We now know
that building Customer Loyalty is key to success in any organization. The philosophy
was first articulated by Fredreich Reicheld who studied the relationship
between three factors - customer satisfaction, customer loyalty and profits. (Bain & Company)
He stated
several facts that seem glaringly clear now, but until then, had not been
clearly stated.
Tom Peters,
author of the seminal business bible In Search of Excellence', described
great management ideas as " a
blinding flash of the obvious" - because they're so right, so simple
and so obvious.
This is
certainly true of Reicheld's statements on Customer Loyalty. They are equally
extremely POWERFUL. With them we have the key to success. Without them, we
are left without a clear direction forward in competing within our marketplace.
What Reicheld stated was " Customer
loyalty appears to be the only way
to achieve sustainably superior profits".
He used as an
example the life assurance business stating that a 5 per cent increase in customer retention has the effect of
lowering costs per policy by 18 per cent no small cost in any business.
The Customer
Loyalty Goals
The more
Customers we keep the more profits we make. Poor service, bad quality and
deficient delivery are all factors that encourage some people to go. To stay they must like you. The bare minimum is customer
satisfied' expectations met. This will
not send customers away but it will not keep them.
To keep the
customer we must exceed
expectations deliver the extra special positive experience. A positive
experience can involve cheaper' or better quality'. But the really powerful positive experiences
involve feelings - of personal touch', like', special', trust', honest',
straight', fair' and so on.
And now things
stop being blindingly simple'
because delivering likeable ' as a business strategy involves a complex system of
interrelated KPIs, competencies, attitudes and behaviours that actively drive
a powerful customer focussed culture'.
Learning from
Success
What do
successful Companies do? They accept the basic premise customer retention is our business strategy.
Customers stay
because they like you they want to stay. To have our people deliver this want to stay' service - we need
them to WANT TO keep the customer. We
need them to have the competencies
to do that and
be in an environment that motivates and empowers them.
Customer Focus
involves adopting an overall strategy that will result in increased customer
retention e.g.
1. We will measure, report on and
discuss that which is related to customer loyalty number of defections,
customer complaints, positive feedback from customers, focus group reports,
feedback from customer care agents, complaint handling, cash collection etc
2. We will manage the Customer
Experience. We will study, report, learn from and take action on CRM data on
the Customer Experience.
3. We will reward people, actions and behaviors that encourage high use of customer
focused behavioral competencies or contribute
positively to increased customer retention.
4. We will set targets, expectations, and definition of accountability
based on customer focus attitudes, values, and competencies.
5. We will include customer focused core values and behavioral competencies in the job description
of all from MD downward.
6. We will recognize that leader behaviour is a
fundamental determinant of follower motivation and success.
7. We will use customer focused skill building and creative problem
solving as motivational tools for all our teams.
This Customer Focus Strategy must create an engine that will drive every
individual within the Company. The pay back lies not only in increased
retention,
but in a huge surge of highly motivational drivers that, in turn, increase
performance and drive towards success.
Disclaimer: All information on this site is provided for informational purposes only! By no means is any
information presented herein intended to substitute for the advice provided to you by any health care or other professional
or organization.
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