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2/8/2016

Building Customer Loyalty

The Power of 3³

All things change; especially customers. Today's customers are not the same as yesterdays and even the existing ones that may have been loyal to us for many years are more than just older, they are likely to be different in their view of and approach to suppliers. It therefore follows that if customers’ expectations and behaviours have changed, then so too must the things we do to build customer loyalty.

So what are the customer expectations and behaviours that have changed significantly over the past few years? The key ones that most of the latest research findings point to are that today’s customers are -

· More impatient – They want it now.

· Better informed – They’ve looked it up on the Internet.

· More demanding – They expect more - probably for less.

· More prone to complain – They will tell you if they don’t like anything.

· More focused on experiences – They want to enjoy their encounter with you.

· More likely (and able) to tell others about what they view as poor service – They now have access to millions of other customers via the Internet.

If you think about it, this probably not only describes your customers, it perhaps also describes you when you are a customer. So this poses the question of what service techniques and practices need to be adopted to effectively serve these new types of customers.

Focussing on the right thing

Many organisations and people are rightly focussed on Customer Experience Management. For the past few years I have been too. But then, a few months ago, I came across some research that got me thinking that maybe we haven’t been focussing on the right thing.

I guess the key goal of people in the world of customer service is to build customer loyalty. Yet my research suggests that Customer Experience Management alone will not do this. So although I’m still interested in Customer Experience Management, I’m convinced that it falls into the category of ‘necessary but not sufficient’. More is needed. Much more in fact! So here are some thoughts on what more I think is needed.

Loyal Customer Behaviours

Let’s start by considering what are the behaviours that are typically displayed by loyal customers. There’s lots of research into this and below is a list of typical findings.

Loyal Customers will:

· Recommend you to other potential customers

· Pay you more for the same things they know they could get elsewhere for less

· Forgive you when things go wrong

· Defend you when others attack

· Provide you with honest feedback

· Actively look for ways to spend more with you

· Cost you less to serve

· Build your sales and make you more profit

Obviously not all loyal customers do all these things. But I’m sure you would agree that just a few of them are worth some effort and investment. So to my mind, Loyalty has some really worthwhile rewards and should therefore be the key goal. My main focus has therefore now moved to the subject of Customer Loyalty Management.

Influencing Customer Loyalty

Loyalty is a behaviour customers display sometime in the future. But to influence future behaviour we need to do something more than simply manage current experiences. We need to make some things within these experiences are at least memorable and ideally unforgettable so as to plant strong memories that will cause customers to behave the way we want, sometime in the future. That’s a tall order and the standard techniques of Customer Experience Management do not do it. So memory management and experience management are not the same things and a whole new range of techniques and implementation tools need to be learned to be good at Customer Memory Management.

But even that isn’t the whole story because we still haven’t properly considered customers’ expectations and the massive influence they have on future loyalty. If what you expect and what you get are the same that will probably have little or no impact on your loyalty. But what if they are not the same? What if you consistently get more than you expect? It’s then reasonable to assume that could make you more loyal. (Research shows that it does). And conversely if what you get is less than you expect, that will make you less loyal. So if expectations can have such a strong influence on future loyalty this must raise the need for yet something else - Customer Expectation Management.

So this means that if customer loyalty is the goal, we need to understand and be skilled in three distinct and different (although connected) techniques. They are:

· Customer Expectation Management

· Customer Experience Management

· Customer Memory Management

I’m calling this Customer Loyalty Management and it is where I think the future focus should be. So here are a few thoughts about what is needed to be good at it.

Customer Loyalty Management

As I’ve already explained, there are three elements that combine to make Customer Loyalty Management. So let’s now consider the key things to focus on in each one.

Customer Expectation Management

This is all about ensuring that the expectations customers have are carefully managed so that what they get is always either as expected or better and loyalty is therefore either maintained or improved. The key is to ensure that no promises are made that can’t later be delivered or expectations created that will not be met. Experience has shown that there are three key things to avoid which are -

False Promises – These are promises made to customers that the person making them knows will not or perhaps probably will not later be met. Making them may achieve a short-term gain or remove a current problem, but they always return later, usually with greater impact, and create an even bigger problem and serious damage to loyalty.

Land Mines – These are event drive promises, made by one person, which cannot then be delivered by another. An example is when a sales person commits an installation engineer to doing something they can’t later do. The issue is that, as with a land mine, the person that experiences the problem is not the person that caused it. And because of this they are often happy to keep causing future similar problems with little or no regard for the damage they cause to colleagues or customer loyalty.

Time bombs – These are similar to Land Mines but they are time related. For example, if a customer is due a credit and is told that it will be received by a certain date; when that date arrives, if the credit has not been received, the time bomb then goes off and an annoyed customer will be on the phone. Here again, the person setting the time bomb may not be the person that has to deal with the ‘explosion’ when the annoyed customer calls, and so is happy to keep setting them.

Every time a customer experiences one of these things it’s the equivalent of stabbing a knife into the heart of relationships and loyalty – Trust. You cannot trust a person or organisation who or that does not deliver what they promise. In individuals this usually happens because the person is either dishonest or so focussed on achievements in the present they have no concern about the future. In organisations this generally occurs because the various departments are not joined up with shared worthwhile goals based on end-to-end customer experiences. But whatever the cause is, if you want loyal customers, things like this must be eradicated.

Customer Experience Management

This is about delivering experiences that match or exceed expectations, encouraging customers to behave the way we want in the present and ensuring we do all we can to maintain or build loyalty. There are three key areas to focus on to do this. They are -

Removing OUCH experiences – These are negative experiences a customer has, such as waiting an excessive time to be served, having to deal with ill-mannered, poorly trained or uncaring people, product failures, etc. The key is to be open to all feedback from customers so that you are aware of all these experiences and can do whatever is necessary to remove them promptly, effectively and permanently.

Creating WOW experiences – These are similar to the Magical Moments in the next section. However their purpose here is to make a current experience as pleasant as possible. They are usually things, done on the spur of the moment, as opportunities arise, by caring employees who wish to make the customer feel happy and pleased with the service they are receiving.

Practicing DAZZLING RECOVERY – Recovery starts when an OUCH is reported or detected. The usual response from most organisations is to remove whatever is the cause of the OUCH and then perhaps to fix the problem so that it cannot reoccur. But that isn’t recovery. Recovery happens when following the removal of the OUCH, a WOW is added. For normal recovery the WOW will be equal to the OUCH in the impact it has on the customer. For dazzling recovery the WOW will exceed the OUCH and so create an unforgettable story of a positive experience. Research shows that dazzling recovery is one of the most powerful loyalty building techniques that exist.

Customer Memory Management

This is all about planting unforgettable memories that will influence customer to be more loyal in the future. Psychology tells us that for things to be remembered there needs to a story to tell and that the three key things that create memorable stories are -

Changes – These are things that in some way are different to what was expected. So if the goal is for them to create loyalty they need to different in a positive way, which means they need to be better than expected. I therefore like to call them Positive Surprises.

Significant Events – These are things that are memorable because they triggered some emotions and/or sensations. These too must be positive feelings that we like if they are to build loyalty. I therefore call these Magical Moments.

Endings – First impressions are important; but last impressions are critical. They can override everything that preceded them in any experience and become the only part of it that is remembered. It’s therefore vital that we think about the end part of any experience and make it at positive as possible. I call this making a Last(ing) Impression.

Conclusion

So there you have it - some thoughts on why and how to go about Customer Loyalty Management. And I guess by now you spotted why I gave this paper the subtitle The Power of 3^3.There are 3 key topics and in each one, 3 things to focus on. I think they collectively make a very powerful loyalty building combination. So I hope you have great success putting them to use in your business.

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Building Customer Loyalty

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