Who is Minding the Back Door for Your Business?

 

Most companies I know spend a large portion of their budgets on driving new business through the front door.  Far fewer spend even a fraction as much in a directed effort to avoid having those precious customers walk out the back door.  The prevailing assumption is that by providing pretty good service and having largely satisfied customers, the back door is covered as well as it can be, and everything else is controlled by external market forces.

 

In fact, retaining and developing profitable customers is the result of having a solid and aligned organizational culture focused on building relationships that generate loyalty.  According to Fred Reichheld, researcher, consultant, and author of The Ultimate Question, a loyal customer always returns, brags about your organization and provides (free!) word of mouth advertising.  They are willing to pay more to work with you and, when there is a mistake, they are more forgiving.  The ability to cultivate loyal customers is a profitable and powerful competitive advantage.

 

Satisfaction vs. Loyalty

 

There are 2 measurements that can help you understand and manage your customer relationships: customer satisfaction and customer loyalty. Many organizations assume that high levels of satisfaction translate into customer loyalty when, in fact, customer satisfaction ratings are more closely linked to your customers’ perception of product and service attributes rather than to the value they gain by doing business with you.

 

Satisfaction is a measurement of, “I expected it and I got it; therefore, I’m satisfied.”  If this were translated into a grading system, satisfaction translates into a grade of “C” on a traditional report card. This is precisely why your “satisfied” customers routinely shop around when it comes time to buy again. The desired score is obviously an “A,” an “A” always equates to loyal customers. An “A” implies that customers got more than they expected and their expectations were exceeded in some way.

 

High perceived value, as defined by your customers, creates loyal customer relationships, and research has demonstrated that customer loyalty is the best predictor of your future strength and growth potential. Perceived value occurs at the intersection of what customers want and what they get from you versus what they could get from your competition.

 

In order to create and sustain loyal customers, it is necessary to consider every contact with each customer as an opportunity for you to provide value—every time. Every service point is critical and every service point has a level of expectation from the customer that must be understood and managed. We call these contact points, Points of Connection (POC).

 

Points of Connection

 

Employee impact starts from the way they treat and relate to each customer at a given POC and their treatment of customers stems from the employees’ attitude. Attitude drives behavior, and behavior determines outcomes.  If the employees’ attitudes are positive, their behavior will be positive and supportive of the customer, which will generate results consistent with the expectations of the customer.

 

To effectively manage POCs they must first be identified. Once identified, you must clearly understand what value your customers’ desire from each POC. If there is a disconnect between what your customers expect and what currently exists then it imperative to ensure that proper employee development and process improvements are put into place to correct it.

 

Case Study

 

My friend, Jennifer Cassels, owner of Park Avenue Title Agency in Green Brook, NJ, exemplifies the cultivation of customer loyalty.  In the mortgage industry, the ability to overcome obstacles and close loans within tight timeframes can literally mean the difference between success and failure.  Jennifer works very closely with her clients – many of whom are real estate attorneys and mortgage lenders – to help them however she can to facilitate timely closings.  I’ve heard stories from her clients regarding her willingness to go “above and beyond” the call of duty to get transactions done – all the while providing accurate title services with a smile.  Additionally, she manages the POCs very well.  For example, you’ll always get a live person on the phone during business hours and she has a widely acclaimed closing cost estimate calculator on her website.  By managing POCs effectively and by going out of her way to solve her clients’ most pressing challenges (i.e. “how am I ever going to get this loan closed by Friday?”), Jennifer has created a loyal and growing client base.

 

Conclusion

 

Making the strategic decision to create a loyal customer base is one of the most important commitments you can make to the success of your business.  As Janelle Barlow and Paul Stewart say in their book, Branded Customer Service: The New Competitive Edge, “The customer service experience must be aligned with organizational promises.”  When your customer’s experience is not reflective of what has been advertised, promised, or expected, their trust in your business is undermined, which results in more traffic out the back door and lost revenue opportunities.

 

To build loyalty, your team must learn how to create strong relationships through frequent points of connection and deliver unique service experiences as expected and promised by your marketing and sales activities.  The immediate impact of delivering an exceptional experience based on what you’ve promised is a winning combination and a powerful weapon against the competition.  It will also help to ensure that the customers you work so hard to bring in the front door never even consider looking for the rear exit.

 

Got Alignment? Broken Promises Won’t Pay the Rent

People build relationships and decide who to buy from based upon trust.  Patricia Aburdene, author of Megatrends 2010 said: “Transcendent values like trust and integrity literally translate into revenue, profits and prosperity.”

If you are searching for a surefire way to anger and alienate your prospects and customers, simply violate their trust and you have just found it!  Think about one of your own recent experiences as a customer where what was delivered to you didn’t live up to what was promised.  How likely you are to do business with that company again? Even worse (for the business), how many people have you spoken to about your negative experience? 

I had a fun and illuminating breakfast meeting about a week ago with Larry Bailin.  Larry is an internet marketing guru, a published author, a sought-after speaker, and (as I concluded during our breakfast) an all-around nice guy.

The initial part of our conversation focused on Larry’s primary business, Single Throw Internet Marketing.  As a speaker and a consultant myself, I have a natural curiosity to learn about businesses, their customers, the people who run them, and the obstacles and opportunities they face.  So in a conversational manner, I was running Larry through a series of questions to help me get a grip on both “the man” and his enterprise.

One of the things Larry shared with me that periodically frustrates him is that some of his clients struggle to implement the internal processes, systems, and behaviors to support their online presence.  As we dug into this issue, it became clear to me that these clients struggled to deliver on the promise of their marketing.  In my own terminology: their internal reality (what they did) wasn’t aligned with their external reality (what they promised) and they weren’t creating trust.

How does your business’ internal reality align with its external reality?  If you’re not sure, I suggest that you take steps to find out, and pronto.  Your prospects and customers will be able to tell you, as will your own staff (believe me, they know).  An organizational assessment tool I use with my clients is a handy way to get at this critical information quickly, economically, and in a manner that preserves the anonymity of individual responses (in other words, you get the truth).

Data in hand – good, bad, and even ugly – you can then more objectively evaluate your internal reality in terms of your organization’s:

• Structure – including roles, responsibilities, and lines of communication
• Processes – both formally defined processes and informal ones
• Rewards & Recognition – both formally and informally, what behaviors are you reinforcing?
• People – do you, your mangement team, and your staff each have the right knowledge, skills, and attitudes to be successful in your role?

In my experience, if you’re not actively working to align the internal and external realities of your business, they are probably moving on their own inertia in a divergent path.  This is exactly the pattern that gives my new friend Larry Bailin heartburn as he helps his clients market more effectively online; it’s also the pattern that can stagnate growth, or even worse, put a business out of business altogether.