Whether you run a small organization trying to make it in the marketplace or a large conglomerate of companies, the basics of business remain the same.  You set up expectations with your customers and you meet them.  If you do, they will tell people, which in turn will generate additional goodwill and the big wheel of fortune will start rolling your way.  Conversely, if you do not meet the expectations of your customers, they will also tell people, their friends and associates, and....the wheel will go the other way.  If you remember yesterday, we talked about the $10,000 cup of coffee.  Considering the price of gaz, the proximity of the retail store to my home location, the two gaz guzzling vehicles that I own, I can say that on a weekly basis, I am easily a $100 client.  Since I don't plan to move, say for the next 20 years, the total would be $100 X 50 weeks X 20 years - or a $100,000 client - ouch!

So here I am tonight, pulling over for a fill up, the 2nd this week.  For starters, the 4 pumps furthest from the cashier are covered with the orange covers "temporarily out of service".  My guess, and it is just a guess, is that with the price of gaz, it is easier to close those pumps at night to avoid what is called as a "drive off".  So the 4 closest pumps are in "working order" and I get ready to fill up.  No reason to go inside the store, wait in line and buy extra stuff that I don't need.

I use my card, scan it in the system so I can do the whole transaction without going inside.  I select the amount, then enter my pin for authorization, confirm that I want a receipt, select the grade and start pumping.  At the end of the transaction, the machine completes the transaction and the message appears: Please see inside attendant for receipt. $/>@#$%>5  .....why the hell would I go through this whole charade if I am to go inside anyway?  Is it because of the motto "In Customers We Trust"?

I went in, asked the attendant why I would have to come in when the whole point of the new and modern pumps was that the whole transaction could be done right there, at the point of sale.  All I got was "uhH".

For the next 2 weeks, I will try the Esso down the street and see if they operate differently.  If they do, I plan to tell a few friends.

I am away for 3 days, therefore, from an expectations setting point of view, I will not be able to write new posts.  The family is coming back home after 3 weeks in Ontario.  I will probably have found something relelvant on the way back to New Brunswick, including different options to my very, very little issue.

Best Buy, however, isn't the only retailer to categorize their customers by profit levels - just one of the only ones to expose it publicly.  One of the common tools to do this categorization is the Customer Lifetime Value (CLV) model.  According to Wikipedia, CLV takes into account the "present value of future cash flows attributed to the customer relationship."  But can this same tool be used for online merchants?

Last year, we used the CLV methodology to look at customers for a popular online subscription-based merchant.  The findings were the about the same - approximately 13% of subscribers accounted for 50% of all profits; and about 21% of subscribers were not profitable.  But, before you dismiss the 21% of customers as "devils", think of this:

These "non-profitable" customers:

• Were most "involved" with the website.  They logged on more often and took advantage of more features on the website.
• Had the second-longest subscriber length
• Had the highest amount of activity for the subscription service
• Were more likely to be recruited online

And the "angel" customers?

• Engaged in the service the least - in this case, they rented merchandise less (if at all)
• Were the least involved with the website
• Were more likely to subscribe via a brick-and-mortar store

The "angel" customers were basically those that forgot they even had a membership.  You've done that, haven't you?  Signed up for a gym or tanning membership, and never (or rarely) used it?

And, the non-profitable customers were those that we had hoped to attract in the first place.  They were actively involved with the service - of course, that also meant more shipping costs, more help desk calls, more broken merchandise - all of which led to their non-profitable status.

We need the "angel" customers - they account for 50% of our profits, but how do you attract people that are basically blind to the charge hitting their credit card each month?  You can't make service improvements or add more web widgets - they rarely log into the website.

Using Customer Lifetime Value methodology to rank customers of subscription-based services can be misleading.  Each business needs to take a close look at their customer segments compared with their business model.  Don't assume that your "angels" are your best customers.  You may need to re-think your pricing model - I know, you're probably laughing, thinking "we're here to make money."  Yes, but it's very risky business model to rely on people who have no loyalty to your product or service.

Do you know who your best customers are?

If you could only take care of one of the 2 clients at the counter, which one would you pick?  You are selling coffee.  The first client is 44 years old, comes in every day and spends about 2$ on coffee and he is waiting.  The other client, looks the same, but will spend $10,000 in your business.  Which one do you take?

The title of this post might have given it away.  Spending 2$ X5days X 50 weeks for the next 20 years, and you got it, both clients are the same person.  Yet the $10,000 client was a lot more appealing.  Looking at your client base in view of the whole potential the relationship has to offer should change the way you look at each client that gets through the door.  That approach is real by the way.  And the case is as well.  The manager of the Timothy's at 5650 Yonge Street saw his clients the $10,000 way back in 1999!!

I was at MY golf course today.   Not the one I own, but the one where I have been a member for the last 5 years.  I was playing with another member and at one point, we went in the pro shop to bring back golf club head covers we had found around the tee boxes today.  Between, the 2 of us, applying the same logic as in the previous paragraph and the people we bring in to the course as guests, it is fair to say that $250,000 walked in the door to bring back golf club head covers.  My buddy delivered a dry joke - no laughs.  I handed the head covers - no thanks of any kind.  There were 4 people in the pro shop and we were clearly interrupting their session.

We were not asking for an audience, not asking for any perks or breaks.  We just walked in to the pro shop where we play and were treated as if we had interrupted the Christmas dinner at the neighbors!  We went outside, he looked at me and said: "We bothered them".  I agreed.  I then went on to explain this concept to him - The Client for Life.  Informing me that his son might join and is much younger than the both of us, he promptly corrected me - we were now as a two-some a $500,000 client that was treated as pure strangers.

He smiled, walked away and muttered something about other courses in the Moncton area.

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Well, that’s the reaction I’m guessing they were hoping for. Sadly, I suspect the money they save me just might be offset by their July announcement of a record 35% increase in my gas bill!

What were they thinking? That a few free light bulbs would soften the blow?

This is precisely the kind of CR tokenism that really pisses me off. If you want to convince me you’re a responsible business, don’t send me light bulbs, give me confidence that you’re treating me fairly as a customer.

Right now, that means offering a bit of transparency around your strategy (past, present and future) for protecting me against the effects of rising wholesale prices – and inspiring confidence that such a massive increase is actually justifiable.

In a recent letter inviting me to fix my prices until 2011, British Gas does a great job of explaining how wholesale prices for oil and gas have increased by over 60% over the last six months.

What it doesn’t do, however, is give me any inkling as to how they’ve sought to manage the situation, nor as to their long-term plans for developing and sustaining a more cost efficient supply.

Without that, all I can see is that they’ve announced an unprecedented price rise in a month that actually saw oil prices fall by 16%. Rightly or wrongly, that just fuels the perception that it’s all one-way traffic and it’s only ever increases that get passed on to customers.

There may be quite legitimate reasons for the increase, but I’ll never know because rather than engaging openly with customers, British Gas seems to think it can demonstrate responsibility by bunging us a pointless freebie.

No doubt some bright spark in the marketing department thought this would be a great way to project a caring image and encourage customer loyalty through a difficult period for energy companies.

For me, though, it’s a clear signal that they just don’t get CR and a bloody good reason to look elsewhere for my gas and electricity.

Charlie Fewell, experienced consultant and coach, has a different idea for how businesses should handle marketing in tough times. As he said on BusinessWeek, while you have no control on the state of the economy, you do have control over how you respond to it:

“I am convinced that in tough times, your outreach program to your top existing customers needs to kick into high gear. It is said in business that 20% of our customer list provides 80% of our sales revenue. You need to strengthen the value of the existing relationships within that 20%.”

Applying the Pareto principle, or the 80-20 rule, to your marketing during tough times will help you focus on the customers in your list who make the biggest impact on your bottom line.

People are taking more time to make purchasing decisions and drastically cutting back on spending, making it more important than ever for you to be the first that comes to mind when the customer is ready to buy.

Spend your marketing dollars reaching out to that top 20% of your customer list. Halting marketing across the board will only lead your customers to believe you went out of business, crossing you off the list of potential places to go when they’re in need.

Take these two examples…

1 – About 13 years ago my dad had neck surgery. It was imperative that he have it so he took the recommendation of one (maybe even more) of his doctor’s and went with surgeon A. Pre-op was great and the surgery seemed to go well until a short time later when my dad realized that his neck was no better and he had an unbelievably disgusting looking scar on his neck. Even 13 years later he can’t hold his neck properly and often has pain.

2 – Monday I thought I’d be a good Samaritan and donate blood. I do this as often and I generally go to a location about 30 minutes north of here but on the weekends. Because it was going to be after work, I decided to try the newly remodeled location not far from where I work. I get in, fill out the paperwork and the nurse pulls me in to one of the offices to go over my medical history. She then pricks my left finger for a hemoglobin count. It was too low so she pricked the other hands same finger. This time it worked. I then cruised on over to the comfy chair to donate – me and my two middle fingers wrapped up in Band-Aids.

The next nurse comes over, tries to find my vein and calls over another nurse who’s “stealth” as she says, when it comes to finding veins. She finds it, pops the needle in, I say it stings, she moves the needle out a little bit (I guess it was in too much) and then I hear something to the effect of “oh no!” Apparently when she was taking the needle out a bit she bruised me. Not sure how she knew that already but that’s why she’s a nurse and I’m not. I look down and there’s blood coming out of the needle injection site. Hmmmmm. If the blood was going through the tubes for collection that would be one thing, but it was on my arm. Within a minute my arm had swollen up, it was sore and bruised. They immediately wrapped it up and iced it. After getting my permission they moved to the right arm and I was successfully able to donate blood.

So, would my dad recommend his neck doctor? Absolutely not. But, how many “don’t use this doctor” would it take to deter someone else from using him. Would I go back to the blood bank – I haven’t yet decided. Maybe both cases were rare accidents. Maybe both cases happen all the time. I don’t really know. But what I do know is that based on the “value” that’s put on the interaction/transaction will determine the importance and weight of the recommendation or non-recommendation.

How does this relate to the customer reference professional? Make sure you know the good and bad points of what the customer thinks of you and/or your company. It’s okay if there are some negative comments, but be aware of what they are so that you can counter act them if necessary.

BTW, Bay Area blood banks are critically low on "0" type blood so donate if you can :-)

A recent article on Marketing Sherpa demonstrated the difference between what companies (vendors) believe are the reasons customers leave, and the real reasons customers leave.  While companies cite pricing as the top reason, customers say they really leave because of customer service.

Why the Difference?

The article sights two great reasons for this difference.  First, since it's usually sales reps that report the loss, it's easier to report price as the issue since it's beyond their control.  Second, it's easier for customers to claim price as the issue as it's harder to dispute and doesn't cast blame on sales.

Divorce and Customer Loss

I can't find the exact study, but when asked why a couple is divorcing, an often cited reason is financial stress.  When researchers dove deeper with the individuals to get to the real reason for the divorce it's usually not financial.  It's just that it's easier to say that, it's less embarrassing than stating infidelity or abuse as the reason.  Same thing is happening here.  It's just easier to use price as the excuse.

It's hard for a customer to tell you straight-up that it is poor service that pushed them to leave.  It's hard because that kind of information may lead to confrontation, defensiveness, or hurt feelings with the sales rep.  These are all experiences the customer doesn't want to pile on top of their existing frustration with your company.

More Proof

As a customer researcher, I am often able to show companies that their beliefs around customer loss are just not real.  By conducting customer satisfaction interviews in the B2B space I have often showed clients that service and support were significant issues for clients. It can come as a shock since the company previously believed they had no problem with their sales and support staff.

In working with credit unions and member (customer) loss, you will find that many members will cite "moved out of area" as a primary reason for leaving the credit union.  Now I know the housing crunch is brutal, but there really are not that many people moving out of the service area of the credit union.  It's just easier to give that reason when you are face-to-face with the teller when you go in to close your account.

Good News, Bad News

As the article states, the good news is that customers are less likely to leave because of price.  Also, excellent customer service can lead to stronger customer loyalty and a price premium for your company.  The bad news - if you don't really know what your customers think of your customer service you may be headed for a trial separation or a divorce...

Too many companies these days depend solely on what I refer to as spreadsheet mentality.  Financial prowess is rewarded far more than people and creative skills, thus leaving major decisions up to the finance department and that’s typically not good for customers.

We are a nation lacking in people-centric leaders and I believe that is one of the reasons for our decline in service over the years.  Technology has added to the mix as we become more dependent on machines to communicate (email, voice mail, etc.) instead of our personal communication and people skills.

My first job in “Corporate America” was a flight attendant position with a major airline.  Not to date myself, but it was pre-deregulation.  Airlines still had a certain cache and prided themselves for delivering great customer service.

I was mentored by flight attendants (mostly female in those days) who had experienced a lot in life having traveled all over the world, but more important they had amazing people skills. They cared a great deal about the passengers who were on their flights.

We felt it was not only our duty to help each and every passenger, it was our pleasure to do so. That’s why we were hired -- to make every passenger feel welcomed, comfortable, appreciated, and safe.

We had “difficult” passengers as well, but we were taught to use tact, diplomacy, and creativity to try and turn the situation around.  We were taught to value each customer or risk losing them to the competition.  We didn’t have frequent flyer programs in those days to drive loyalty.  Customer loyalty was every employees’ responsibility.

To build this type of culture we had people-centric leaders.  Our leadership cared about us as much as they cared about the business.  We were given the training, the tools, and the support to create memorable customer experiences.  We were encouraged to create as many “wow” moments as possible.

Post-deregulation in the airline industry created a need for a more finance driven business model, and the leadership model changed as well.  It was no longer about people; all of the answers were on a spreadsheet.  People skills were no longer valued, it was all about the bottom line and what the market will bear.

In chapter three of his book A Whole New Mind -- Why Right-Brainers Will Rule The Future author Daniel H. Pink talks about the past 150 years as a “three act drama.”

Act I being the Industrial Age, and Act II the Information Age -- times that required very left brained thinking.  He goes on to say that the “curtain is rising on Act III” the Conceptual Age and that will require “creators and empathizers,” in other words right-brained thinking.  Pink also points out that we can’t do away with left-brained thinking. “L-directed thinking remains indispensable.  It’s just no longer sufficient” Pink says.

Part of Pink’s reasoning is that for the past 30 plus years we have been living in what he calls “Abundance.”  Shopping malls, big box stores, car dealerships (to name a few) are now small cities with more choices in brands, models, and styles than ever before.

Pink goes on to say that “because of Abundance, businesses are realizing that the only way to differentiate their goods and services in today’s overstocked marketplace is to make their offerings physically beautiful and emotionally compelling.”

A Customer Experience strategy is all about delivering your customers’ physical and emotional want/needs and expectations across every touch point. To do that you need leadership that balances the people side, with the financial aspect of business.

Like it or not, it’s people not machines that make life happen.  It’s people that have the vision and creativity to help program the machines that help make our lives better.  Technology is a great thing, but it can’t replace the human element and our need to connect with each other.

The left-brained imbalance will no longer cut it in today’s market.  It will take creative leaders and thinkers that care about people, and understand how to create compelling experiences that not only connect with customers, but will also hold their interest and keep them coming back for more.

It’s an exciting time for us right-brained types, and I hope that we take full advantage of the opportunity.

1. Accelerate your customer database management strategy
2. Embed analytical thinking within marketing teams where use of data & analysis is made mandatory
3. Micro-market - Identify smaller & smaller segments and increase campaign velocity with relevant offers

Here's what the article has to say:

According to Experian, companies that can gain useful customer insights through integrated marketing techniques will benefit from greater agility than their competitors and will be able to more quickly adapt to market changes and provide products, services, and value propositions that are more closely tuned to customer needs and purchasing patterns.

Collect insights, not just data
According to Marie Myles, director of marketing consulting at Experian's Integrated Marketing division, "Based on our experience with some of the world's largest consumer brands, the turbulent economy simply means a re-doubling of efforts to derive even more valuable intelligence from every consumer interaction."

Actions for brand growth

1. Understand customers and their needs
   Customer insight needs to be continually revisited to ensure that it is up to date, focusing research investment on this area and not solely on the brand. Marketers need to use this intelligence to create engaging and relevant messages based on a solid understanding of each customer's preferences, needs and behaviours. This will pave the way for true one-to-one communication and enhanced brand loyalty.
2. Analyse and segment
   Customer profiling, clusters or RFV models are essential to identify which customers are spending the most, how to uplift sales and to detect high value customers that show signs of diminishing value. As new trends emerge, marketers can use this insight to adapt and refine retention marketing techniques on a personalised basis.
3. Adapt products and services
   It is imperative to assess the environment and for marketers to re-evaluate their propositions. In a changing economic climate brands need to be responsive to evolving buying habits. By taking this approach, marketers will be able to offer a better service to customers, making it harder for competitors to lure them away.
4. Integrate channels to increase customer engagement
   Customers expect to be contacted through different media. Companies need to understand these media links and weave different online and offline messages to build compelling, engaging and personal experiences. Integrating channels at different stages of the customer buying cycle and customer management programme will drive benefits including a more consistent and persistent message.

At Cequity, our belief is that loyalty marketers don't really use their loyalty marketing data effectively for creating tangible business impact. Our belief is that loyalty data has to be effectively used in real-time(week after week in grocery retail or month after month in lifestyle, CD/IT retail) in target marketing campaigns to build " value perception" & " personalized service/rewards privileges" amongst loyal customers.

Take a look at what the Nielsen Report has to say:

Foundations of loyalty
In an increasingly competitive marketplace, companies that use their loyalty programmes to establish a deeper relationship with their customers are better positioned to prosper. Two foundational factors are especially important within any loyalty scheme:

1. Maintaining good customer data with insights, which can be easily distributed throughout the organisation for decision-making;
2. Developing a business culture that constantly looks for ways to improve programmes that benefit customers by applying shopper insights.

Creating a process for gathering insights, testing programmes and learning about customer response is important. While a few interesting facts about a cardholder's household composition might come from the initial card application, such information and even deeper insights may also be derived by capturing sales history and assessing information about customers from transactional-level purchase data.

Sales data not only tells an analyst about additional family members in a cardholder's household, but it also identifies opportunities to target the household more uniquely through a better understanding of preferences for specific categories, products and brands to satisfy the special needs of a child or any other household member.

Analytical models
Increasingly-sophisticated models also enable analysts to understand why customers shop, how they shop, what they buy and how sensitive they are to various price structures. If properly collected and assessed, sales data can point out everything from pets in the home to family health and nutrition needs. Analysis of the data becomes one way to answer those burning business questions:
· What do customers want?
· How can I keep them shopping in my stores?
· What opportunities exist to increase sales?

The data, analysis, and decision-making are only as good as the commitment by business leaders to continuously apply the insights to developing programmes that positively impact customer behaviour. This kind of transformational change and the impact it has on the enterprise takes time. If leadership embraces the use and application of customer data, the business will follow. Even then, the business must adapt in other ways.

Structural changes needed
Organisational and structural changes are required to re-align goals and incentives or develop planning processes that place a focus on the customer. The end result, however, works. Nielsen Loyalty has witnessed established retailer programmes achieve:

• Sales effect increases of 1% to 5% in same store sales;
• Loyal customer basket sales increases of 5% and 9%;
• New customer retention rate increases from 20% to 40%;
• Supplier funding for insight and communications rises from 0.05% to 0.1% of sales;
• Promotional budget savings from 20% to 40%;
• At least 75% of sales tracked at customer-item level.

Every aspect of a retail business and the interaction with supplier partners must embrace the needed changes for these levels of success to occur. It does not happen quickly, but the sooner the shift in focus occurs, the sooner all parties can begin trialling new solutions.

A good example
One North American retailer, well known for rewarding it best "Platinum Fans" customers, wanted to use its Loyalty card programme to further build customer affinity and grow sales. By all accounts, this grocery chain has earned some measure of success-achieving over 85% of sales on card by reinforcing a message of customer value, targeted offers, and special services. These loyal customers received periodic special in-store gift cards and coupons presented to them directly by the store manager for maintaining high loyalty thresholds.

Mitch & Ralph

Went to the optician and the lady was very helpful, lots of selection, but a 7-10 business day wait. What I expected, but was hoping for better, but if they hit the 7 days (or even 8) I would be OK. She told me that if the frames were in stock they might do better than 7 days.

The glasses arrived yesterday (about 3 days). They were as ordered and several days early, which thrilled me. Reminding me again of the power of under-promising and over-delivering.

Mitch

How does Starbucks create customer loyalty?  John Moore at BrandAutopsy said this a few years back:

"For years, Starbucks Coffee has used high-touch methods to build and maintain a loyal customer base. In his book, “Pour Your Heart in It," Howard Schultz, in supremely succinct fashion said, “If we greet customers, exchange a few words with them and then custom-make a drink exactly to their taste, they will be eager to come back.” That is the true description of a high-touch way retailers can connect with customers to build enduring loyalty. "

John was writing this post to contrast the approach of high-tech methods of building loyalty with high-touch methods of building loyalty.  Which approach is Starbucks using today?  Let's look at what they have been doing lately to improve customer loyalty and the customer experience.

Customer Service

Starbucks closed all of their US-based stores for a few hours earlier this year to conduct partner (employee) training.  Right after the training, it was observed that Starbucks partners were making it a point of asking for customer names again (something they had moved away from) when taking drink orders. They also seemed pretty cheerful and upbeat.

Fast-forward to July 2008.  At my most recent experience in a Starbucks I regularly frequent, there was no recognition or asking for names.  My mother-in-law was with me, and she pointed out how "grumpy" one of the partners seemed to be.  I had noticed this before with the same person.  I did notice signs on the wall, directed at partners, which pointed out how to manage fresh bananas (a key ingredient in their new Vivanno smoothies).  

I have also noticed a quieter, more subdued attitude from employees at other Starbucks I have been to lately (including my most commonly visited store near my house).  I wonder if a combination of store closing news and the introduction of new, time-consuming drinks has weighed-down our barista friends.

Customers Rock! Take: Keep focusing on your employees, especially when things are difficult.  They are your brand ambassadors to the outside world.  Customers will notice the change in customer service right away!

[caption id="attachment_554" align="alignleft" width="128" caption="New outside seating!"][/caption]

Customer Experience

 

 

 

 

 

I am not sure if this is happening at other Starbucks, but one of our local stores has put in nice, comfy seating - outdoors!  Now if they can just 1) keep the tables cleared of trash and 2) put some more cushioned chairs inside, we might have a winner.  (Note - that is my Passion Iced Tea on the arm of the chair...)

Introducing... New Products

Starbucks has really been focusing on the introduction of new products in their stores these past few months.  First came Pike's Place Roast, a new blend of coffee meant to hearken back to early days when Starbucks was a true coffee experience.  Although it has had mixed reviews, the idea of grinding in the store has helped boost the coffee aroma (which was sorely missing before).

Most recently has come Vivanno smoothies (mentioned earlier), the Orange-Mango Banana and the Banana Chocolate.  These two new smoothies are high in protein and fiber, and not horrible with respect to calories (compared to the Frappuccino).   Reviews of the Vivanno so far have been mixed.  One interesting thing I noticed in the comments to the blog post Starbucks' Vivanno vs Jamba Juice was how customers felt like it was out of place to order "smoothies" at a coffee store!  Others who are comfortable with the use of protein powders really seemed to like these drinks (see comments in this BusinessWeek post on Vivanno).  Personally, I would rather stick with my iced tea and get smoothies somewhere else.

Customers Rock! Take: The Pike's Place Roast has been a good way to try and re-focus on being a coffee store.  It still needs some work, but they are on the right track.  The smoothies are a good option for someone coming to Starbucks looking for something nutritious to drink.  However, is this really why people come to Starbucks? 

Does It Make a Difference?

Here are the real questions to be answered.  Do these new smoothies help Starbucks get back to the "third place" experience?  Does the Pikes Place Roast bring in new customers?  Does the Starbucks Loyalty Card bring back loyal customers?  So far, the reviews are conflicting.  It takes more than new drinks, free WiFi, and comfy chairs to retain customers.  It is not just about high-tech vs high-touch approaches.  It takes building relationships, one customer at a time. 

Starbucks has the opportunity to do so through many channels, both high-tech and high-touch: the daily interactions with customers, the registered Starbucks Reward cards (they have yet to try to interact with me, and I have three cards registered), and their site MyStarbucksIdea (which is heading in the right direction but lacks a true dialogue between customers and partners).   However, it just hasn't really happened yet.

Starbucks, I would like to see you be successful in re-inventing yourselves through the customer experience.  It would set new standards for other companies who know they should be more customer-focused.  It would make your existing customers happier.  It would help insulate you from your competition, and they are charging up fast. 

There is just one thing you still need to do: look at your stores truly from the customers' perspective.

What do you think?  Fill Out Our Survey!

Jay and I have put together a short survey to see what you, our readers, think about Starbucks and its “re-Experience” project.  Please take just a minute to click on this survey link and fill it out.  You could even win, what else, a gift card to Starbucks!  We will be report results on our blogs shortly.

(Photo credit: TAlex)

Something that I found extremely interesting was that there were people from many different roles within an organization at the training - an HR manager to call center manager to SVP of Customer Experience to a CMO and President of a company. It goes to shows that having a complete and successful customer loyalty program requires input from a plethora of groups within a company.

If you don't have the budget to attend one of the training classes, I understand that the conferences are very good too. If you don't have budget for that, read the book "The Ultimate Question" by Fred Reiccheld.

I'm meeting with my boss this week to see if we can implement a Net Promoter program and hopefully she'll say yes!

Del Taco has become the second largest Mexican fast-food chain in the U.S., behind Taco Bell (YUM). How did it manage this? Walk into almost any Del Taco restaurant and you'll find a counter card promoting the chain's new shakes (it also offers burgers and fries, in addition to tacos, burritos, and quesadillas). On the back of the card, visible to employees, is a reminder to smile and make eye contact with customers. The card is one example of the simple tools Del Taco President Shirlene Lopez uses to build customer loyalty.

Don't miss the little things. Effective communication skills played a prominent role in Lopez's career advancement and she sees such skills as crucial in the way Del Taco builds customer loyalty. "I learned at an early age that customers respond differently based on how you communicate with them. How you greet them and thank them makes all the difference in the world,"

Respect your employees and customers. Respect is a theme for Lopez. It extends to how she believes employees should treat customers as well as how employees should be treated by management. And she thinks eye contact and body language are necessary to convey respect.

Turn transactions into interactions. Lopez believes there is a difference between a satisfied customer and a loyal customer who returns to the same restaurant more than once a week—and tells people about it. According to Lopez, moving beyond merely "satisfied" customers to creating loyal ones is crucial in tough economic times when customers have fewer dollars to spend.

That is the truth - organizations that focused on customer loyalty are taking the wrong path to customer retention.  Mea culpa, I was one of those people who saw Customer Loyalty as the end-all for customer service.  If you could just achieve high levels of loyalty, the idea goes, you won't have to worry about customer retention.  I have since learned through work I have done with several clients, that loyalty carries no reward with it.  There is no higher wallet-share, there is no higher likelihood of repeat purchases -- there is nothing that foretells that Customer Loyalty helps an organization, and plenty to show otherwise.

Maria Palma wrote in her blog (Customers Are Always) a couple of days ago that Bargains and Deals may just trump customer loyalty.  I commented in that blog that loyalty only brings up your cost of customer maintenance, and it does not provide you with the benefits you expect.  Let me expand on that.  Customer Loyalty and Customer Satisfaction are similar concepts: they rely on feelings that are not easy to manage or control, are expensive and cumbersome to measure appropriately, and they have not really shown any correlation between what they cost and the benefits they bring.  It is just another way to look at a customer feeling about a company, instead of a product or experience, that cannot be used to predict future behavior.

In the movie "Nothing in Common" Jackie Gleason plays an older salesperson who prides himself in having the best relationships with his clients.  They all admire him, respect him, and have great loyalty towards him.  Early in the movie, a brash young new VP of sales calls him into his office to discuss his performance.  He is truly impressed by the relationship he has with his clients, but when he looks at the performance he is dismayed.  Abysmal sales numbers have been trickling in for the last few years.  Turns out all his clients are now buying from the competition because they have better shipping policies and cheaper prices.  So much for loyalty, and for Jackie's job.

I said it before, and I will say it again.  Don't focus your metrics on your customer's feelings.  Instead, focus on what matters. There are three things you can do to ignore customer satisfaction and customer loyalty and come out ahead:

1.  Build a solid infrastructure (technologies and processes) to deliver great customer experiences across channels.

2.  Extend it to include feedback, sales, marketing, operations, and to create end-to-end commendable customer experiences

3.  Ensure that the delivery of your experiences meet customer expectations, and use expectations to improve your delivery

Then, you won't have to worry about loyalty, satisfaction, or anything like that.  Then you will be able to simply focus on doing the best possible job for your customers - and get rewarded for it.

Are you focusing on the right metrics? Are you doing the right thing?

"Why don't they sell swim trunks in July?  That's when I need them.  Seems like stores aren't very focused on what their customers need!"

Now, I know all you folks out there in retail-land have your reasons for why this occurs.  Seasons for the industry are not the same as the seasons for consumers.  Inventory needs to be cleared out for next season's merchandise.  I am sure you can share more.

However, let's look at this from a customer's perspective.  It took driving to 6 stores and over 50 miles (total) to find a pair of swim trunks that fit.  This is due to the fact that most swim trunks are no longer in stock.  If we had wanted to find a winter outfit, or something for back-to-school, we would have been set!

Putting Customers First

There needs to be some type of balance between the needs of the business and the needs of the customer.  Sure, it is difficult when a whole industry is set up to operate on a certain schedule.  However, our next generation is looking for a new, practical approach to business.  They want to feel important, like they matter to companies.  This will be key in building relationships with them.

We can build all the cool social media sites we want, connect with our customers on Facebook and MySpace, and even get them to spread our message virally.  But if they come into our shops and retail spaces and we don't have what they need, that creates shaky ground for any relationship already built. 

Organizations need to stay in tune with what their customers need, want, and desire.  One of the best ways to do this is with ongoing customer conversation.  Keep in touch, remind them you are there, and meet their needs.  These steps will help strengthen any shaky foundations that may have developed due to thinking more about ourselves than our customers.

I'm not angry with him for being late. I get that stuff happens and we can't always keep our promises. But he could have called. I had to call him 5 times before he picked up his phone....probably because he knew there would be yelling on the other end. But he could have avoided that by calling me first.

When you are in a family and something you are doing will affect another family member, the right thing to do is communicate. We all know this. By not communicating, it causes all kinds of friction. You're all shaking your heads in agreement, I can feel it.

Well, it's the same with your customers. If someone buys something from you, they expect at least to know what they need to do to complete the sale and when their package will arrive. And in this day and age, it's really easy to get in touch, via email, phone, text message or even twitter! (Sidebar: What's a twitter you ask? A really fun way to stay in touch! More about that in a future post.)

So guide your customers along the way. Talk to them. Email them when you receive payment, when you expect the product to ship, and when it has shipped so they know to watch for it. If you have a problem or are waiting on a back order of beads, email your customer and explain the hold up. Most people are very understanding, if you just give them the opportunity to be. If you don't communicate though, and a package takes longer than expected to arrive or the product is not exactly what was pictured (and with handmade that is often the case), you might find you have an unhappy customer at the other end. And we all know we don't want that.

The top reason why customers move on from a certain company is customer service, followed by price. Vendors most often cut ties with companies because of price pressure.

According to the Sherpas, the survey revealed surprising information about customer loyalty:

“First, customers are less likely to leave for a competitor over price and will give you the opportunity to keep the business. Second, they are more willing to pay a premium to continue their relationship. Third, they are strong external advocates of the brand.”

Your packaging should reflect the same care and creativity that goes into your products. It makes for a special experience for your customer and it also helps them to remember you and your name. I add a thank you note that I created in Microsoft Word, put my logo and a picture on there, so it helps customers remember my brand. Right now, I'm also enclosing a 20% off coupon for each customer's next order. The holidays are closer than you think.

Treat your packages that are going to customers the way you would expect to receive something or would like a gift sent to a loved one.

Recently, I purchased some fabric on eBay. The fabric was gorgeous, arrived very quickly, but the seller only enclosed a receipt. There was nothing to remind me of her name. I might not buy from her again, because who knows if I'll remember who she is? And that's a shame because I buy A LOT of fabric, and I could be a great repeat customer.

Put something in each package that brands you and helps your customers remember who you are. Package your products with care so your customer knows that whenever they receive a package from you, it will be special. It doesn't have to cost a lot! When those customers come back again and again, you'll be glad you made the effort.

I buy tissue and bags at Nashville Wraps. They are inexpensive, I can buy in bulk and it's easy. I'm off to get some gift boxes!!

'Tis the holiday season. We'll all spend lots of quality time with friends and family enjoying good fun and great food. Well, as we mulled over how RRW could relate a marketing topic to the holidays, we couldn't help but thinking of a tried but true marketing ploy. Hence, this months' friend and family newsletter theme. (OK, we do realize it's a stretch!).

In the '90s, MCI came up with the brilliant idea of asking customers to refer "Friends and Family" to join the MCI network. The offer was that anyone in the family circle could benefit from lower rates on Long Distance Calls if they were all MCI customers. It was a wonderful success and gained them a lot of new customers.

Since the '90s, this idea has exploded, especially with the growth of the Internet and the newfound ability of people to spread news, jokes and even marketing offers quickly and vastly with a few clicks of the mouse. Marketers have made this a science, calling it Viral Marketing, Guerrilla Advertising, Word of Mouth Marketing, even Loyalty Marketing.

Overall, the idea is to exploit existing social networks to produce increased awareness, and ultimately increased sales. People will pass along and share 'cool' and entertaining content. Likewise (as in the case of the MCI example), they'll share a great offer, if they feel it may benefit their friends and family.

If you're looking for some good information on this concept, RRW has put together a series of weblinks that provide a diverse amount of content on this topic. We'd be happy to share results of our web research. Of course, we are also available to talk with you about your specific program and explore how some of our direct marketing expertise may assist you in your loyalty and word-of-mouth marketing programs.

Just give us a call at (503) 206-5255. Or, please visit our website: www.rrwconsulting.com for more information on our experience and capabilities.

And, enjoy Happy Holidays with your friends and family!

Writing in response:

BANKS are not interested in 'customer loyalty' as they once were, despite the perception that many people have. Banks and financial institutions constantly seek-out their profitable customers, without due concern of how millions of paying customers are being, in some cases, excessively overcharged. Any charge, be it a bank charge, a fee or penalty for exceeding an overdraft effectively amounts to a reduction in a person's disposable income; sometimes those charges might be unanticipated, education is as important as any liberalising of how current account customers might behave in the future. Indeed, the editorial states that, "the bulk of consumers pay little or no attention to even basic details of their accounts", what makes one think that people will change their behaviours even if more information is forthcoming? In this globalised world to which we live, the speed of business and transactions, and the pace of our everyday lives suggest we do not have the time or patience in articulating through any small print that may arise in the future.

Personal finance can be an awesome subject, but it is equally up to each one of us in taking responsibility for our own affairs. Again, education is key: perhaps there is a greater need, more than ever before, by introducing, for example, more fundamental aspects of personal finance into the secondary schooling curriculum. Constantly blaming the banks for personal failure, for an individual's poor banking record when a customer runs-up a large bill for charges, is more to do with the poor management skills and behaviour of the customer, not really an excuse in assigning blame onto the banks. Whilst banks can be erroneous in some of the mistakes they make on our accounts, those entries, if applicable, can only be corrected if customers are fastidious by regularly checking through their bank statements. Mitigating circumstances might also apply, which customers should chase-up if they feel they have been unfairly charged.

But, customer behaviour might change if the banks were, once again, to become a friendly-focused environment. The days of when account holders could meet face-to-face with their branch manager in arranging an overdraft, or if things went off-track, are long-past. Now, its electronic voice recognition with much of how we have been forced to transact. Even if we do get through in speaking to someone, after numerous digi-pad pressing on the telephone, the standardised approach can hardly be the approach that many people are looking for. Customer loyalty should mean something when banks have made millions in charges from their customers.

Certainly, the opportunity exists for individuals in switching and transferring their details to another bank. But, does this solve the underlying problem of how people might behave in the future? If people are not educated in dealing with their affairs in an orderly and efficient manner, or do not take notice of how there banks accounts are being run or how charges are incurred, what makes us think that merely changing banks will drastically alter a persons behaviour? The likelihood is, is that our trait patterns would continue.

Banking is more personal than constantly swapping insurance policies; everything we do, in financial terms, is, in some way, likely to be connected to our bank accounts. The inconvenience factor, I believe, therefore overrides any incentive in changing to another bank although, I accept, that much of the transferring can be very well managed between the institutions themselves. Our own attitudes to how we bank, and how we manage our financial affairs, are crucial if we are to minimise future banking charges on our accounts.

© Mark Dowe 2008: all rights protected

Reference:

• Guardian Editorial, "Called to account"

http://www.guardian.co.uk/commentisfree/2008/jul/17/banking.regulators