Customer Loyalty: How Smart Companies Build Long-term Success
O
ne definition of insanity is doing the same thing
customer relationship building and, as a result, customer loyalty,
Judging by the way some companies relate to
alty as a way of doing business. In this context, the organization
over and over and expecting a different result.
their customers — focusing on transactions rather than relationships — the same definition could also apply to their idea of business as usual.
Customer loyalty is becoming the ultimate goal of smart
begins at the top with a philosophy of capturing consumer loy-
must be committed not just to satisfying customer requirements, but to anticipating potential problems as well as new requirements and proactively addressing them.
“Customers who are not loyal, but merely satisfied, are able
companies today. Loyalty brings a basket of benefits, including
to switch brands more quickly now,” says loyalty guru Micah
acquisition costs, greater word-of-mouth referrals and reduced
them very similar, and all of them a click away.”
lower cost of sales, better revenue predictability, lower customer risk. Yet many firms are practically stone deaf when it comes to
Solomon. “Why? Because there are so many choices, many of Solomon, author of High Tech, High Touch Customer Service,
listening to the voice of their customers. They survey consum-
says the secret to building customer loyalty comes from “antici-
business data. All in a vacuum. And they fail to put in place the
is something magical about the ability of some companies to
ers. They handle customer complaints. They collect operational management strategies and structures that make customer care an overarching way of doing business.
According to John Goodman, vice chairman of TARP
Worldwide, a firm specializing in customer experience research, only about 20 to 30 percent of companies have formal, effec-
tive voice of the customer programs that create the economic imperative to actually get most issues fixed. Often, responsibility
patory customer service.” While magic is not involved, there transform the consumer experience, turning a basic transaction into a trusted relationship. “When customers feel that you know
what they are looking for before they ask for it, they feel at home at your business and their desire to wander — whether for a lower price or because you made a minor stumble in your service delivery, goes away to a significant extent,” Solomon says.
for monitoring, measuring, assessing and addressing the cus-
Creating the magic
the opportunity to glean actionable intelligence for anticipating
brands with establishing loyal customers. Advertising, earned
Goodman says, “The voice of the customer is available at
ment to sell products and services. But their power to engage
tomer experience is distributed among several departments, and consumer needs and solving problems before they occur is lost. every phase of the business life-
Start with clarity. Companies sometimes confuse developing
media and marketing can certainly generate a sense of excitethe customer over the long term
cycle, from marketing and sales
is limited. A commitment to cus-
to support and billing. Putting
tomer care puts organizations on
these pieces together and inte-
the road to sustained customer
grating them with operational data creates a credible, holistic
every human emotion, loyalty is the result of behavior. According
they are the exception.”
ogy of loyalty, deciding to be loyal is really deciding a pair of
But it is only the “exceptional” company that truly captures
the customer’s attention, appreciation, loyalty and enhanced
Fall 2012
The reason is people. Like
picture of the business enterprise. A few companies have sought
to capture and elevate the end-to-end customer experience, but
margins. Having the processes, methods and infrastructure in
place to move from an environment of commercial transactions to customer relationships is key. But opening the door to
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relationships and greater loyalty.
to James Kane, a speaker, author and consultant on the psycholquestions: Do you make my life easier? Do you make my life better?
“If I do not have to do as much work or use as much brain
power, if you can complement something that I don’t do very well, then it’s a good thing to have you in my life,” he says.
Customer Care News
So much for easier. What about better?
“Because we are self-aware creatures, we are not just living
to eat and reproduce. We think about going on vacation, sending our kids to college, things that have nothing to do with our basic
survival. It’s about fulfillment. If I can find an organization, an
found just over half of chief financial officers and chief marketing officers felt comfortable investing in the customer experience
to enhance revenue. That is great news and market advantage for companies actually making those investments.
Another step in building relationships involves empower-
individual or a product that makes my life better and more ful-
ing customer care employees to solve problems at the point of
are always looking to limit the choices we have,” Kane notes.
problem can double a customer’s sensitivity toward price. It pays
filling, that limits the number of choices I need in this world. We
Trust is an important consideration in answering these “easi-
er and better” questions, but too often trust is merely asserted by
contact. According to Goodman, a single product or service to resolve customer problems quickly.
Incorporating customer care into every aspect of virtual
the company rather than demonstrably proven to the customer.
operations and social networking is also important in today’s
But even as important as these elements of trust are in establish-
er self-service, and social media chan-
Trust is about being competent, reliable, honest and consistent. ing customer satisfaction, they fall short when it comes to true relationship building.
“You never get credit for being trustworthy,” Kane says. “I
expect you to be fair. I am not going to give you credit for that.
tech-savvy culture. Websites need to support the goal of customnels must reflect customer preferences for effective and efficient problem resolution.
Finally, becoming a learning
The only time that I have to question it is when you aren’t.”
company is a critical step in build-
mind-reading: “It’s not about whether I am competent at my
From contact centers to social media
And here’s where the magical thinking comes in. Or maybe
job; it’s about whether I am as competent as you think I need to be,” Kane says.
He notes that building trust is about managing expecta-
tions — but not in the sense that a client’s unrealistic thinking must be given a reality check. Rather, it is the process whereby
the customer’s evolving needs and the company’s ability to meet those needs are constantly measured and addressed.
Transaction-based companies wring costs out of their sys-
tems to improve margins. By doing the same thing over and over, by standardizing operations, albeit with better quality and
efficiency, they hope for a different result: higher profitability.
ing those customer relationships. sources to employees in the field, customers are talking, and what they
are saying can identify trends, flag
problems, recalibrate expectations and customize interactions. Make the
voice of the customer valuable input
to every department and business unit and adopt accountability measures to
Matthew D’uva
make certain all issues are resolved. Listen, learn and profit from this rich source of market feedback.
While changing from a company that simply performs
But the transactions themselves may be based on false consumer
transactions to a company that anticipates customer needs and
attrition. This may be a strategy for the short term, but in a
quite practical and achievable. When companies are competing
assumptions and poorly managed expectations, hiking customer world in which consumer preferences can change with a tweet, it is hardly a winning approach for the long haul. Building relationships
Relationship-building companies invest in customer care
people, processes and technology to gain a better understanding of the customer, to use more personalized interactions to give that customer a greater sense of belonging, and to nurture the sense of identity with a product or service that turns consumers into advocates. For these companies, employees coloring outside
Gaining C-suite buy-in to the strategy of becoming the
leading customer relationship company in a given market sector is a key step in building relationships. A recent TARP survey
www.customercarenews.com
on this basis, to do otherwise is just plain crazy. CCN
Matthew D’uva, CAE, is president and CEO of the Society of Consumer Affairs Professionals (SOCAP) International, a professional society based in Alexandria, Va., representing more than 2,000 best-in-class customer care executives and professionals from more than 100 brand name companies throughout the
United States and Canada. SOCAP is a member-driven organization committed to promoting customer care and engagement as
competitive advantages within the business enterprise. SOCAP member benefits include education and training, peer-to-peer
Fall 2012
the lines to improve a customer experience is a virtue.
exceeds customer expectations may sound like magic, the goal is
networking, relationship building, partnership programs, confer-
ences and seminars, news and information, research, and more. Visit SOCAP on the web at www.socap.org.
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