Have you ever lost a customer and didn’t know why?
I was talking with Business Coach and Professional Speaker Leslie Ungar of Electric Impulse Communications about customers. She shared a story with me that really helped put things in perspective.
As the economy takes its good old time recovering, the trickle down effect of lower revenues is hitting some of the smaller companies and as such, companies are cutting back some of their vendor/freelance relationships. Each time we loose a customer we have to access the situation.
Is there something I could have done differently?
Was it price?
Was it attitude?
Should I have said something different?
Should I have kissed him?
(That’s what Elizabeth Kitt – recent participant who was eliminated from ABC’s The Batchelor is asking herself today.)
Leslie used to show horses. She told me that at the end of a competition participants could approach the judges and ask for advice on what they could do differently next time to place or win in their category.
“I was always the first in line to ask a question,” Leslie told me. “I wanted to know why I didn’t win and what the judges thought I should have done differently.” Sometimes they would remember, or after refreshing their notes they might have a specific comment, but often it was a general bit of advice that they would share. She listened carefully each time to what they had to say.
“If one person told me something, I would listen but I might not make a change. I was listening for patterns that I couldn’t ignore. If I heard the same comment from different judges or multiple times then I knew that was an area I needed to address.”
She was looking for patterns.
We need to do the same thing with our customers. Of course that means we have to engage them in conversation – exit interviews – follow up surveys or phone calls to ask about the service and experience and then listen for patterns.
Customer complaints are another great place to look for patterns. Some times you just have a complainer – but often, if you listen closely enough, you’ll find out about an area of service you need to address because it impacts the customer’s experience.
Have you lost a customer lately? Do you know why? Has it been the first time you’ve heard the reason or has a pattern begun to emerge?
Listen carefully to those patterns you can’t ignore and then start to make some changes!
We did a book swap at Boardroom this morning and I picked up the book 5 Minutes with the VITO - a Sandler Sales book. VITO stands for Very Important Top Officer and is the one person in the company that can say YES. The prospect every sales person longs to meet and build a relationship with.
The book talks about walking and talking the same way a VITO does so that you are peers – co-conspirators, if you will on a journey to achieve the goals the customer has set.
Part of this sales process is understanding the “pain” the customer has. Not a new concept; I often talk about understand the customer’s expectations and needs so that you can find the solutions that will make their life easier, better, faster, more profitable.
But this book divides the “pain” into three parts:
The problem itself
The reasons for the problem
The impact of the problem
I’ve always just thought of the problem and the solution. However, adding the impact allows you to attach a dollar amount to the pain. Understanding the reasons behind the problem gives you an opportunity to point out different alternatives/solutions.
When you divide the problem/pain up like this what becomes clear is the GAP between what they currently have and what they long for.
Someone in Boardroom talked about a presenter who spoke at a luncheon and they referred to the entrepreneur’s sweet spot as “owning the gap.” If you can understand what separates the customer’s pain from their goal – the gap – and can offer a service or product that removes that gap; you have the opportunity to be the hero in the eyes of the customer. Or the VITO – the person who can truly appreciate the value you bring.
So how do you identify the gap?
You have to ask questions. You have to learn about your prospect – their customer – their industry – their operational process so that you can uncover the opportunities (gap) and find a way to insert yourself.
I feel strongly about developing relationships with customers which I believe, in turn, develops loyalty; customers who remember, refer and return.
So I’m often on the look out for other’s opinions on the topic. This morning I read a post by Susan Abbott entitled Loyalty or Loyalty Programs: There is a Difference. She gives a great example that shows how a customer’s use of a loyalty program could APPEAR to mean that customer is loyal when in fact that isn’t the case.
If you need loyalty points to get repeat purchase you may have a great loyalty program, but you might not have much true loyalty…It’s a mistake to confuse consumer commitment to your loyalty program with the true preference for your service offering. We just love the points.
Developing a loyal fan base of customers requires more attention to the relaltionship than just a good deal or accumulating points against a future purchase. It involves understanding your customer’s needs and expectations and then working hard to make it easy to do business with.
Valerie Maltoni talks about the importance of our reputation as it relates to customers referring us to their friends and family in her post entitled The Value of Reputation. She offers up a study that shows the seven key areas that relate, in the customer’s mind, to our reputation:
product/service
innovation
workplace
governance
citizenship
leadership
performance
Valerie goes on to explain that “according to the Institute’s research, if you improve reputation by 5 points, support goes up by 6.75%.”
Her article explains the importance of every department – even those traditionally not connected with the customer – needing to focus on the customer in order to positively impact the corporate reputation.
In my last corporate job I spent most of my years on the operations side – directly connected to the customer, but in my final two years as Director of Communication – I was in the “shared services” department of the company. You know – those departments that never talk to customers; HR, finance, real estate, and IT. I found that the employees felt no connection to the company performance on a day to day basis because it didn’t mean anything to them. They had blinders on to their tasks at hand. There wasn’t any connection between what they did and how it impacted the customer.
I wonder how many companies operate that way – assuming that only the operational folks need to worry about how the customer views the company reputation. If every person in every department understood their value in making it easier to do business with, I wonder what impact that would have on reputation and thus recommendations and ultimately loyalty.
Valerie asks the question
How many of you are actively working on communicating with the people and communities that contribute to influencing your brand’s reputation across these seven dimensions? Customers, employees, partners, investors, and so on.
You know that reputation has an impact on the perceived value of your company and brand.
Are you actively working to improve your company reputation in the eyes of your customer or do you rely on loyalty programs to keep them coming back. As Susan stated – if it is just for the points – then what happens if you take away the program or reduce the point value? Wouldn’t you rather have customers coming back because they know you understand them, you care about their needs and you strive to make life easier for them?
How are you building loyalty? Through a points program or through customer relationships?
We say it all the time, but how often do we ask our customers what they want, what they value, what experience they desire?
I remember IN THE OLD DAYS when I worked for Pearle Vision, we’d hire a company to conduct exit interviews. People would stand outside the store and ask customers a series of questions. Or customers would be called and asked a series of questions. The responses were interesting but it took forever to gain enough of a sampling to provide real value.
Now thanks to the Internet, there are a variety of ways you can connect with customers and ask for their feedback:
Survey Monkey. There is a basic free service that allows you to create a survey to send via a link to your customers or prospects. It is easy to use and allows you to create questions that are multiple choice with one answer or more than one; questions that required the reader rank their responses and options for a blank comment section for people to share their views. It tabulates and provides reporting to help you easily analyse the data. Gotta love FREE.
Facebook now has pay per click ads that allow you to target your message to specific people within your fan base. You can select criteria from anything in the fan’s profile; age, interests, location, etc. Much more targeted than any other pay-per-click option.
LinkedIn Questions. Ask a question of the professionals in your network. Questions are categorized by subject, industry, corporate title – you have the opportunity to target who the question in sent to and the responses provide valuable information. Just check out the Answerstab on your LinkedIn account to see what people are asking and answering.
What is it they say….”You’ll never know if you don’t ask.”
Or how about this: “The answer is always NO unless you ask the question.”
As we close out another year and set our sites on 2010; consider asking your customers/prospects about your business and how you might meet their needs even better in the coming year.
Big Lots has launched a loyalty program – The Buzz Club. Make 10 purchases of at least $20 each and receive a discount.
If I’m a regular customer of Big Lots – that’s a nice unexpected bonus. Will it drive me there if I’ve never been a customer? Probably not. To make a commitment to a new retailer of ten visits – that’s asking a lot.
I’m not suggesting it won’t work. I have too many little plastic loyalty cards hanging from my key chain to suggest otherwise. But here’s what caught my eye in the article from DMNews announcing the program:
“The program will allow us to learn more about our core customers’ shopping tendencies and opens up micromarketing capabilities we’ve have never had before,” said Steve Fishman, chief executive of Big Lots.
So they are gathering information from prior shoppers rather than trying to entice new customers. He went on to say “marketing messages going forward will be more aggressive and more completely focused on value and savings.”
So who is the loyalty program for? It sounds like it is more for the company than the customer.
What is the purpose of a loyalty program? For me – as a customer – it can be a major frustration. If I leave a loyalty card for a particular store at home – I often have to go to the customer service desk and have them look the card up. With a common last name like “Brown” it is no small feat to find my loyalty card number. In the interest of time – I have left my grocery cart without purchasing because I shopped based on the loyalty discount but didn’t have the time to wait for them to retrieve my card number.
There are two sides to everything:
As a customer - we receive tailored discount and marketing messages – but is it what makes us a loyal customer? If we are shopping based on discounts, is loyalty really our motivation? Isn’t it finding the best deal in town?
As a company – we can track purchases to create the tailored marketing messages – but does it drive new traffic? And if our loyalty messages are wrapped around the “best deal,” isn’t there always another competitor willing to loose more money just to drive the traffic?
What do you think? Do loyalty programs work or do we really create a loyal customer through the behavior and the relationship our employees have with each customer?
I’d have to say customer loyalty is low on my scale.
We don’t have customers in our business, we have clients. And loyalty from them isn’t one of the things we’re looking for. Loyalty is for football teams and dogs. I don’t know why but the word loyal reminds me of reluctance to change. I know it’s one of the boy scout characteristics we all should strive for but in business or even as a consumer, it’s the “best deal,”, “the best value,” and the complete package that everyone wants.
If I buy the same products year after year because I’m loyal, it’s probably because I’m afraid to try something new. Or too busy to research what’s new. Isn’t it better to try something new and then come back to the original when you found out which was better, then never test at all?
Loyalty seems passive. I think the word satisfied or satisfaction is even too weak. I love to have our clients be thrilled, amazed, delighted, happy, blown away and in general, overjoyed. Some how the word “loyal” falls somewhere in the more moderate range with the word satisfied.
She’s right. Loyalty is a passive concept. I never thought of it that way. I equated loyalty with repeat business – the golden goose of success. But if loyalty equals humdrum, then what does that say about the relationship we develop with our customer?
Do words and phrases like “assume” and “take for granted” and “habit” begin to creep into our thinking when we approach our customer?
Holy Cow Batman! That isn’t going to work.
As Chris says – we need customers who are Delighted! Surprised! Overjoyed!
So although I’m not ready to say loyalty from our customers is worthless – I do wonder how we keep the excitement in the minds of our customers when they think of us.
As a business – do we begin to get lazy when thinking of our repeat customers and even go so far as to take them for granted? How can we keep it fresh so they are excited and delighted?
I believe in customer loyalty. In fact, I have a speech – my most popular speech – entitled Earning Customer Loyalty. So imagine my surprise when I was reading a recent edition of Advertising Age and found the article entitled: Why Customer Loyalty Isn’t as Valuable as You Think” by Hamish Pringle and Peter Field.
However, when I began to delve into the text I learned that they believe in customer loyalty and communicating and marketing to them, however, they don’t recommend it as the single marketing strategy. In the article the authors agree that a happy customer will return and will recommend – becoming a brand advocate for your business.
However, it is the pesky unhappy customer you have to worry about – which ties in directly to my Make or Break Moments – connecting and building relationships with your customers. If you take the time to build a relationship with a customer – if they become unhappy (let’s face it – life happens – we will mess up on occasion) they will be more likely to return so we can make it right.
If we haven’t done anything to connect with the customer then the only person they’ll tell is our competitor when they take their business elsewhere – oh and the seven, ten or fifteen friends they come in contact with over the next month.
The authors conclude their article (which is chalk-ful of great data, studies and statistics) by saying “Marketing communications do not appear to be able to influence loyalty significantly, whereas they can make a big impact on penetration. ..don’t be tempted by the fool’s gold of loyalty – it will probably turn out to be a whole lot less valuable than you’d hoped.”
Perhaps in terms of ad dollars – I would agree. Believing that just reminding a prior customer that they’ve shopped with you and counting on that marketing message to convince them to drop everything and return with their wallet open is foolish.
However, if you took the time to nuture that relationship with active listening, empathy, understanding their needs and exceeding their expectations and THEN you send them a message – you have a far greater chance that they’ll respond in a positive way.
Customer loyalty hinges on the relationship, not the marketing message. However, a loyal customer is your best word of mouth advertiser and if they believe you care and will put their needs above your register – they will return.
How loyal are your customers? What percentage return for more?
“Companies spend 6 to 10 times more to acquire new customers than they do to retain existing customers. But a 5% increase in customer retention can have a bottom-line profit increase of 75%, depending on the industry.”
-Don Neal, Director of Business Development for Hallmark Business Expressions
I was just reading a post of Zach Heller’s entitled Why Joke with Your Customers. It was an April Fool’s Day post – the classic day for jokesters but he brings up a good point when he talks about having fun with your customers:
What is the point of playing a joke on people who trust you to deliver, or serve, or help them? Why risk upsetting people?
Because a good story is fun, and something fun and different can spread. Ideas that spread lead directly to success and, if you are a fan of Seth Godin, you know that is his rallying cry. True word of mouth marketing exists when customers are so intrigued by your story or your beliefs that they tell their friends, they blog about it, they Tweet about it, etc. When a lot of people do this in a short period of time, the impact is instant.
Today my teen-aged son told about a text he received while in the middle of play practice last night. He’s on stage in the middle of a scene. He feels his phone vibrate. Discreetly he takes a look:
“Don’t send me any more text messages. Don’t call, don’t even look at me. I can’t believe you said what you did. I’ll never forgive you. And don’t give me that face. You know what you did. April fools.”
He cracked up. He quickly sent it to another in his “gang” but before he could hit send – two more messages came in from his closest friends – the text was traveling. So he looked around on stage and as carefully as he could without getting caught – he sent the message to six of the actors on stage. He watched their faces as they received and read the message. One by one their faces looked puzzled and then brightened with the joke. He noticed they too began forwarding the message to their friends.
They each wanted to be the FIRST to spread the fun.
Our customers want to be “in” on the joke too. Not just on April 1st but all the time. Have you flown Southwest Airlines? Have you EVER flown with SA and not had a fun story to tell afterwards?
What about Cold Stone Creamery - they joke and tease with customers all the time.
Imagine being known as the place to come for wonderful service, the best quality products but most of all FUN! In this economy – the best gift we can give our customers is fun.
Don’t wait for the next April Fool’s Day to start having fun with your customers. What can you do to interject a little light hearted banter or silly fun with your customers?
When you take the time to have a little fun with your customers, you begin the process of developing a relationship. Relationships lead to loyalty and customer loyalty leads to referrals and customers who return for more!
I’m a big fan of Liza Minelli. (she’s brilliant in the above rendition of Irving Berlin’s I Love a Piano.)
And her mom was no slouch either (Judy Garland). When I was younger people would say I looked like Liza; same short black hair styled to accent my eyes, big voice, and long legs. Huge compliment!
I have recordings of Liza from when she was a child appearing on her mom’s television show, memories of her starring in Cabaret, and a variety of other albums and video recordings across her career. She was a performer extraordinare. She has my loyalty. I am a fan.
So when I saw her this morning making her comeback on the View (she is actually performing in a one-woman show on Broadway) I stopped what I was doing to enjoy every note, every dramatic arm fling.
So how was she? Well, her hair looks the same and she’s lost weight. Her many face lifts resemble her younger look and her voice? Shakey, a little flat and unable to sustain a long note.
However as a fan – I saw the vivacious performer selling a song I’ve always loved. To my ears, she sounded fantastic. Her song interpretation was dramatic and enjoyable.
My loyalty glosses over any flat sounds and the fact that she can no longer kick her legs as high as she used to.
Loyalty forgives a million little mistakes. Our customers are no different. If they are loyal; they forgive a missed deadline, a faulty product or a sour note. They want us to do good because of their memory of our past treatment and their faith in our future successes. We earned their loyalty by taking the time to build a relationship, listen closely and effectively match the right products/services with their needs.
How do you go about earning your customer’s loyalty? Building a relationship with your customers no only leads to a great customer sale, referrals, return visits and (if we are having a bad day) a blind eye to our little mistakes.
John is – WAS – a customer of a local eatery, frequenting them every weekday with the same order. After an unfortunate incident in which the management showed, by their actions, that they didn’t feel John’s business was all that important, John wrote them a letter.
In the letter he calcuated the cost of lost revenue due to the lack of customer service:
Now to you this is probably no big deal, you didn’t sell a few egg-whites this morning, so what… but let’s look a little closer. As mentioned above we have been coming there almost every single weekday for the past year (enough so that Sarah and the rest of the staff know our order by heart – which I am sure you do too because our waiter this morning told us we could not have egg-whites, before we even had a chance to order!) so that means we are there about 250 days every year. Our bill is the same every morning: $10.14 – and we always give a $3.00 tip – so that is $13.14 x 250 – or roughly $3,285 in lost revenue to you and your staff.
Ah, but we also bought muffins and cookies for our clients from you and we had been ordering lunch for our entire staff from you a few times every month too, so conservatively that is at least another $1,200 a year we were spending at The Bakery Mill & Deli. Now the total is $4,485 in lost revenue.
However, that is only one year. Since we live right up the road, there is no reason to believe that if we had been treated well we would not have continued to come in for quite some time. But let’s just call it the next 3 years – so a conservative “lifetime value” for us as customers is: $13,455. Which means you just turned away more than $10,000 in future business over probably less than $1 of egg-whites.
Over $13,000 in estimated lost revenue for the next three years when the manager/owner could have walked across the street to the grocery story to purchase a container of Eggbeaters for a few bucks.
Over $13,000 in estimated lost revenue and a tarnished reputation here on the web. John not only wrote to the owner but also posted the full letter in the comments section of my blog post.
Over $13,000 in estimated lost revenue within the community. Certainly if someone were to ask John about the benefits of having a meal at the Bakery Mill and Deli in Florida, he would retell this story.
How do you regain your reputation? How quickly do you gain back the trust?
We need to think twice and three times before we quickly dismiss a customer’s request. In this age of instant and viral communication, our reputation can suffer almost before the words are out of our mouth!
Have you ever calculated the cost of a lost customer? What would you do differently if you had the chance to try again? Anything?
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Have you ever lost a customer and didn’t know why? 
I’m facing a 
I believe in customer loyalty. In fact, I have a speech – my most popular speech – entitled Earning Customer Loyalty. So imagine my surprise when I was reading a recent edition of Advertising Age and found the article entitled: 
I was just reading a post of Zach Heller’s entitled 
Yesterday John Spence left a comment on a post a wrote last month entitled 
