Costs begin to shrink as the expense of acquiring and serving new customers and replacing old customers declines.
This loyalty model effectively provides insight to success versus failure in any organization. It is clear that the companies or organizations with the highest retention rates (retention of loyal customers) also earn the highest profits and maintain viability. As mentioned earlier, loyal customers reduce cost. In one study, it was found that in most service organizations word of mouth advertising accounted for one-third to one-half of all new customers. Relative customer retention also explains bottom line implications better than market share, scale, cost position, or any variables usually associated with a competitive advantage.
So what can you do differently for your business? Perhaps a good place to start would be to find better ways to create and sustain a loyal customer base. While there will be an investment, the advantages will be enormous for your customers, employees, and investors. Strictly from a financial perspective, revenues increase from improved service quality tend to be 10 to 20 times the costs associated with fixing the problem. What strategies do you need to implement today?
Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in helping businesses achieve high levels of excellence and success by adopting customer loyalty strategies as a critical success factor of organizational success. Learn how at www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.
Tags: Customer Loyalty, customer retention, emotional connection, employee retention, margins, profits, RAC, Resource Associates Corporation
Posted in Customer Loyalty | 1 Comment »
Thursday, May 20th, 2010
In his book, The Ultimate Question, Fred Reichfield (www.theultimatequestion.com) suggests a simple measurement to determine customer loyalty. His contention is that you have three types or levels of customers resulting from their experience with your organization. Determining which category each one of your customers falls into can be measured by asking one question, “How likely is it that you would recommend us to a friend?” If the responses were sorted on a scale of 1-10 with 1 being ‘not at all likely’ to 10 being ‘extremely likely’, the responses of 9-10 are your loyal customers and provide you with the best word of mouth advertising; 7-8’s are generally not excited about their experience but found their experience to be okay or average; while anyone rating their experience as a 6 or lower is clearly not happy with their experience and may even be angry.
Here is how it ties directly to your revenues and potential profits.
Your Loyal Customers (9-10) are those who are absolutely delighted with your products or services and their experience during the entire purchasing process and follow up. These customers will promote your organization through word of mouth (referrals) and will repeatedly purchase your goods or services. They are your loyal customers.
Your Neutralizers (7-8) are those who are unenthusiastic about their experience with your organization, not totally turned off, but not enthusiastic about it either. They are open to buying from your competitors or perhaps you if the right promotion or situation arises. They are your Neutralizers.
Your Diminishers (0-6) are those customers who are unhappy enough with their experience and with your organization to actively look for an alternative source for your products or services which immediately costs you a revenue opportunity. Your diminishers will raise expenses because now you need to spend more on marketing or advertising. They are Diminishers because they not only will not come back, but they will also actively try to take others with them.
Identifying the percentage of your customers who fall into each category: Loyal, Neutralizers, and Diminishers provide you with metric that will indicate future strength and direction for your organization. We call this metric the Customer Loyalty Score or CLS (http://www.resourceassociatescorp.com/blog/category/customer-loyalty/)
This one simple metric can provide you with an indication of your long-term future because this formula is an absolute predictor of your customers’ future purchasing behavior as opposed to their opinions which are collected through a traditional satisfaction survey. If your customer loyalty metric is going down, your future is not strong and proactive decisions may be needed. If this metric is going up, so will your profits and long-term growth. This metric can be to customer relationships, as an organization’s net profit is to financial performance. This single metric can for the first time provide a target for management and the entire organization to focus upon as an indicator of your business’ growth. No longer should it be the goal of business to only satisfy a customer, but rather it needs to focus on how to make loyal customers for your business!
Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in helping businesses achieve high levels of excellence and success by adopting customer loyalty strategies as a critical success factor of organizational success. Learn how at www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.
Tags: advertising, Customer Loyalty, diminishers, marketing, neutralizer, RAC, Reichfield, Resource Associates Corporation, The Ultimate Question, word of mouth
Posted in Customer Loyalty | 1 Comment »
Wednesday, April 28th, 2010
After running several errands, my husband and I stopped at a local chain restaurant for dinner Monday evening. We typically eat at the bar as there are several TVs lining the header of the bar, and its provides a great way to catch up on the day. We noticed very quickly that the service was slow, but we waited patiently for the server to move in our direction. As we waited, I started observing the bar area and there was one server handling the area. The bar area seats 30 people and there were 15 people seated in the bar totaling 9 parties. It was clear from the body language of the server that she was growing frustrated. The server made her way to us and took our drink order, gave us menus, and proceeded to tell us that she was swamped based on the number of people she had to take care of leaving us with the underlying impression that the service was not going to get any faster or better. I watched her communicate the same message to the rest of the parties sitting at the bar as she served drinks and took orders. (By the way, she never delivered food. Another server from the kitchen delivered the food when it was ready. And, her customer population did not grow the entire time we were there.)
Talk about setting up expectation! I looked at my husband and asked him, ‘Wonder what she would do or say if she had a full bar of customers to serve?’
Often times in the restaurant industry customers make an immediate contribution to a server’s compensation. I wonder if in any of this particular server’s training anyone shared that concept with her. Her attitude and behavior clearly communicated that the 15 of us were too much for her to handle and quite frankly an inconvenience to her evening.
This story is an example of situations that happen every day and it is unfortunate on two levels. The customer expectations were not met let alone exceeded impacting our decision to return and the server dramatically impacted her financial success based on her own inappropriate attitudes and behaviors. Not a good experience for the customer, a possible loss of the customer for the restaurant, and a personal financial loss for the server.
There are two great articles in the March issue of T&D magazine highlighting Chick-fil-A’s views on developing employees, developing future leadership, creating customer loyalty, and being innovative. Dan Cathy, the company’s COO states, “Our sole source of capital is customers. That’s it.” Chick-fil-A has reported their 42nd consecutive year of sales growth and the restaurants aren’t open Sundays.
I don’t think it really matters if we are talking about restaurants or any other industry. Dan Cathy is correct. Customers are every business’s sole source of capital. Every team member and every contributor inside your organization directly impacts your organization’s relationship with your customer. The culture of true customer service and creating customer loyalty is in Chick-fil-A’s heritage.
What does your organization need to do or do differently in order to create an organizational value of exceeding your customer expectations and creating a loyal relationship? Have you ever quantified the financial benefit to your organization? I encourage you to evaluate the answers to these two questions, as it may be an enlightening exercise!
Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in helping businesses achieve high levels of excellence and success by adopting customer loyalty strategies as a critical success factor of organizational success. Learn how at www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.
Tags: ASTD, capital, Chick-fil-A, communication, Customer Loyalty, Customer Service, customers, Dan Cathy, RAC, Resource Associates Corporation, server, T&D Magazine
Posted in Customer Loyalty | 1 Comment »
Wednesday, April 14th, 2010
Perceived value as defined by customers creates loyal customer relationships, and customer loyalty is the best predictor of your future strength and growth potential.
The value you provide to your customers is always compared to the value your competitors provide: therefore, value is your customers’ perception relative to similar products or services in the marketplace—your competitors.
Perceived value occurs at the intersection of what customers want and what they get from you versus what they could get from your competition. You can only sustain customer loyalty by continually meeting your customers’ product/service qualifications, specifications, or expectations. You also need to meet their needs in the order that customers deem important while maintaining a favorable comparison between you and your competition. In your marketplace, your competitors are the alternative suppliers your customers use to form their comparative value perceptions. How would your customer define perceived value?
For example if your customers expect your product to perform error free, to be delivered on time, to be supported by timely and personal technical support, and to be properly billed at a fair price, you must be good in all categories to get an “A,” and you must be at least as good as your competitors. If you deliver a product that meets all of their design specifications but are unable to provide personal technical support, you failed in meeting an important criteria; therefore, the perceived value will decrease. For every mark you miss, the value as defined by your customers decreases and you slowly lose the ability to develop a loyal customer relationship. To create and sustain loyal customers it is necessary to consider every contact with each customer as an opportunity for you to provide value—every time. Every service point is critical and every service point has a level of expectation from the customer that must be understood and managed. We call these contact points—points of connection.
Every point of connection gives your organization the opportunity to emotionally connect with your customers. Your customers will judge your value and their emotional tie at every point. Developing and implementing a strategy of creating a consistent emotional connection with your customer creates value, which creates loyal customer relationships.
We know that loyal customers will always return to purchase your product or service, which create a long-term stream of revenue. Another advantage of loyal customers is that they will consistently boast about your product or service creating the most effective and least expensive form of advertising for your organization. Additional advantages of developing a loyal customer base is their willingness to pay more for your product or service, and they are also more forgiving when your organization makes a mistake. Why? As loyal customers, they trust your organization and have faith that you are fair.
Making the strategic decision to create a loyal customer base is one of the most important commitments you can make to the success of your organization. Your individual contribution is also a large part of that success.
Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in business and management consulting, strategic planning, leadership development, executive coaching, and youth leadership. For more information visit www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.
Tags: competition, Customer Loyalty, Customer Satisfaction, customer value, perceptions, points of connection, RAC, Resource Associates Corporation, success, supplies
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Thursday, January 14th, 2010
As a business we help companies adopt and implement customer loyalty as a management strategy, and we help employees inside those companies understand how they impact the success of loyal customer relationships. Therefore, I am acutely aware of service interactions—the good and the bad.
After my early gym routine this morning, I had a window of time to run across the street to the grocery store. It was approximately 7:20 a.m. and my goal was to pick up some necessities for the week. Based on how the store is laid out, my first stop was the deli. As I waited, because there was no one currently staffing the deli, I observed five staff members in the bakery, the produce section, and the floral department taking inventory, stocking produce, rearranging displays, and discussing certain NFL teams and their playoff status based on yesterday’s games. As I stood there patiently waiting to be helped, none of the five folks who could physically see me thought it important to go find someone to fill my deli order. Their priority was stocking and rearranging. After about five minutes a young lady appeared. She did not say good morning, Happy New Year, or make eye contact. She proceeded to put on her sanitary gloves and asked, “What can I get for you?” She filled my order and sent me on my way with a thank you.
The essence of customer loyalty is all about the points of connection—every single touch point your employees have with every customer. In my seven-minute deli experience there were at least 15 points of connection that were missed or poorly executed. Five staff members watched me wait in front of the deli counter and none of them took the time to acknowledge my existence or offer to find someone to assist me. In my opinion, this earns double demerits because they could clearly see I wanted something from the deli and did nothing about it. (10 points of connection missed). The lady working in the floral area took the time to talk with a bread vendor in lieu of offering assistance (1 point missed).
When the young deli worker appeared there was no eye contact and there was no greeting (2 points missed). Her attitude was lackluster at best. She really did not appear pleased to be at work serving a customer (1 point missed). As she was completing my order another customer appeared and her opening line was “What can I get for you?” with no additional pleasantries (another point missed).
Points of connection define the customer experience and determine how a customer rates their service and how they ultimately rate your business. Your business is dead without customers. Adopting customer loyalty as a management strategy is critical to the success of business and industry in our ever-growing service environment. If you want to make a significant difference in the results of your business for 2010, I would strongly encourage you look how customer loyalty is defined in your organization. I am confident that the five staff people watching me wait for assistance are not bad employees and they were genuinely “doing their job.” However, I am also confident store management does not embrace customer loyalty practices or my early morning shopping experience would have been quite different. Unfortunately, my experience with the deli that morning is not my first.
Why do I continue to shop there? It is the closest store to my home and office. However, next closest store is only about 3 miles further and I have decided to break my habit and investigate the other store. If their services prove to be better my current store will lose a 5-year, weekly customer. By my conservative calculations that nets approximately $20,800 worth of business.
Take a serious look at your organization’s customer loyalty standards, practices, and measurements. No business in today’s ever changing economic world can afford to lose a customer because of non-existent or inappropriate points of connection.
Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in business and management consulting, strategic planning, leadership development, executive coaching, and youth leadership. For more information visit www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.
Tags: attitude, Customer Loyalty, Customer Satisfaction, Customer Service, Management, points of connection
Posted in Customer Loyalty | 4 Comments »
Tuesday, August 18th, 2009
In a quest to maintain market position, business leaders are realizing that one of the areas where they can improve profits, as well as market position is by creating a customer-driven organization.
A customer-driven business is one that has recognized that an autocratic, top-down structure must be inverted to put the focus on the customer who is now the driving force. All of the plans and people in your organization need to be focused on the most important person—the customer. Focus is no longer on customer satisfaction. Today’s focus is on exceeding customer expectations as customer service is expected.
Becoming a customer driven business requires the efforts of everyone pulling together with a clear focus on the vision of the organization and the mission at hand, all of which must focus on exceeding customer expectations. Your leadership must ensure that this value is articulated, which helps you create a culture that is solidly entrenched in achievement, continuous improvement, and customer focus. An organization can only survive if customers are satisfied and will thrive only if their customers are delighted which creates customer loyalty.
Create customer loyalty by going the extra mile for your clients. Look not to satisfy them, but to exceed their expectations. Do more than they expect and you will delight them. Word of mouth advertising is still the most powerful advertising available. Delighted customers tell others who, when delighted, will tell others and so on and so on.
Consistency is also important. Many businesses are very accommodating with a new customer, but tend to get lazy as times goes on. They focus on getting new business (which costs five times as much as keeping a customer) instead of revitalizing and improving existing business. As a result, they fail to maintain their service standards with existing customers. Research also shows that 70% of the customers that take their business elsewhere do so because of poor or rude service.
Nothing is more important to an on-going business relationship that honesty and integrity. Live up to and exceed promises made to customers!
Tammy A.S. Kohl is President of Resource Associates Corporation. For over 30 years, RAC has specialized in business and management consulting, leadership development, executive coaching and youth leadership. For more information visit www.resourceassociatescorp.com or contact RAC directly at 800.799.6227.
Tags: Customer Loyalty, driven, exceed, profits
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Tuesday, August 18th, 2009
Holding on to a customer has never been harder.
In today’s ever changing service arena the key to winning customers has nothing to do with price or even product. It’s emotional connection. In the past measuring customer loyalty was a challenge mostly because organizations didn’t understand loyalty. We now know that loyalty is tied to consistent and positive points of connection. Because emotions are perceived as soft, messy, and hard to deal with, emotions make many organizations nervous. Organizations can’t ignore this critical ingredient anymore because the emotional connection with a customer is the basis for creating and building customer relationships.
How can we measure the emotional effect on loyalty? The Gallup Organization suggests using measurements that assess things such as overall brand loyalty, confidence, integrity, pride and passion for the brand. The brand can be the company’s name, its products or services, its people, its policies, etc. Although many of these areas refer to the products or services, connecting with a service provider has a huge impact on the customer’s perception of the brand.
If you want to find out who your loyal customers are, find out how likely they are to recommend your organization to someone else. Remember, one of the key measurements of loyal customers is their desire to recommend your organization. There is a direct and strategic correlation between an organization’s revenue growth and its customer loyalty score.
How does your organization’s measure customer loyalty score?
Tags: Customer Loyalty, measure, poc, points of connection, score
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Tuesday, August 18th, 2009
Have you ever been to a retail store where someone was helping you and then the person disappeared? When you asked someone else to help you and his or her response was, “Is someone else taking care of you?” You answer, “Yes, but he seems to have disappeared.” The response often is, “Well if he is helping you, then I can’t.” You are stranded in the zone of service provider indifference probably getting more frustrated by the minute.
The emotional state of your service provider will always influence the outcome of the service interaction, and emotionally positive points of connection are the best predictor of Customer Loyalty. Have you ever thought about the criteria your customers use to evaluate positive service interactions with your organization? According to Zeithaml, Parasuraman, and Berry from their book, Delivering Quality Service, there are five key areas Customers use to evaluate service.
Reliability. Can Customers depend on the organization to accurately and dependably provide service to them?
Assurance. Do the service providers convey confidence about their product or the service, and do the Customers trust the service provider?
Tangibles. This deals specifically with the appearance of the service area, the store, the lobby etc., and the appearance of the customer service provider. Is the environment pleasing and appropriate, and is the service provider dressed appropriately, smiling, warm and genuinely open? If interacting with customers via the phone obviously smiling, tone of voice, and listening intently will create positive points of connection with Customers.
Empathy. This is the strongest skill that demonstrates if a service provider genuinely cares.
Responsiveness. This involves the ability to provide prompt or timely service, and measure the willingness of the service provider to help Customers.
If points of connections are positive, chances are the Customer will return. If the points of connection really made an impact and provided value to the Customer then there is a much greater chance the person will become a loyal Customer … and loyal Customers positively impact the bottom line!
Do you have processes within your organization that provide you with the ability to monitor and measure every point of connection in your service cycle? If not, start now!
Tags: creating, Customer Loyalty, loyal, measure, measuring, poc, points of connection
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