April 19, 2014

Small Business Advice:

How to enhance customer loyalty

Jerry Osteryoung | 1/18/2013

Accenture did a study in early 2012 predicated on research conducted in 2011. The firm surveyed 20 industries in 20 different countries and the results showed that businesses just are not spending enough time, focus or money on customer service.

The study showed that 66 percent of customers switched companies in 2011 because of poor service. Also, only 23 percent of customers feel loyal to a company, meaning an overwhelming majority — 77 percent — do not feel loyalty at all.

These results were surprising to me because I am always hearing companies talking about how their customers are the most important part of their business.

I was recently talking with a friend who had just changed her doctor. When I asked why she had done so, she replied that she thought a newer, younger doctor would serve her better. She added that she really had no loyalty to her existing doctor.

This lack of customer loyalty has evidently become widespread. To deal with it, many large companies are hiring “chief customer officers” or CCOs. The fact is if you do not have anyone in charge of customer service, it will just fall through the cracks.

As defined by the Chief Customer Officer Council, a CCO is “an executive who provides the comprehensive and authoritative view of the customer and creates corporate and customer strategy at the highest levels of the company to maximize customer acquisition, retention, and profitability.”

Most small businesses might not be able to afford a CCO, but the role should be performed by a designated member of the senior management team.

There are a number of things businesses can do to enhance customer loyalty.

A business’ function is not to provide the service it thinks customers want, but the service they actually want. The obvious first step in developing loyalty, then, is asking them to tell you want they want, listening to what they say and delivering, if possible. Normally, this kind of dialogue is achieved through focus groups.

Next, look inward. Are your employees happy with their jobs? This is critical, especially for customer service positions, because whether staff are satisfied or not is going to bleed into their interactions with customers. You can have the greatest organization in the world, but the customer only knows that one employee they work with.

Once a business knows what customers want and is sure it has a happy workforce, it might consider a rewards programs as a means of encouraging customer loyalty, like Delta Air Lines’, for instance.

I do so much flying that I really appreciate Delta’s Medallion program, which rewards loyal customers with better seat selection, earlier loading and free baggage transportation.

Offering this costs Delta very little, but these added services have tangible value for fliers like me. This is the key to a successful rewards program: reward loyalty with benefits customers can really use.

Now go out and make sure that you have someone in charge of customer service and a plan in place to improve customer loyalty. Be sure your outcomes are measurable so you are able to evaluate your performance.

You can do this!

Other small business advice columns from Dr. Osteryoung are here. Note: Articles older than 30 days require registration (it's quick and free).

Jerry Osteryoung is a consultant to businesses - he has directly assisted over 3,000 firms. He is the Jim Moran Professor of Entrepreneurship (Emeritus) and Professor of Finance (Emeritus) at Florida State University. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book co-authored with Tim O'Brien, "If You Have Employees, You Really Need This Book," is an Amazon.com bestseller. He can be reached by e-mail at jerry.osteryoung@gmail.com.

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