How to build customer loyalty.
Ralph Waldo Emerson famously said, “Build a better mousetrap and the world will beat a path to your door.” The idea here is simple. Better products create loyal customers. And loyal customers buy what you’re selling.
Of course, there is some truth to Emerson’s observation. The problem is in our understanding of the word “better.” All too often we as managers define better exclusively in terms of product features and functions. But in most business sectors, customers rarely distinguish the best firm from the second best based upon product features. David Neeleman, founder and former CEO of JetBlue Airways, described what differentiated his company from competitors this way:
Our better product is more than just the DIRECTV and XM radio we’re getting on and the Fox movies we are putting on. What you can’t buy is the loyalty that comes through our dedicated crewmembers.
The reality is that customers determine “better” based upon their total experience, not simply the product’s features and functions. What this means is that there is no separating the human element from the total offering. In other words, loyal employees are conduit for creating loyal customers.
The very bad news is that we as managers are not doing a good job of creating either: loyal customers or loyal employees. Only one out of five customers feels strongly loyal to the places where they do business. Worse still, only one out of ten of us feel a strong connection to the company where we work, to our peers at work, and even to the people who report directly to us.
Sadly, we as customers and employees believe that we are giving as good as we are getting. The percentage of people who feel loyal as customers or employees is virtually identical to the percentage of people who believe these companies demonstrate that they deserve our loyalty. The result? Employees mentally quit their jobs, treating them as just a way to make money, and customers begin treating every interaction as merely an economic transaction.
As managers there is no escaping this simple truth—the only way to way to grow a business is through loyal customers and loyal employees. And we as managers have to demonstrate that we deserve that loyalty.
4 Steps to Building a Loyalty-Driven Organization
1) Pinpoint where you are.
Building a loyalty-driven organization must always begin with a personal self assessment. Improving our connections with others invariably begins with improving ourselves (as leaders, managers, colleagues, etc.). But without a realistic assessment, we are flying blind. We need to know how we interact with others. We need to be clear as to where our loyalties really lie.
Most of us believe that we are much more loyal—and therefore much more deserving of loyalty—than others see us to be. Therefore, we need to be completely objective in evaluating ourselves, and in seeking input from others regarding their perceptions of our loyalty.
[Because of the difficulty most of us have in doing this, we created LoyaltyAdvisor (www.LoyaltyAdvisor.com) a revolutionary tool for examining our loyalties. This Web-based interview analyzes your loyalty across multiple dimensions proven to link to your success. LoyaltyAdvisor is the product of a global effort, the most comprehensive study of loyalty ever conducted, to identify those loyalties most important to our success.]
2) Pinpoint where your organization is in the eyes of its customers.
How loyal are your customers really? Loyalty is more than a feeling. Loyalty requires action. So answering the question requires collecting information on how customers feel about the organization and how customers actually do business with the organization (i.e., how do they divide up their spending among competing alternatives).
Getting a measure of how customers feel is relatively straightforward. All it takes is a good survey process to get an objective gauge of customers’ attitudes.
Collecting data on customer shopping behavior isn’t quite so straightforward. But with a little determination, it can be done. In the absence of actual spending data, customers can be surveyed to ascertain both their attitudinal loyalty and their buying behavior (as opposed to their future intentions). Wherever possible, however, stated customer behavior data should be validated and calibrated with available internal data.
3) Pinpoint where your organization is in the eyes of its employees.
Rensis Likert observed, “The greater the loyalty of a group toward the group, the greater is the motivation among the members to achieve the goals of the group, and the greater the probability that the group will achieve its goals.” Unfortunately, virtually all of us sense a decline in company–employee loyalty in comparison with our parents’ and grandparents’ generations.
Collecting information on employee loyalty is simple. All it requires is a good survey process. The key here is in providing a forum where employees feel comfortable sharing their real feelings without fear of a negative backlash.
4) Make the link.
The correlation between employee-loyalty-related attitudes, customer-loyalty-related attitudes, and business outcomes is always meaningful from a practical, managerially relevant perspective, so it is worth the effort. In fact, a large-scale study conducted by researchers Harter, Schmidt, and Hayes presented compelling evidence that employee-loyalty-related attitudes were positively linked to customer loyalty, employee turnover, and firm revenue and profits. Furthermore, managers can learn a great deal by studying the performance of their most loyal business units, and how this is influenced by managers’ own relationship styles.
The performance data (revenue, profits, turnover, etc.) exists within the organization. And the data on manager, employee, and customer loyalty is easily obtainable. The only think that prevents us from making the link is our will to pull this data together.
Timothy Keiningham is Global Chief Strategy Officer at Ipsos Loyalty. Lerzan Aksoy is Associate Professor of Marketing at Fordham University.
Add this page to your favorite Social Bookmarking websites
Hits : 789
