Client Loyalty

In this age of e-commerce, information overload and fast-paced communication it seems that loyalty is a rather quaint, old fashioned notion. Nothing can be further from the truth. Loyalty is at the hearty of every customer, employee and stakeholder interest . They place their loyalty in our company when they make a purchase, show up for work or invest their dollars.

According to author Fredrick F. Reichheld, who wrote the bestseller “The Loyalty Effect” the acid test of leadership is to build strong bonds of loyalty with customers, employees and shareholders. Leaders too often confuse profits with purpose. They take the low road to short-term gains at the expense of their partners.Loyalty leaders TRANSFORM customer, employee and stakeholder loyalty into economic advantages. For example Harley Davidson recovered from near bankruptcy by building loyal relationships with all stakeholders. Southwest Airlines, which has never had a layoff, is the only consistently profitable airline in the United States every year since 1973. Enterprise Rent-a-Car is the largest car rental company in America by living their motto, “Put customers first and employees second.”The key to building loyalty is developing and LIVING to a set of consistent core goals. These encompass six basic principals:

  1. Play to win/win
  2. Be picky
  3. Keep it simple
  4. Reward the results
  5. Listen hard, talk straight
  6. Preach what you practice

1. Play to win/win
Loyalty isn’t about frequent flier miles. It is about earning people’s trust and enthusiastic commitment to a relationship over the long haul. When partners trust that you have the capability and desire to help build THEIR success, then they will do the same for you and your profits will soar. If you want to deliver superior customer service then you must refuse to be satisfied. Only by helping others to reach for the stars can a leader ensure that their company is taking the high road to success. It is also important that we play WHERE we can win. You cannot afford to waste time and energy with business and customers with which you don’t have a legitimate opportunity to do the best work. Get rid of the distractions and focus on your core business. Make a commitment to grow from your position of strength. In 1994, Dell computers was selling directly to consumers as well as through retail chains such as Circuit City and CompUSA. They found however that their customer satisfaction level and profitability with retail based sales was considerably lower than through the direct sales model. The answer was to concentrate on their original model which proved to be brilliant for the company.2. Be picky
Choose your partners carefully whether they be customers, employees or company stakeholders. Nothing speaks more clearly about your values and principles than your choice of associates and who you promote to positions of authority. Loyalty leaders will be the first to admit that they discriminate – not on the basis of race, religion or gender, but on the basis of capability, performance and attitude. Hire people not so much WHAT they can do but rather for WHO they are. Employee behaviors and attitudes communicate most directly to customers and suppliers just what the company stands for. Be as choosy with your customers as well. Don’t lure butterflies, but rather collect barnacles. These are customers who are likely to stick around for a lifetime if they are treated right. Butterflies on the other hand tend to flit off to the sweetest deal of the day. They look nicer than barnacles but I’ll take a crusty old barnacle any day.3. Keep it simple
Complexity is the enemy of speed and flexibility. Like it or not the world today runs at Internet speed. Companies must have the capacity for rapid learning and rapid response. There is a link between loyalty and response time. Companies with a loyal customer base are highly adaptable to market needs and changes. We all know that the only constant is “change.” As loyalty leaders we must convince everyone in our organization that the past will never be as good as the future. Those of us that have lived in a small town know that loyalty is very natural. People know each other and treat one another as neighbors. Companies need to think small if they want to build greater loyalty. Build a structure where people can work well in small teams. When a small team accepts ownership of a daunting challenge for change, a wonderful dynamic emerges. Everyone stops worrying about who will get credit or the political factors. They step up and collectively perform.4. Reward the results
Few organizations, large or small have effective reward or incentive systems. They typically pay based on those variables which can most easily be measured rather than the right results. Are you measuring on the right things? What you decide to measure clearly identifies your values and priorities. You can talk all you want about loyalty and customer satisfaction, but if all of your rewards are based on profit rather than also including loyalty, service and satisfaction then you will paralyze growth. A classic example of poor reward systems exists in the cellular phone business. Most experience enormous customer churn. Yet they continue to abuse loyal customers by offering the best rates, discounts, new technology and free minutes to first-time customers and offer nothing to loyal existing ones. Share economic advantages with loyal customers first.5. Listen hard, talk straight
Many call this the age of information but as I have said on many occasions on may radio show and in these Marketing Minutes; this is the age of relationships. People are looking for relationships with those that understand them and CARE about them most. If you want to build a business community of enduring relationships you must help everyone in your firm to become more effective communicators. Their most exceptional skill should be at communicating the benefits to constituents and winning them to their way of thinking. Everyone must be willing to LISTEN, LEARN, FOLLOW-THROUGH, EXPLAIN WHY.6. Preach what you practice
Many have heard the maxim, “practice what you preach,” but I like to say loyalty leaders “preach what they practice.” Each of us are literally preaching a sermon with the lives that we lead. We can’t go quietly about our business and presume our actions simply speak for themselves. We must preach the wisdom of loyalty to all the ranks in our relationship networks. We need to build a repertoire of teachable stories that illuminate the loyalty principals.I hope this motivates you to develop better loyalty programs for customers, employees and stakeholders in your business.

Posted in customer satisfaction, Uncategorized.

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