You Can't Buy Customer Loyalty
There is no loyal customer today. This is a statement that rings loud at typical sales meetings. I should know. This is the subject of sales meetings (formal or otherwise) at the companies I worked for in the last 12 years. This truth creates both a predicament and an opportunity. For companies that want to enter a new market, it is an opportunity to grab market share, grow a new revenue stream, and increase profits. For companies under attack, it is a threat against which constant vigilance and willingness to adapt are a must.
But while it is true that there is no such thing as a loyal customer, you can create a loyal customer following if you know the right buttons to push.
According to JoAnna Brandi, publisher of JoAnna Brandi's Customer Care Coach, "loyalty is an emotional attachment to a company based on the customer's subjective perception that the company is delivering the value they desire or need, when and how they need it. It is based on their needs, and on their experience of doing business with us. When we feel good about doing business with a company we form emotional ties, not just financial ties with them."
"A positive customer experience is not a luxury, it's a necessity," said Tim Sanders*, Yahoo! leadership coach. Sanders list the three essential elements for creating valuable customer relationships as customer experience, knowledge and compassion. According to Sanders, "we no longer live in a services economy rather we live in 'the experience economy.' Customers buy experiences, not simply products."
ServiceXRG, a Boston-based research consultancy, concurs with Sanders. A recent survey of customers by ServiceXRG 47 percent indicated that service excellence keeps customers loyal to technology vendors. While marketing, promotion and recognition initiatives are critical, they are less meangingful to existing customers.
"Current customers will not be influenced by what you tell them through marketing," said Ladd Bodem, principal analyst, ServiceXRG. "Rather, they will form their opinion based on what you do for them through their service experience."
The same holds true for any company, with any product, in any industry. Our customers buy from those with whom they have a recurring positive experience. Spoil the experience once and you can get away with it. Spoil it a few times, and you will lose your customer.
In an age when time is a luxury, customers will prefer to develop relationships with suppliers and partners who are willing to create a sustained positive experience for them. High quality products and services are important but only part of the equation. Creating a dramatic and engaging experience helps to differentiate a company's product from the competition, and becomes an opportunity to charge a premium. Sanders cites Starbuck's as one example of a company that has created a customer experience so engaging that it can charge a premium for its products: a US$5 for coffee at Starbuck's versus 75 cents at most delis, convenience stores and diners.
Fred Reichheld, one of the world's leading authorities on business loyalty, recommends running your customers through the loyalty acid test -- a series of questions that gauges your customers' perceptions on you and the value they place on your products and services. To know more about the Reichheld acid test visit http://www.loyaltyrules.com/.
Passing the acid test is only the beginning. You should also consider developing a customer loyalty strategy or program. The four proven elements of such a program include:
Segment the Customer Base
Segmenting the customer base helps you identify the factors for customer loyalty. Understanding these Understanding these traits will help you build sales, service and marketing programs that meet and exceed customer expectations, generating satisfaction and long-term loyalty.
Identify Specific Loyalty Drivers
Once their customers have been segmented and analyzed, you need to identify the key triggers that drive loyalty. Churn factor, likelihood to switch, and likelihood to recommend are some of the benefits to be gained in this exercise.
Develop a Customer Life Cycle
Now that you know who your customers are and what makes them tick, you need to understand which customer experiences can be positively impacted (from a relationship and profitability perspective) by applying the customer knowledge you've gained. One framework that identifies these opportunities is a customer life cycle. With a customer life cycle, you can define and understand different customer interactions, from acquisition to churn.
Identifying Loyalty Events
You now need to identify the specific processes, interactions, channels and events within each respective customer life cycles that have the greatest impact on customer loyalty. Loyalty events help organizations focus their time, financial and human resources on specific scenarios that have a direct correlation to revenue and profits.
Having executed a customer loyalty strategy, you now need understand the analytical processes necessary to support customer loyalty initiatives. Customer intelligence tools supply these analytical processes and increase the effectiveness of loyalty programs by consistently monitoring customer segments, loyalty events and loyalty drivers. They enable companies to understand the volatility and performance of their customer loyalty program's guiding principles.
Good luck.
Jose Allan Tan is a technologist-market observer based in Asia. A former marketing director for a storage vendor, he is today director of web strategy and content director for Questex Asia Ltd. He also served as senior industry analyst for Dataquest/Gartner and was at one time an account director for a regional PR agency.
Article Source: ArticlesBase.com - You Can't Buy Customer Loyalty