Wednesday, May 26, 2010

The role of alignment in customer loyalty

It's easy for business owners and managers to make some assumptions about why customers are or are not being satisfied when they make contact with the company.  These assumptions include:
  • If only my people would be better they would treat the customers better.
  • Customers don't know what they want (and other "blame the customer") variations.
There's more to be done than to ensure that employees know how to behave at every point of customer connection, and to have them feel motivated to do it consistently.

Strategy
The company's strategy points the way for customer loyalty.  Leadership needs to determine the targeted customer base, and that leads to the selection, expansion or contraction of product and service offerings. The plan also includes the basis upon which the company intends to compete:  its strategic advantage might be location, price, innovation, comprehensiveness of product offering, etc.

Structure
Have you ever been sent to "voice mail hell" when trying to resolve an issue as a cuatomer?  The business's structure determines how many people are available to serve the customer's needs, how much power they have, and how far you have to go to find the place where the buck stops.

Process
Customer loyalty is in large part about the service experience.  Regardless of the quality of the widget being purchased, loyalty can be won or lost based upon how easy the company is to do business with.  Things like payment methods, payment terms, clarity of invoices and return policies roll into the process component.  Note:  Service deficiencies that are pinned on employees by management are often process issues, not people performance issues. People are usually doing their best within processes and systems that are broken, too complex, or poorly defined.

Rewards
I don't know about you, but I'm not inspired to buy when I'm leapt upon by two salespersons who are falling over one another competing for me (and for their commission.)  I understand the concept behind pay for performance, but some reward structures by nature lure customer service personnel to take the short-sighted view that this immediate commission opportunity is more important than the long-term satisfaction of the customer. 

The rewards component also reveals the fallout from its flaws when a team is serving a customer, but only one person or role on the team receives the rewards.  Teams under this scenario can eat their young - at the very least there will be conflict between the "fair haired children" who are rewarded and the rest of the team.

People
Ah, yes.  Now we're down to the people.  Behavior that generates customer loyalty is fueled by effective customer service skills, customer focused and positive attitudes, and goal-driven action.  By goal driven I'm not talking about the self-serving behavior mentioned above in the rewards component.  I mean action that is focused, targeted, intentional based upon the strategic intention of the company.

There are certainly personalities and temperaments that more easily lend themselves to be effective in customer service roles.  But when customer loyalty is a central piece of the company's strategy, customer focus is not only the purview of the people who have direct company contact.  People in management, support functions, back shop - everywhere in the company - have to be hearing the whisper of the customer in their ears and responding to it.

Summary
Each of these components is connected to every other component.  If you push on one of them, the rest are going to wiggle.  You'll see problems when they don't fit with one another.  But when these five components are integrated and aligned...well, that's where the loyal customers live.

5 comments:

amjadbutt said...

If only every person in the world would follow all the rules that you gave... I think that everyone should come and visit your website
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Green Marketing and Customer Loyalty said...

There is not a way to prove customer loyalty in business. Business is purely math.

Julie Poland, certified business coach said...

Green Marketing and Customer Loyalty -

I beg to differ. You can measure customer loyalty in a number of ways:
1. Repeat business $ and frequency of transactions from a particular customer
2. Net promoter score - a calculation based on responses to the question "How likely are you to refer our business to a colleague or friend?"

Julie

GeorginaShenton said...

Repeat buys is the usual way to measure loyalty - also customer surveys are a good source although there can be sample bias involved.

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