building customer loyalty white paper

7/29/2019 Building Customer Loyalty White Paper

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The Academy of Service Excellence

23 Alders Road, Disley, Cheshire, SK12 2LJ

t: 01663 766300 m: 07831 628898

e:[email protected]

w: www.customerserviceuk.com

Copyright Chris Daffy 2012

Building Customer LoyaltyThe Power of 3

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All things change; especially customers. Today's customers are not the same as yesterdaysand 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 thereforefollows 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 todays

customers are -

More impatient That want it now.

Better informed Theyve looked it up on the Internet.

More demanding They expect more - probably for less.

More prone to complain They will tell you if they dont 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 describesyou when you are a customer. So this poses the question of what service techniques andpractices 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. Forthe 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 havent been focussing on the right thing.

I guess the key goal of people in the world of customer service is to build customer loyalty. Yetmy research suggests that Customer Experience Management alone will not do this. So

although Im still interested in Customer Experience Management, Im 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

Lets start by considering what are the behaviours that are typically displayed by loyal
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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 Im sure you would agree that just a

few of them are worth some effort and investment. So to my mind, Loyalty has some reallyworthwhile rewards and should therefore be the key goal. My main focus has therefore nowmoved to the subject of Customer Loyalty Management.

Influencing Customer Loyalty

Loyalty is a behaviour customers display some time in the future. But to influence futurebehaviour we need to do something more than simply manage current experiences. We needto make some things within these experiences at least memorable and ideally unforgettable soas to plant strong memories that will cause customers to behave the way we want, some time

in the future. Thats a tall order and the standard techniques of Customer Experience

Management do not do it. So memory management and experience management are not thesame things and a whole new range of techniques and implementation tools need to be learnedto be good at Customer Memory Management.

But even that isnt the whole story because we still havent properly considered customers

expectations and the massive influence they have on future loyalty. If what you expect andwhat 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? Its 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 havesuch 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


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Customer Expectation Management

Customer Experience Management

Customer Memory Management

Im 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 Ive already explained, there are three elements that combine to make Customer Loyalty

Management. So lets 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 sothat 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 cant later be

delivered or expectations created that will not be met. Experience has shown that there arethree 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 greaterimpact, 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 cant 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 theycause 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 datearrives, if the credit has not been received, the time bomb then goes off and an annoyedcustomer 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


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Every time a customer experiences one of these things its the equivalent of stabbing a knife

into the heart of relationships and loyalty

Trust. You cannot trust a person or organisationwho or that does not deliver what they promise. In individuals this usually happens becausethe person is either dishonest or so focussed on achievements in the present they have noconcern about the future. In organisations this generally occurs because the variousdepartments are not joined up with shared worthwhile goals based on end-to-end customerexperiences. But whatever the cause is, if you want loyal customers, things like this must beeradicated.

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 tomaintain 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 oruncaring people, product failures, etc. The key is to be open to all feedback from customersso that you are aware of all these experiences and can do whatever is necessary to removethem 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. Theyare usually things, done on the spur of the moment, as opportunities arise, by caringemployees who wish to make the customer feel happy and pleased with the service they arereceiving.

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 isnt

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 thecustomer. For dazzling recovery the WOW will exceed the OUCH and so create anunforgettable story of a positive experience. Research shows that dazzling recovery is oneof the most powerful loyalty building techniques that exist.


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Customer Memory Management

This is all about planting unforgettable memories that will influence customer to be moreloyal in the future. Psychology tells us that for things to be remembered there needs to astory 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 theyneed 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. Its 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 LoyaltyManagement. And I guess by now you spotted why I gave this paper the subtitle The Power of33. There are 3 key topics and in each one, 3 things to focus on. I think they collectively make avery powerful loyalty building combination. So I hope you have great success putting them touse in your business.

Chris Daffy is one of the UKs best-known customer service fanatics. He is a Companion of the Institute of Customer

Service, a member of the ICS Editorial Board and founder of The Academy of Service Excellence. His experience and

expertise has taken him all over the world as a consultant and conference speaker and enabled him to work with

organisations a varied as 3M, Air Products, AXA, BAE Systems, BT, DLA Piper, Dorchester Group, ING Group, JCB,

Microsoft, Pizza Express, Toyota, Watches of Switzerland & Xerox.

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