Posts Tagged ‘points of connection’

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.

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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.

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