“An ounce of loyalty is worth a pound of cleverness.” - Elbert Hubbard
For decades, the goal of many organizations has been to satisfy customers. While satisfaction is important, it is not sufficient to guarantee that your customers will continue to buy from you. As the business world evolves at a rapid pace, the minute you become complacent, BANG, a new competitor surfaces with a product or service they claim is better and more cost effective than yours. Suddenly, your customer no longer needs you.
We all know it costs significantly more to acquire a new customer than to maintain an existing customer. Existing customers play a vital role in our ever-changing global economy; we must keep them and grow them!
A satisfied customer is NOT always a loyal customer! So, what really drives customer loyalty?
Josiah Royce, an American philosopher in the mid-to-late 1800’s, claimed that the trait of loyalty was most often associated with political institutions, religion, war, and family. In these situations, people had one key influence in common; a passionate link to a “common cause.” Loyalty can be built when you and your customers are aligned on 7 key factors. These are:
1. Emotional Dependence
This is the psychological commitment from the customer. It is the customer’s reliance on an organization for support, guidance and decision making.
How to create emotional dependence:
- Learn what your customer value is on a personal level and go beyond their expectations to demonstrate that you care about them.
- Show a high degree of empathy and responsiveness when you sense your customers are getting emotional about an issue. If you can’t solve the problem on the spot, let them know they are important and that you will do what it takes to resolve the issue an issue as soon as possible.
- Put the right person on the job. Make sure the customer facing employee can provide support and has the right processes in place. Make the customer feel good about working with your organization.
2. Structural Dependence
This is the operational foundation of the relationship and consists of people, facilities, systems, and distribution channels.
How to create structural dependence:
- Understand how your customers businesses operate. Accenture is a good example of a company that creates structural dependence by providing clients with a wide range of outsourced IT service. This enables clients to run their businesses more efficiently and focus on their core business.
- Determine where they have gaps or inefficiencies. UPS is another good example of this. They have re-positioned from a company that merely delivers packages to one that can manage an organization’s complete supply chain function around the world.
3. Business Dependence
This is the marketing positioning of the relationship. It includes how you help your customer create go-to-market solutions, grow and retain their customers, and be competitively sound in their market.
How to create business dependence:
- Identify areas where your customer is weak but you are strong, as well as areas where you are weak and your customer is strong. After conducting this analysis, identify opportunities for building on each other’s strengths and minimizing each other’s weaknesses. Then, start to envision how the relationship would work operationally and financially to build mutual value.
- The relationship between Apple and AT &T is a great example of business dependence. When Apple decided that it wanted to launch the iPhone, it entered into an exclusive agreement with AT&T. Apple distributed the iPhone through AT&T’s massive retail network and, in turn, AT&T built its subscriber base by attracting customers from competing providers, such as Verizon and T-Mobile, who couldn’t offer the iPhone. By combining forces to sell the iPhone through the AT&T sales channel, both organizations benefitted significantly.
This is often an indication of how well your organization performed during a recent event. It often includes elements of service, support and delivery.
How to create satisfaction:
- Creating high customer satisfaction starts with a careful assessment to determine needs and uncover expectations with regard to price, impact and level of service. Then you must meet or exceed expectations. “How” you deliver can be as important as “what” you deliver, so don’t underestimate the impact emotions play in satisfaction scores. Formal surveys and properly designed questionnaires are a big help.
- For example, JD Power and Associates are well-known for their customer satisfaction surveys on automobiles, consumer electronics and financial services. Among the most widely known are Power Circle Ratings related to the J.D Power and Associates Initial Quality Study, which measure consumer perceptions of automotive new-vehicle quality after 90 days of ownership.
The remaining 3 factors will be covered in part 2 of this blog series next week, stay tuned! If you simply cannot wait, access the free whitepaper below.