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Defining Customer Loyalty
In the 1980’s results from a
survey involving a variety of industries were reported by the
Sales and Marketing Executives International.
Reportedly, customers stopped
buying from their current vendors for a variety of reasons:
- 1% die
- 3% move away
- 5% form other interests
- 68% leave because of poor
customer service.
Reportedly,
they experienced disrespect, thoughtless behavior, apathy,
complacency on the part of the members of the vendor’s company
with whom they had contact. Many market researchers often refer
to these results.
In the 1990’s,
the White House Office of Customer Affairs reported that 96% of
customers who are dissatisfied with service switch to different
providers and vendors. They do NOT complain, they merely switch.
This seems to mean that for every one complaint a company
receives, there are possibly over 20 silent complainers who are
dissatisfied and will, most likely, sever business relations.
For these
reasons as well as other research pointing to the differences
between satisfaction – dissatisfaction - loyalty in customers,
it is most important that every business and professional
organization become proactive in the systems they have built
into the heart of their organizational operations to serve
customers with speed, gentle care, and with pleasure and
respect. The ‘customer comes first’ should not be viewed with a
‘no matter’ attitude; it should be viewed with ‘it does matter’
attitude. After all, who really provides funding to pay bills,
meet payrolls, helping you to invest in growth and the future?
The customer! (For the sake of expediency, let’s use only one
term to stand for all other possible users of different business
and professional organizations goods and services, such as
patients, clients, shoppers, students, consumers, buyers,
constituents, etc.) Every company must build customer servicing
into the heart of its organization and not include it as an
afterthought.
As Tom Peters and Nancy Austin (‘A Passion for Excellence”)
wrote: “…price will bring shoppers, but not customers. In the
long run, creating lasting relationships, partnerships with
customers will have greater impact on buying decisions than will
price…”
What is the difference between loyal and satisfied customers?
Harvard Business Review in the 1990’s reported that 60 to 85% of
those questioned companies (in a variety of industries) that
recently changed from their current vendors (in different
industries) said that they were satisfied before they switched.
Although there
seems to be a high correlation between high levels of
satisfaction and your customer’s share of spending on your
company’s products and/or services, they still may switch.
Although there
seems to be a high correlation between high levels of
satisfaction and your customers’ number of referrals they make
as well as the amount of money they are willing to spend,
satisfied customers are still open to change and hear from other
vendors.
However, loyal customers buy from you and you only. They have no
intention to change in the future. They include a budget portion
for your company and the products and/or services you provide.
They are more likely to give feedback and complaints. They are
committed to this business relationship. Loyal customers cost
less to service, and require shorter lead times in which to
decide to give additional business to you.
What can we
do to create greater customer loyalty?
Build the kind
of culture in which all members of your business organization
(from receptionist to sales and marketing to billing to
management to shipping to maintenance, etc. are oriented to
being part of customer servicing. Create the kind of business
culture that not only emphasizes the values of your products and
services, but also, shows that you are interested in building
long-term relationships rather than maintaining short-term
transactions. Build and maintain this business culture with two
prongs or sides to it:
1. The Business
Side: that focuses on organizational systems, product research
and development, distributing, advertising, marketing, pricing,
selling, problem-solving, inventory, auditing.
2. The Human
Side: that focuses on person to person interactions,
relationships (internal, external, intra-department,
inter-department), complaint handling, follow-up strategies,
feedback and needs assessments, competent expertise in human
relations. It is at this level that all members of the business
organization know how to interact effectively with consumers
directly and indirectly and work with each other as a team. The
words “that’s not my job” are never thought nor spoken. The
result is a well-oiled, efficient business team.
What do you mean by complacent companies?
The dictionary meaning of complacency is: showing a feeling of
self-satisfaction. Ironically, this feeling tends to exist in
the mind and behavior of the provider and may come across to the
customer in the form of: disrespect, long periods of time to
return calls, being ignored, failure to respond to messages,
curt behaviors, short tempers, etc. Hence, the unintended
message of NOT BEING VALUED OR
APPRECIATED may be received by the customer.
How do you define customer?
To create the
kind of business culture that emphasizes excellent customer
servicing, a constant showing of value and appreciation (top
motivators) must be communicated to employees as well as
prospective and existing customers. Every member of the
organization from each level of the organizational hierarchy
must respect the existence of its internal and external
customers. Once this is cemented into the heart of the
organization, training and accountable evaluations and
assessments may be offered to ensure internal and external
servicing.
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Internal
customers include anyone inside of the business organization
who depend on your job services and your effectiveness in this
role. Your internal customers may include: secretaries,
maintenance personnel, purchasers, production workers,
managers, administrators, engineers, marketing and design
employees, co-workers, sales staff, CEO, etc.
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External
customers include anyone outside the business or professional
organization who depends on you and the products and/or
services you provide. They may include buyers, shoppers,
clients, patients, students, constituents, residents, etc.
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