Archive for the ‘Customer Loyalty’ Category

A Loyal Customer Is Your Revenue Generator

Many small to mid size businesses cannot answer this question:  What is the total value of each loyal customer? For these SMB owners are so busy working on yesterday’s issues and today’s issues, they fail to invest the time on tomorrow’s opportunities.

To calculate this very important number begins by understanding your average revenue per order and knowing the total number of orders per year per customer.  By multiplying these two numbers creates your total revenue opportunities per year for your average customer.

Next take your total revenue opportunities multiplied by the average tenure of your customer and you now have your total value of a loyal customer.

For example, you are a small, locally owned restaurant and the average breakfast meal is $6.00 and your customers visit you 2 times a week or 104 times a year for annual total revenue opportunity of $624.  Your average tenure or lifetime for your customer is 10 years.  Total value of that customer is $6,240.

When that customer stops coming, you have not lost $12 a week, but $6,240.  This is why building loyal customers is so critical to your bottom line.

Here is another real world example. My husband and I go out for dinner usually once a week.  Twice a month we frequented a locally owned restaurant that consistently delivered good food. During one of our visits, my husband visited the men’s facility and observed a cook not washing his hands. Upon returning to the table, he quietly shared with me the incident and we left.

On our way out, my husband took the manager outside and politely explained what had happened.  Even though the manager did try to resolve the problem, we both know that individuals who fail to wash their hands will not change their behaviors.  Impact to that restaurant was easily $25,000 over the course of 10 years because usually once a month another couple joined us.

TAKE ACTION to make sure that everyone from the executive team to the frontline workers understand all points of connection. Demonstrate the financial impact when just one loyal customer is lost because a simple point of connection such as the staff not washing their hands was not maximized.

Share on Facebook

The Quicksand of Customer Loyalty Those Nasty Complaints

Building customer loyalty must address unsolved problems aka customer complaints. Take a moment to think about a problem that you had with a product or service provider such as a hospital, a retail store or a new car dealership.

Was your customer complaint or problem resolved to YOUR expectations or was it resolved to the provider’s satisfaction?  How did you feel when the complaint was resolved within your expectations?  Probably, pretty good and you may have even told some of your friends.

If that problem was not resolved to your expectations, how did you feel?  Just the opposite, angry, frustrated and can’t wait to share this miserable customer service experience with the first person who will listen and commensurate with you in your misery?

Now think about your customers and their unresolved problems.  When those problems are not resolved, they can become like quicksand.  You don’t know the quicksand is there until you step down and suddenly your entire body is being pulled into this gooey mire.

Unresolved customer complaints, for the most part, can be easily solved provided that everything from policies, procedures to systems are in alignment. What causes unresolved problems to stay unresolved is that employees do not have

  • Customer loyalty attitudes
  • Authority to resolve problems

If employees truly believe that their attitudes will either make or break customer loyalty while knowing the overall corporate goals, they are more inclined to create incredible points of connection.

For example, I attend a conference at a hotel three times a year. This conference brings at least $100,000 annually to the hotel. Each morning there is a breakfast buffet to quickly serve the 150 guests. I do not like the breakfast buffet. The hotel could force me to take it or leave it (that’s our policy, you have heard that before), but the morning waitress remembers my special breakfast order even though I am only there 3 times a year. A potential unresolved problem is immediately solved.  Am I a loyal customer? Absolutely!

CUSTOMER LOYALTY TAKE ACTION ITEM: By setting a goal to resolve 100% of all problems to your customers’ expectations during the next 90 days.  Measure the results. You should find an increase in revenue because you have dramatically increased customer loyalty.

Share on Facebook

How Do You Develop Customer Loyalty?

To develop customer loyalty means that you must know what to do and probably change your paradigms.  Loyal customers have different expectations than just satisfied ones.

Customer Loyalty Coaching Tip:  The digital disruption will impact your paradigms about loyal customers.

To learn your customers’ expectations begins with the management team.  Senior management needs to identify the points of connection within the customers’ experiences. Points of connection are anything that customers can see, feel, smell, taste or hear. Literally walking through the organization is a very simple way to locate the many points of connection.

Also, management needs to determine what a loyal customer is worth over the average customer lifetime.  For example, a satisfied customer visits a local retailer four times a year and spends an average of $50. This customer is worth $200.  A loyal customer visits the same store, spends $50 weekly and her value climbs to $2,600 annually.

Now consider those customers shop the same store in the same manner for 10 years. The satisfied customer has a total customer value of $2,000 while the loyal customer is worth $26,000.  This calculation quickly demonstrates how just a 5% retention in customers can create a 25 to 100% increase in profitability.

Some retail stores such as automotive to industries such as lodging have extensive data about their customers and understand the overall value every potential customer brings to their establishment.

Then a customer service survey can be created to reflect these points of connections as well as other issues such as unresolved problems.  When this information is compiled, then a customer loyalty strategic plan can be developed to ensure that all actions are aligned to the goal of developing loyal customers.

Of course, employees also need to be trained and developed to embrace a customer loyalty philosophy while shedding the old one of customer satisfaction. This customer service training should have them also identify points of connection and understand the critical goal of problem resolution.

TAKE ACTION to make every customer experience is the best.  Begin with a organizational assessment that is aligned to a continuous improvement process. Then take time to identify the critical points of connection.

Share on Facebook

Customer Loyalty So You Have It?

The 20th century business model focus was labor intensive. Creating satisfied customers was the goal.  However, the 21st century has changed the marketplace forever.

With the click of a mouse thanks to the dramatic impact of ever changing technology, your satisfied customer can leave and become easily satisfied by your competitor. What will you do then?  Continue the same practices, policies, and procedures through archaic customer service training?

Customer loyalty is truly about your bottom line.  Did you know that a 5% increase in customer retention can have a 25% to 100% in profits?

Take a moment to think about the impact of this figure to your bottom line. You already have satisfied customers.  By converting them, you save money by not acquiring new customers which is far more costly.

But the real power is that these loyal customers become your greatest marketers. They are singing your praises to everyone through Word of Mouth (WOM) advertising. And everyone in business knows that you cannot pay for a referral.

So what is keeping you from building loyal customers?  In many cases it may be your policies, procedures and customer service training.

For example, some organizations focus on timing the interactions between associates and customers.  Speed becomes the driver of the customer experience.  The customer cannot complain that the transaction took too long, but they will complain about being treated like a number, like an empty bag, like less than a human being. Have you ever had that experience?

Smarter salespeople are coming to realize that unresolved problems are keeping them from loyal customers.  If a customer has a problem and that problem is resolved to the satisfaction of the customer, repeat sales happens.  In other words, resolved problems create loyal customers who want to come back and spend or invest their dollars with you.

TAKE ACTION to think about your customers.  What can you do to build loyal customers?  If you do not have a customer loyalty strategic action plan, then construct one is where to begin.

And remember, the digital disruption will impact your customer loyalty strategies.

Share on Facebook

Customers Leave People Not Businesses

You work hard to build your SMB.  You make the extra effort to show appreciation to your loyal customers.  And then poof, one of your people, with some poor emotional intelligence destroys what you worked so hard to achieve.

customers-emotional-intelligence

A True Customer Loyalty Story

An entrepreneur recently shared his customer experience about how one restaurant manager destroyed his customer loyalty. He then put that destruction into hard cold cash. This friend had a 40 year plus relationship with this particular upper end restaurant.  He was by all accounts a valued, loyal customer.

In the last eight months, he had given this SMB over $10,500 and he determined yearly expenditures were around $18,000.  Additionally he had booked his annual Christmas party for the another $7,000.  His annual sales at this particular establishment amounted to $25,000.  Even for established restaurants, losing $25,000 in annual sales is a significant hit to the bottom line.

The manager lacked the emotional intelligence to effectively manage his wait staff.  He also failed to recognize the importance of maintaining loyal customers.

Now this entrepreneur will take his business luncheons, business dinners and casual dinning experiences elsewhere.  He will no longer recommend this particular restaurant as he had done hundreds of time in the past. So the $25,000 annual sales from this one loyal customer could easily be doubled or tripled.

SMB owners so often fail to recognize the importance of their managers to effectively manage their people while ensuring loyal patrons stay loyal and employees are treated with respect.  In today’s world, we identify this ability as emotional intelligence.  To mistreat a loyal customer with decades of patronage is unforgivable especially if during all those years there was never an issue with the customer.

There is an old adage about employees leaving managers not businesses. This wisdom should also be applied to customers as well.  People make or break any business from the smallest to the largest.  As a SMB owner the question should be:

Can you afford to lose customers and their referrals because your people are unprepared to handle customer situations?

Schedule a time to speak with Leanne Hoagland-Smith (CLICK HERE) and learn how to build emotional intelligence into your employees.

Share on Facebook

Buying Mistrust Is the Intersection of Expectations and Inconsistencies

Yesterday, I personally experienced how just one word creates buying distrust.  I also experienced how a seller recognized and overcame that buying distrust. Let me quickly explain.

buying distrust

Credit www.pixabay.com

Buying Mistrust a Short Story

Two weeks ago I made an appointment at my health care clinic. The intake person said I would be seeing Mindy. I asked who was Mindy and the person responded “She’s the doctor.” My doctor had relocated out of state and was no longer at this clinic.

Yesterday was the appointment. In completing the paperwork, a question was raised about my preferred pharmacy. I told the intake person that I preferred a written prescription so that I can check prices online. She said “you can talk to the doctor about that.”

When Mindy came into the room, she introduced herself as a nurse practitioner.  This caused immediate distrust because my expectation was to see a doctor. I had been told twice I would be seen by a doctor.

I voiced this concern. Mindy recognized I experiencing distrust and gave me the choice to see a
medical doctor or to just continue.  She demonstrated excellent emotional intelligence and I decided to continue with her.

Even after 40 plus years of dealing with customers and being in sales, I once again realized how quickly buying trust can be placed by buying distrust even with loyal customers.  Trust be it in business or one’s personal life can never be taken for granted.

In working with clients, I continually stress the importance of consistency in all aspects especially in behaviors.  Here just one word, doctor, spoken twice to a loyal customer planted the seeds of distrust.

As a side note,  my husband had visited the same clinic. On his visits he has been told he would be seen by the nurse practitioner.  My experience confirmed this organization has an inconsistency in communication behaviors.

Just imagine each day how many customers or patients experience this collision of expectations and inconsistencies?  Who would really appreciate how this collision has the potential to be caused by just one word?

Trust even with loyal customers can never be taken for granted.  Every interaction must continue to build trust.  To fail to ingrain this principle into the organization’s culture or what I believe is truly the sales culture can be the organization’s Achilles’ heel.

 

Share on Facebook

How Customer Loyalty Can Be Destroyed by One Simple Action

Much is written about customer loyalty. Yet in speaking with a colleague yesterday he shared how his loyalty of 20 plus years was destroyed by one simple action.

customer-loyaltyHis financial institution, a national and well known bank, stopped taking in loose coins. The reason he was told by the teller for this was the maintenance cost to the coin counting machine had become cost prohibitive.  He was then told he must count and roll the coinage. Then he can bring it back to the bank.  Even though he was not told this directly, this specific banking service was no longer profitable.

As he learned of this, he saw tellers standing around, talking and not waiting on customers.  He told me, “They won’t take my fricking coins when people are standing around doing nothing?” Then to add insult to injury he later learned the coin counting machines in the grocery stores are owned by this national financial institution.

The end result was within 30 days he changed banks. He switched not only all of his personal accounts, but his business accounts as well.  Of course this was a little action, not accepting coins, but in the long run it probably did more damage than the cost of maintaining the coin counting machine.

To maintain customer loyalty is to understand what clients value. In this instance, it was a common service.

Additionally, transparency matters with regards to customer loyalty.  Don’t tell a customer you can no longer provide a free banking service and then sell a product charging a fee for the same service. This behavior usually upsets and angers loyal customers. Communication is critical when making changes to expected services.

I asked my colleague how many people he has told this story?  His response was many.  Again, unhappy loyal customers will tell a lot more people about a negative experience than a positive one. This fact is continually verified by customer behavior research.

So if your organization be it a SMB or a larger one is thinking of making minor changes, just make sure your have communicated your intent to your loyal customers.  Be extremely careful of what you communicate because transparency is a two way street.

Share on Facebook

Eating Workplace Culture One Bite at a Time – Part 10

How would your workplace culture respond to this simple question?

workplace-culture

Credit www.gratisography.com

How likely are you to refer a friend to this organization?

Funny isn’t it, many in leadership will use this question to gauge external customer loyalty, but ignore internal customer loyalty?  If your employees will not refer your business to their friends either as potential employees or paying customers, what does that say about your workplace culture?

This question is often ignored or passed over when assessing organizations.  Yet the research done by Fred Reichheld in his book, The Ultimate Question,   has demonstrated the higher the score to this question, the greater customer loyalty and greater sustainable business growth.

Some organizations now embrace this question better known as the Net Promoter Score. In numerous instances, this question is asked after interactions with customer service departments to quickly identify any distractors or unhappy customers.  As noted previously when discussing customer focus,  unhappy customers are costly and become bad PR beacons.

Even though the Net Promoter Score has been readily adopted, this may lull executive leadership into a false sense of security.  People may be likely to refer others to your business, yet the proof is in the pudding as they say.

Did they actually take action and make a recommendation?

People are far more likely to take action to share the bad news than to take action to share the good news.  Good news as we know just doesn’t sell.

Workplace culture is a bee hive of good and bad news.  Executive leadership must create an environment where good news is rewarded and shared.  Employees should not be afraid of sharing bad news if necessary.  However the guiding values or business ethics should clearly identify that some bad news such as gossiping is not acceptable.

Have you ever been around some sales clerks and hear them talking about management or another employee?  I know I have.

 How did that make you feel as a customer? 

Did you find yourself not wanting to go back? 

When employees refer a friend, they understand their credibility is on the line.  They will not refer a friend just because they are asked to. No, they will refer a friend because they want to and believe in the organization as an employee and as a customer.

An engaged workplace culture can not only increase productivity, it can reduced costs from marketing to hiring. Maybe now is the time to find out how truly engaged your workplace culture really is?

Please feel free to check out this holistic cultural assessment tool that allows even the smallest firms to start identifying the barriers to effective execution of current business growth strategies including refer a friend or customer loyalty.

* * * * *

Leanne Hoagland-Smith is THE People and Process Problem Solver. She supports forward thinking leaders in bridging the gaps between the two problems restricting strategic business growth – people and processes. Leanne can be reached at 219.508.2859 central time USA.  Follow her on Twitter or check out her profile on LinkedIn

Share on Facebook
RSS Subscribe!
Coaching Tip

People buy results or rather people buy the feelings the results deliver.

What’s Happening?

Internal Results interviews
Leanne Hoagland-Smith
. Some of her answers may surprise you.

Check out this podcast on value creation between David Brock and Leanne Hoagland-Smith

Listen to Leanne Hoagland-Smith at Sales Scenario podcasts

Another list of top sales bloggers

Pre-order this great book How to Get a Meeting with Anyone. You may recognize a familiar name.

Top 100 Most Innovative Sales Bloggers Honored this blog is included in this impressive list.

Best Sales Blogger Award for 2014 Third place awarded to Leanne Hoagland-Smith.

NWI SBDC awarded Small Business Journalist of 2014 to Leanne Hoagland-Smith. Awards.

Expand Your Business Horizons
Sign up to receive monthly newsletter devoted to small businesses and busy sales professionals Beyond the Black
Be the Red Jacket
Seeking an easy and practical book on marketing, selling and sales? Read the reviews at Amazon and then order your hard copy or eBook.
Sustainability Expert
The Institute for Sustainability
Ezine Expert
Blogroll – Leadership, OD
Contact Coach Lee

Leanne Hoagland-Smith
219.759.5601 Main Office CDT
219.508.2859 Mobile CDT

Office located near Chicago, IL

www.processspecialist.com Main Website

Sales Corner

Tracking by The Sales Corner
Blog Rankings
Business Blogs - Blog Rankings
Blog Top Sites
Plazoo
RSS Search
Blog Log