Do You See What Your Customers and Prospects See?

Have you been wondering why your customer retention is not higher? Or is customer retention good but new business generation is below expectations? Are you unable to attract the right employees? These and similar issues may be indications that you’re not be able to see the true you in the mirror! I often listen to CEOs and their leadership teams talk about their companies in ways that defy the facts. It is great to be proud. It’s important to be positive, and having the right attitude is critical. After all, people are not going to want to follow you down the highway to hell. The problem begins when you are not willing to face the brutal facts.

New Customer Acquisition

When new clients are not easy to acquire, it may not be a problem with the industry or the prospects. You have to look in the mirror. The marketplace is telling you that even if you are different from your competitors, the differences in your products and services are not compelling enough to the buyer; your marketing and sales efforts and materials sound like everyone else’s; or there are breaks in your sales and marketing processes that are going unchecked. If you do not address these issues, the prospective buyers will continue to believe you are just like everyone else and will see no compelling reason to use you to solve their needs and problems.

Employee Acquisition

If you cannot fill positions in your company, lack of available talent is not usually the problem. The problem lies with 1) the person you have made accountable for filling the position; 2) the process you are using for filling the position; or 3) how attractive it is to work for your company. You need to address these issues, or you are likely to hire the wrong person or not fill the position.

Customer Retention

If customer retention should be higher, it is not because customers are not loyal and the product or service you’re offering is an inferior commodity. The problem is 1) the person you have made responsible for overseeing the processes for retaining customers is not the right person (or you don’t have one); 2) the unique attributes of your products or services are not compelling enough for them to stay; or 3) you have the wrong team, and the mistakes they are making are causing you to lose clients.

Key Performance Indicators and External Feedback Will Set You Free

So I challenge you! What key performance indicators are you using to effectively look in the mirror and see where your internal problems lie. What external surveys are you using to help you see where you are losing opportunities? How quickly are you addressing these issues and seeing improvement?

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

 

 

7 Ways to Serve Your Internal Customer “The Employee” Better

In my previous article, Are You Failing the Most Important Customer: “The Employee?” we addressed the question, “If you considered the people that worked for you as your largest and most important customers, would you behave toward them or see them any differently than you do today?” I addressed two issues I think all organizations face to some degree. In this post I want you to consider 7 ways to serve your internal customer better.

Are You In Denial?

You may be thinking, we treat our employees well. However, according to Gallup, Inc. and their well-known State of the American Workplace Report., essentially 70% of today’s workforce is being paid to be “not engaged” or “actively disengaged.” A staggering 52 percent of employees are “not engaged”, meaning they essentially do just enough so they won’t get fired, but not more. The remaining 18% who are “actively disengaged” employees aren’t just unhappy at work; they’re busy acting out their unhappiness. Every day, these workers undermine what their engaged coworkers accomplish.

What is clear by findings, leadership is causing the 70% who are “not engaged” or “actively disengaged.” The evidence is supported by the fact that the 70% was not spread equally across companies and there also were differences within the companies. The primary difference was to whom those employees reported. This is important because when employees you have invested in are not engaged, you get less return on your investment.

How Can You Improve Internal Customer Service?

Consider your internal organization as your best and most important customer and ask yourself the following questions:

  1. What is my strategy for employee retention?
  2. How well do we communicate “with” employees rather than “at” employees?
  3. What is our interdepartmental strategy?
  4. Does it take an act of Congress to get something done around here or are we fast on our feet?
  5. How are we going to identify and nurture talent?
  6. How do we create career opportunity even though we are a small business?
  7. What types of leadership and management development do you offer your people on an ongoing basis?

The decision is up to you! Find and polish your gems today, or spend lots of your organization’s valuable time and money salvaging and finding new internal and external customers. Review our website to understand how an executive coach or business coach can help you increase the success of your career and business, or contact Howard Shore at (305) 722-7213.

The Most Important Conversation You Should Have

Throughout my career I have seen history repeat itself over and over again: leaders making important changes without having a conversation with their most important sources — their customers. You see, what leaders are looking for is data that supports the path they have always followed or believed to be the best strategy for their organizations, but when you look carefully you will see that what the data supports is the opposite.

Things Are Always Changing

What worked in business years ago does not work today. Times are changing. Customer wants and needs have also changed. Imagine twenty years ago, when some technologies didn’t exist, and customers’ desires were different than today. A great example is the fast food industry. The menus are constantly changing. They are always trying to keep up with what their customers’ needs are. Are you?

Change Starts With You Too

The obvious place to start is with your customers. Create solid questions to receive solid feedback. Analyze the solid facts. Most importantly, take what you have learned and implement it into fixing your current strategy. When Americans started eating healthier, McDonald’s reacted to it by including healthier options to their menu. Did the trend take anything away from them? No, because they now can have customers who became health-conscious continue eating at their establishments.

Don’t Go With Just Your Gut Feelings

With so much competition and new products and services coming out every day, businesses can no longer act on whims. There must be secure, solid systems in place to learn how to grow your organization. Leave the “I feels” at home and state the facts. Customers often shop based on emotion. Businesses do not succeed based on emotions. There’s a difference.

To learn how to start collecting solid customer feedback, check out my previous article “Business Strategy Based on Knowledge Instead of Belief.”

We can maximize your team’s success. Contact us for a free consultation to learn how Business Coaching can help your organization, or check out the testimonials page for stories from other leaders we have coached.

Is Customer Loyalty in Your Strategic Plan?

In his book, Customer Satisfaction is Worthless:  Customer Loyalty is Priceless, Jeffrey Gitomer said, “Satisfaction is no longer the acceptable measurement of customer service success”. This is the reality of business today: No matter how satisfied you think your customers are, you need to make an emotional connection and develop a long-term relationship, or that satisfaction is ultimately worthless. You customer loyalty program needs to be part of your overall strategic plan.

Here’s why…

Great customer service is all about sending customers away happy and bringing them back for more. They need to be happy enough to pass along positive feedback about your business to others who may then try your product or service and hopefully become repeat customers themselves.

Why Customers Come Back

Customers will come back, with their family and friends, if:

  1. The experience at every touch point of the buying process was so strong that it left a mark on their memories.
  2. Your relationship with them is based on trust. You want your customers to seek your personal assistance, and be willing to pay for it.
  3. They feel you really care about their needs. Always put your customer’s interests and needs ahead of yours.

Here are some statistics that provide proof that emotional connections with customers matter:

  • A typical dissatisfied customer will tell 6-10 people about their bad experience.  A typical satisfied customer will tell only 1-2 people.
  • It costs six times more to get a new customer than it does to keep an existing one.
  • Of those customers who don’t return, 68%of themdon’t because they experienced indifference from the company or an individual.
  • About 7 out of 10 complaining customers will do business with you again if you resolve their complaint to their satisfaction.
  • If you resolve a complaint on the spot, 95% of customers will do business with you again.

Pretty powerful stuff!

Do You Believe Your Customer will Recommend You

Ask yourself this question: On a scale of 1 to 10, how likely is it that your customers will recommend you to someone else?

If your answer is below seven, or you don’t know the answer, it is time to think about developing a customer loyalty strategy as part of your strategic plan and start creating the emotion in the experience with your business.

Howard Shore is a strategic planning consultant, business coach and founder of Activate Group Inc, based in Miami, Florida. His firm works with companies to deliver transformational management and business coaching to executive leadership. To learn more about strategic planning through AGI, please contact Howard at 305.722.7213 or email him.

Let Your Customers Do the Talking

We live in an increasingly social world. Today, roughly 90% of consumers will read product or service reviews online before making a purchase decision. Clearly our customers, and the information they provide to others about us, influence our success and our reputation.

There was a great article from Bill Lee on the Harvard Business Review’s website recently that challenged executive leaders to think about customers not just as purchasers, but also as providers of value and knowledge. Customers are as much assets as anything else in your business. Not only can they help you improve your products with their feedback, but they can also act as an extension of your customer service team. This is the reality of our digital world and must be considered during strategic planning and goal setting.

Online tools like social media and mobile applications are platforms that almost everyone is using today, and they offer a tremendous opportunity to build your brand and increase awareness. By simply making these tools available to customers you are increasing opportunities for your customers to share feedback and endorse you to their network.

On the other hand, screw up the customer’s experience and you may feel the social media wrath just as quickly. It’s a double-edge sword, so make sure you are on the right end and let your customers help you sell more product. Here’s how:

  1. Make Your Website Social. Make sure you have social plug-ins and sharing buttons on every page of your website. This allows users to quickly and easily share any piece of content with their network.
  2. Allow Reviews and Comments. If you highlight products or services on your website, be sure to integrate review and/or comment functions on those pages. This allows customers to provide valuable feedback and helpful tips to other users.
  3. Consider User Forums. If you provide a highly technical product or service, consider adding a knowledgebase forum or message board to your website. With your own help forum, experienced customers can help each other and provide their own tips and suggestions to each other.
  4. Reward Vocal Customers. If you start to see great comments coming from the same customers, thank them publicly. You could even reward them with special discounts, gifts, or other rewards to acknowledge their loyalty.
  5. Acknowledge Bad Reviews. Somewhere along the line, you will probably be on the receiving end of a bad online review. When that happens, respond quickly and publically by apologizing, acknowledging the unmet expectations and offering a solution. Never get into a he-said, she-said argument online. Try to get the reviewer to contact you offline so you can get more information on his experience. After you resolve the situation, ask the customer if they would be willing to post a follow-up comment indicating their satisfaction.

Encouraging customers to share feedback on your products and services creates opportunities for company endorsements, brand awareness and product improvements. It is time to embrace your customers as the knowledge assets they are and give them the tools they need to spread the word about you!

Howard Shore is a strategic planning consultant and founder of Activate Group Inc, based in Miami, Florida. His firm works with companies to deliver transformational management and business coaching to their executive leadership. To learn more about strategic planning through AGI, please contact Howard at 305.722.7213 or email him.

Employees Are Your Most Important Customer, Part 2

I wrote an article about the many reasons why your employees are your most important customers. I wrote about how keeping your employees happy is one of the easiest ways to keep your customers happy. Happy employees give great customer service and create great word-of-mouth for the company.

When I read an editorial in the New York Times written by an ex-employee of Goldman Sachs on his last day of work, I was reminded again about the value of keeping employees engaged. This is a real-life example of how unhappy employees can cause considerable damage to reputation and potential threats to customer retention.

The Goldman employee, Greg Smith, spent his entire career at the company, rising up in the ranks and maintaining a great amount of pride in the company and its values. He says in the wake of a recent leadership change, the company lost sight of its values to focus on blind profits. He decided to exit the company in dramatic fashion by writing this lengthy editorial detailing his first-hand experiences and resulting disgust. He exposed degrading language used within the company and the practice of selling worthless assets to unsuspecting buyers.

Was his account accurate? We don’t know for sure. Regardless, what he did (besides commit career suicide) was create a great amount of doubt in Goldman’s trustworthiness. Plenty of Goldman customers read that editorial and some probably considered whether it was worth remaining customers.

Remember, your employees are the eyes, ears and voice of your company. They can be your biggest cheerleaders or your worst nightmares. It is crucial you keep them engaged and satisfied. Training, coaching and communication are keys to their engagement. And if they become disengaged for too long they will tell you…or anyone who will listen.

Howard Shore is a business coach who works with companies that need leadership development and strategic business coaching. Based in Miami, Florida, Howard’s firm, Activate Group, Inc. provides strategic planning and management coaching to businesses across the country. To learn more about management coaching through AGI, please contact Howard at (305) 722-7216 or email him.

Customer Service Points You Have to Get Right

A few weeks ago, JD Power released its list of 2012 Customer Service Champions. I found it interesting that there were three airlines on the list. You don’t usually think of the airline industry as customer-focused. Yet three airline companies managed to impress JD Power with their fanatical attention to customer service—so much so that they made it onto this list of just 50 companies that are “champions” of service.

I am not surprised that the three companies are Southwest, Virgin America and JetBlue. These airlines have used customer service as differentiators for some time, each in their own unique way. Their customer service is finely honed and crafted especially for their core customer, which is why they all have such impressive brand loyalty.

The important thing to note is that great customer service is not a one-size-fits-all strategy. The customer service experience is drastically different between all three airlines, and that is by design. The loyal Southwest customer is drastically different from the loyal Virgin America customer. These customers expect different things and demand different experiences, and you could never interchange them. In all likelihood, a loyal Virgin customer would hate the experience of flying with Southwest.

Think like these customer service champions and design your customer service experience around the preferences and demands of your core customer.

Define Customer Service “Moments of Truths”

When I work with a company as a strategic planning consultant, one of the most important company functions we examine is customer service. When we evaluate their service processes, we identify their “Moments of Truths”. These are essentially their most crucial customer touch points—the times and places in their new business acquisition, servicing and retention processes that are so impactful to the customer that if they don’t get them all right, it could cost them that piece of business.

Every company and industry has three to five service “Moments of Truth.” How you touch your customer at these points defines your service experience. Let’s look at the restaurant industry as an example. Every restaurant must meet a certain standard in four key areas: Service, Price, Food Quality and Cleanliness. These are the four Moments of Truths for a 5-star restaurant or a fast food joint. However, how these two very different businesses deliver on these touch points is highly important for their core customers.

The 5-star restaurant customer expects extremely attentive and formal service, gourmet food and impeccable cleanliness, and for that they are willing to pay a premium price. The fast food customer still expects cleanliness, but service should be quick and casual at a low price. Both restaurants can be customer service superstars, but they must understand their core customers and design the service experience around them.

What are the Moments of Truth in your customer service experience? Define them and define the ways that you will use them to differentiate your company in the marketplace.

Howard Shore is a strategic planning consultant and business coach who works with companies that need customer service strategy and coaching. Based in Miami, Florida, Howard’s firm, Activate Group, Inc. provides strategic planning and management coaching to businesses across the country. To learn more about strategic planning consulting through AGI, please visit activategroupinc.com, contact Howard at (305) 722-7216 or email him.

Why Your Customer Service Sucks

Customer service is the new luxury. I’m convinced that the company that owns the voice of the customer and uses it to build an organizational culture that focuses on delighting the customer through uncommon service strategy will own the marketplace. Unfortunately far too few businesses think like their customers, which affects their ability to deliver superior customer service and win a major competitive advantage.

What is does enlightened customer service look like? Here are a few examples:

  • The family restaurant that has bathrooms cleaner than yours at home; with fresh flowers, lotion and mints.
  • The lawn-care company that leaves a lovely bouquet of fresh flowers from your yard after they finish.
  • The drycleaner who automatically sews on missing buttons.
  • The downtown business that offers to “feed the meter” while you shop.
  • The bank that hosts a dinner for their top 30 clients to have an open discussion about how they can serve them better.
  • Any store that empowers their frontline people to find a way to say “yes” and solve problems before they escalate.

The list goes on and on with a million different ways to delight, surprise and entertain your customers. Sadly though, I see very few companies that understand how important (and easy) it is to stand out in a crowded world of me-too products and average service.

So how do you find ways to delight your customers with uncommon attention to service? Here are two quick ways:

  1. Ask your customers. They will be your best source of ideas. Never stop asking and listening to what your customers identify as important to them.
  2. Borrow ideas from other industries. Basically steal and use ideas that worked for others. Look at other companies you see doing amazing things to service their customers and ask: What can I do with this? How can I make this work for my business? What can I do right away?

What can you do right away?

Howard Shore is a business growth expert who provides business strategy, business coach and customer service consultation services. To learn more about how an executive coach, management consultant, leadership training, or business coach can help your team with employee engagement, please visit his website at activategroupinc.com or contact Howard Shore at (305) 722-7216 or email him.

 

Customer Retention is a Business Imperative

Do you sometimes focus so hard on getting new business that you lost sight of how crucial it is to keep existing customers coming back for more. How many of your key priorities for this quarter relate to programs to increase customer retention? Customer loyalty is one of the strongest indicators of how healthy your business is and it should be a big part of your business strategy. The percentage of customers who continually come back for more of your products or services is proof of business goals set and achieved. Customer retention is a business imperative in order for your business to maximize its profitability.

Retaining customers is vital to your business development efforts, and is far more impact to your bottom line than getting new ones. Companies with a great new business funnel don’t necessarily outperform those who keep clients long-term. I’ve seen companies that effectively use marketing materials to tout how different they are from the competition. They focus on how they add value to justify their price point and close a lot of new business. But this is not a good business strategy if your customer turnover is too high. Higher turnover will ultimately lead to higher customer acquisition costs per customer and lower yield on each customer.  In other words, you lower the average life time value of a customer. It’s clear that a business strategy focused on retaining customers by delivering on promises creates consistent revenue and a healthier business model.

Too often companies assume this is the nature of their industry and accept the turnover. I worked with one such company that decided to make it a business imperative to lower customer turnover. As quickly as they brought in new clients, the old ones would jump ship. After careful review of their operations and conducting root cause analysis they found they could make major improvement in turnover. The primary cause of turnover was that they were investing in the wrong type of employees and processes in customer service, which was directly affecting satisfaction of their customers who were already was under constant siege by competitors. They made some minor tweaks in process and one personnel change to set the example, and now customer retention is way up and each account is growing steadily.

How many existing customers have you sacrificed for new ones and how much has it cost your business?

Howard Shore is a business growth expert who provides business strategy and consultation services. To learn more about how an executive coach, management consultant, leadership training, or business coach can help your team with employee engagement, please visit his website at activategroupinc.com or contact Howard Shore at (305) 722-7216 or email him.

What Impact Does Culture Change Have on Results?

In Cindy Krischer Goodman’s article “Culture change: Just do it” (Miami Herald, 10/6/2010), there are two examples of successful cultural transformations in progress. If you missed the article, it was about how Barbara Simmons, CEO of Plantation General Hospital, has rallied her employees’ customer service and job satisfaction and the efforts of Kim Cripe, CEO of Children’s Hospital of Orange County to increase the quality of service at her institution.

In both cases, the CEOs realized the need to make changes to their corporate culture in order to improve outcomes. Most companies want to change outcomes but are not really committed to doing what it takes. They usually change some policies and procedures and throw in a training course. While these steps are valid parts of the journey, the real issues usually are cultural, stemming from the top and cascading down. They are flawed leadership and management philosophies and are hidden weaknesses that prevent organizations from getting what they need. Until the CEO takes responsibility and makes personal changes, there will be no sustainable improvements in the rest of the organization.

Goodman’s article pointed to three important factors. First, for cultural transformation to take hold, an organization has to be ready to make a 2-to 3-year commitment. Employees will likely push back, expecting yet another “program of the month” that will fade shortly after it’s announced, and, because change is never comfortable, will try to make things stay the same. Second, it is essential to create a vision to rally everyone around and to clarify the non-negotiable core values that will be expected from everyone. You then have to train everyone on what behaviors demonstrate those values and institutionalize them. Lastly, the CEO (most importantly) and top leaders must put themselves out there as the catalysts for changes. They have to be out there every day as the catalyst for change. You cannot outsource or delegate this to a consultant, trainer, coach, or subordinate.

Howard Shore is a business growth expert that works with companies and people that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.

 *Reprint

Extreme Customer Focus

I have some very strong beliefs about what I feel it takes to run a highly successful business. For example, I am completely convinced that whoever “owns the voice of the customer” and uses that information to build an organizational culture of Extreme Customer Focus… will own the marketplace. Unfortunately far too few businesses really understand their customers at a deep level which severely inhibits their ability to deliver consistently superior customer service and win an unfair advantage in customer loyalty. And who doesn’t want an unfair advantage? But rather than give you a bunch of theory and vague ideas, let me bring my point home with several real-life examples. As you read through the following list I want you to ask yourself three incredibly important questions:

  1. What can I do with this?
  2. How can I make this work for my business?
  3. What can I do right away?

What is Extreme Customer Focus?

  • The family restaurant that has bathrooms cleaner than yours at home, with fresh flowers, free diapers, handi-wipes, lotion and mints.
  • The doctor’s office with a juice, coffee and fresh fruit while you wait (or better yet, that get’s you in on time, every time).
  • The lawn care company that leaves a nicely arranged bouquet of fresh flowers from your yard every time they trim your plants.
  • The women’s clothes store that has large fitting rooms, with a comfortable chair, plenty of hooks for your garments, a shelf for glasses and purse and NO limit to the number of items you can bring in to try on (and big, soft, cushy reclining chairs… and a TV… so that husbands actually tell their wives to shop a little longer while they rest and watch the game while enjoying a cold soda or juice and a cookie.)
  • The upper-end restaurant that gives you a hand-written thank you card with your check.
  • The drycleaner that simply sews on any missing buttons they find.
  • The downtown business that offers to “feed the meter” while you shop.
  • The restaurant that offers you a free desert for taking 5 minutes to fill out an in-depth survey.
  • The bank that hosts a dinner for their top 30 clients to have an open discussion about how they can serve them better.
  • The marketing firm that offers to do pro-bono work for their top client’s favorite charity.
  • Any store that empowers their frontline people to find a way to say “Yes.”

The list goes on and on with a million different ways to delight, surprise and entertain your customers. Sadly though, I see very few companies that understand how important (and easy) it is to stand out in a crowded world of me-too products and average service. So how do you develop a talent for finding ways to improve your customer focus and service? I have two suggestions. The first is; ASK your customer what they want. Ask them often and in various ways, but never stop asking and listening to what the people who pay your rent are telling you is important to them. The second suggestion is to become an expert at looking for customer service ideas that you can steal and use. Jerry Seinfeld did this with his comedy. Someone once asked him how he came up with so much fantastic material and he replied, “It is simple. From the moment I get up in the morning until I fall asleep at night, I look at everything I do and situation I encounter and ask myself the same question: what is funny about this?” So from now on, whenever you encounter either very good service or very bad service just ask the three questions: What can I do with this? How can I make this work for my business? What can I do right away? You’ll be amazed with the answers you find!

John Spence is an accomplished businessman and a leading authority on strategic thinking, advanced leadership development, and many other building blocks for successful businesses. He ranks highly among the most sought-after executive educators and has conducted workshops for numerous Fortune 500 companies.

Do you truly add value?

When times were good and money was flowing fast it was easy to generate business without a high level of differentiation or an incredibly strong value proposition.  But now that the economic times have gotten tougher and every business and personal consumer is carefully considering how to spend their dwindling resources, unless  you can clearly show that your business adds real value to the customer… you’re going to have a really hard time finding any customers!

Let me give you a very quick example.  About four years ago my wife and I had a good friend of ours build a custom home for us.  When it was time to choose the lighting for the new house we went to a local “lighting gallery” to sit down with the owner and pick out all of the various lighting fixtures and fans we would be putting throughout our new home.  We spent about two hours going over catalogs with him, as he suggested specific fixtures that would go nicely in our craftsman-style home and match the rest of our decor.  We had made it clear that our budget for purchasing all of the lighting fixtures and fans was between $9,000 and $11,000. Twelve days after we met with him we received an estimate for $21,000!  We quickly realized three important things:

1.  Obviously “budget” did not mean a darn thing to this vendor.  Actually, we ran into this time and time again when building our home, we would tell people exactly what we wanted to spend and then they would come back with a price that was often 60% to 120% higher than what we had stipulated.  When we would comment to them that this was far out of our budget, the common refrain was, “well, then just add some more money in your budget.”  Folks, the days of being able to give your customer that sort of response… are gone.  Even back then I felt this was an awfully arrogant thing to say, today it would be downright stupid.

2.  If you’re going to send me a proposal that is twice what I asked for, it shouldn’t take twelve days to get around to offending me.  At the very least I would expect extremely fast and courteous service if I was being asked to spend double the amount of money I had intended to.  Slow service and outrageous prices… not exactly a winning business formula.

3.  When we got the estimate, and picked our eyeballs back up off the floor, one of my first thoughts was, “Why did he let us pick out the fixtures that were so far out of the price range we wanted to spend?”  I felt that as our “lighting consultant” it would have been his job to help steer us toward the fixtures that were within our budget.  However, when my wife decided to Google a few of the products we had picked (using the exact SKU numbers off of the estimate) we discovered that everything on the list had been marked up by 80 to 150%.  The next day we took a trip down to local Home Depot where we looked at the exact same fan we had picked out at the lighting gallery, which had it priced at $480 on our estimate, and was now sitting in front of us at Home Depot for $245.  We promptly went home and ordered everything off the Internet.  Total bill for all the lighting fixtures (the exact same ones we had chosen out of the catalog at the lighting gallery) was $7,300… which included shipping and tax!

The reason I dragged you through this entire story was to make this point: even though my friends at the lighting gallery had been in business for 22 years, in the new Internet-enabled “watch-every-penny-economy” it only took them about three years to go out of business.  That’s right, I drove past their building the other day and there’s a “for sale” sign out front.

They did not go out of business because they sold a bad product, their lights, fans and fixtures were all of the highest quality.  What drove them out of business was the fact that their old way of doing business is obsolete.  They added no value to the equation.  I could go online and find every single thing I wanted, at half the price or less and have it all delivered to me with absolutely no hassle.  Their building, their displays, their catalogs and even their consultation certainly did not add up to enough value to make me want to spend twice what I could get everything for from the comfort of my home.

Unfortunately, I am seeing the same scenario played out in company after company.  For years they have motored along picking all the low hanging fruit, delivering good (but not truly fantastic) products and services and enjoying high profit margins for basically low-value offerings.  Now that the economy has made selling even the best products and services challenging, these companies are having an incredibly hard time demonstrating the real value-add they bring to the equation that justifies their high profit margins.  The old equation used to be “high-quality… fast… or cheap… pick any two you want.”  Today customers demand the best quality, delivered immediately, at the lowest possible price, with superior customer service throughout the entire buying and owning process! If you cannot clearly differentiate yourself on all of these aspects… combined, you’ll find it very tough to convince customers to buy from you, or at least to buy from you without totally beating you up on price.

So here are my questions for this blog: How do you truly add real value to your customers?  What is everything that is unique and different about the way you add value that would make your customers be willing to pay a premium price to do business with you and feel absolutely great about the transaction?

Two things to keep in mind as you try to answer these questions:

a) Remember, value is from the customer’s point of view, not what you think.  As Mark Twain once said, “The only critic whose opinion counts is the customer.”

b) If you cannot answer these questions in a clear, honest and very compelling way… you have some serious work to do.

I hope you found this post of value. I look forward to your feedback and questions.

John Spence is an accomplished businessman and a leading authority on strategic thinking, advanced leadership development, and many other building blocks for successful businesses. He ranks highly among the most sought-after executive educators and has conducted workshops for numerous Fortune 500 companies.

Thanks Steven Slater and Jet Blue

I have been reading about Jet Blue’s flight attendant’s meltdown, and whether or not Steven Slater started the affair or the passenger did, it still highlights something that we can all probably agree on. People in general have lost their manners, and society needs to get back to basics. Whether we are on the road, in an airplane, in the workplace, shopping, or at home, people are not treating each other properly and in many cases are just downright rude and disrespectful.

I could never talk to my parents the way I hear kids speak to theirs today. The quality of communications among people has declined thanks to e-mail, text, twitter and other reasons not to talk face-to-face. Texting and e-mails have caused more strife between people than ever could be imagined. People do a poor enough job expressing themselves in person.

Even without the messaging problems, the basics have just gone out the window. For some reason, it seems that as generations go by, people think that it is okay to be disrespectful. Common courtesies have gone out of fashion like clothing. For example:

  • How often do all the ladies leave the elevator first?
  • How often are people holding the door open for people or just rushing in?
  • In South Florida I do not think anyone is ever on time. When someone is late, they are showing lack of respect for the people waiting for them.
  • When someone cancels a meeting at the last minute, they are showing disrespect for the other person’s schedule.
  • How often does someone see someone else carrying something heavy and pretend not to see them instead of offering assistance?
  • People do not return phone calls, e-mail, or invitation responses.

So after pondering these thoughts, I was considering some of the companies in the world that are known for their customer service. These customer service techniques are rooted in good manners. Saying thank you and you’re welcome, holding open the door for people, and other basic good manners.

I recently visited Aruba and was amazed at how friendly everyone was. I do not care who it was. You could talk to anyone, and they were helpful. The Aruban economy is clearly dependent on tourism, and the small country totally gets it. Compare that to say, Miami, which also heavily depends on tourism, and I would say half the hotels are not nearly as friendly and helpful as some of the street people were in Aruba. There was no surprise that in Aruba they have 2% unemployment, low crime and what they call a “happy island.”

So maybe if our state and federal governments want to spend money on something useful to improve our economy, they should require every American to attend good etiquette and customer service training. This alone might put our economy back on track and give us a competitive advantage over other countries.

If the government cannot see the forest through the trees, business owners must. If your company does not have a large loyal customer base, take a look at how well the staff treats each other and its customers. If you do not think they are setting an example in how well they treat people as human beings, I am sure it is having a negative impact on your top and bottom lines.

Howard Shore is a business growth expert that works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please or contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.

Customer Retention Speaks Volumes About Your Business

Too many companies are under the misguided notion that replacing large percentages of their customers every year is a norm that they must expect. In fact, substantial client turnover is one leading indicator that there are hidden problems in your business.

One of the strongest signs of a good business model is customer loyalty. The true test of how well you run your company is the percentage of customers who continually come back for more of your products or services. In today’s Internet-savvy economy, the complexity of competition has made customer retention infinitely more challenging.

In many businesses, you can see patterns. One company I worked for was great at getting new clients. They had a lot of hype in their marketing about how they were different and would add more value to their products and services than their competitors. Thus, they were able to charge premium prices. But you could see that every 2 to 3 years, their big clients would start slipping away to the competition. The message was clear: they were not delivering on their promises, so their existing customers were not willing to pay the premium prices based on hype.

A company I am working with right now was seeing a constant churn in their client base. As quickly as they brought in new clients, the old ones would start slipping away. Then they would have to go back to the old customers to reacquire them.  What we learned was that they had the wrong type of employees and processes in their customer support department. The department was set up to take and process orders. What was needed was people that knew how to farm and build accounts as inside salespeople. The customer base was under constant siege from competitors, and if someone from my client’s firm was not calling them regularly to tuck them in, the competition was taking them away. In addition, processes needed to be built so that customers could feel and see the difference between doing business with my client versus the other company. By making some minor tweaks and one personnel change to set the example, customer retention is way up, and each account is growing steadily.

Howard Shore is a business growth expert that works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.

Your Employee Is Your Most Important Customer

The South Florida market is comprised of many small- to medium-sized “service” businesses. I look at these organizations and wonder if they are a product of their product. To be truly successful, a business really has to serve two customer bases. The customer base most focused on is typically the revenue-generating one. However, considering cause and effect, the internal customer (the employee) should be on at least an equal footing with the external customer. This leads me to a question to those of you who lead or manage people:

If you considered the people that worked for you as your largest and most important customers, would you behave or see them any differently than you do today?

For those who have a tendency to lean on authority to motivate their employees, let me give you something to think about. Reporting to you on a daily basis means that we have a customer relationship. I say this because if I do not keep you satisfied you are going to help me move my career in a new direction. However, if I am not satisfied with you, I have two options. I can resign or go on silent strike. If I choose the latter, I will give you only the minimal performance to keep my job, but you are never going to be able to get spectacular results from me. While this is scary for any business, it can be devastating in a service business.

Let us consider internal customers from three different perspectives: external customer, other internal customers, and bottom-line impact. From the external customer standpoint, they are going to be most comfortable dealing with familiar faces that know exactly what, when, where, and how they like to receive their service. Given that most of us are creatures of habit and routine, every time that routine is broken I believe you put your customer relationship at risk.

From the other internal customer standpoint, things work the same way. The longer people work together, the more familiar and comfortable things get. We really can build a strong enduring team as long as we do not get complacent and employ proper leadership and management techniques. However, the rules change dramatically every time someone leaves or someone new is introduced to the team. Look what happened when Shaquille O’Neal left the Los Angeles Lakers or when Michael Jordan left the Bulls. Even if things do not get that dire, it is likely that morale will decline as people have to take on extra workload. If it goes on long enough you can rest assured that the external customers are going to see quality, service, and customer satisfaction decline.

Let us not forget about the bottom-line impact of internal customers. I have read all kinds of statistics that range as high as 25-times-salary for turnover of a key management position. While I cannot validate that number, I can point out that you will potentially incur recruiting costs, lost sales, overtime pay, and other costs as a result of employee turnover. This has to add up to a minimum of 3-times-salary. On the upside, think about the results accomplished by your most highly motivated employees, particularly with regard to attracting, servicing, and keeping internal and external customers. Keeping these individuals gives your business a tremendous competitive advantage.

Consider your internal organization as your best and most important customer and ask yourself the following questions:

  • What is my strategy for customer retention?
  • How well do we communicate “with” employees rather than “at” employees?
  • What is our interdepartmental strategy?
  • Does it take an act of Congress to get something done around here or are we fast on our feet?
  • How are we going to identify and nurture talent?
  • How do we create career opportunity even though we are a small business?
  • What types of leadership, management, and customer service development do you offer your people on an ongoing basis?

The decision is up to you! Find and polish your gems today, or spend lots of your organization’s valuable time and money salvaging and finding new internal and external customers.

Review our website to understand how an executive coach or business coach can help you increase the success of your career and business, or contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.

Positive Marketing Creates Customer Loyalty

Nowadays, in order to attract and maintain customers and open new markets, offers must go beyond products and services. People want to add positive things to their lives, buying products and services which will satisfy their needs and bring value to their daily activities.

Communicating positive messages that connect potential customers to their current goals and values furthers the goals of sustainability. Addressing these values connects them to what they care about and provides the impetus for innovative business practices.

During the last decade there has been a positive trend in business: Many companies now address corporate social responsibility (CSR), which is a concept whereby organizations consider the interests of society, taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities, and other stakeholders, as well as the environment. CSR is a voluntary effort to improve the quality of life for employees and their families as well as for the local community.

These positive efforts create a feeling of joy among employees, creating a positive energy which will be translated into more and better customer loyalty.

Recent reports indicate that communicating positive messages of a company’s actions to address environmental, social, and economical issues, favorably affects that company’s bottom line and produces good business opportunities.

More and more consumers want to buy products and services from companies that support their values, care about the environment, and can offer shareholders a solid return. Whole Foods, for example, promotes organic products grown by local farmers by inviting customers to learn about the farm and the farmer through colorful displays positioned near the products. Patagonia connects lifestyle and values by offering customers a recycling option for some of its clothing choices. Whole Foods and Patagonia connect to their customers by using positive messages to address issues of care: values and community. Other companies produce positive messages of sustainability, based on their business goals or mission.

Another example of how a company incorporates corporate social responsibility is Starbucks. Its social responsibilities are part of their mission statement.

A good marketing campaign needs to recognize the importance of communicating positive messages by making offers and developing trust and relationships. By connecting to people’s cares, we affect outcomes – especially important when addressing sustainability.

We live in a world where the negative aspect of life and its consequences drive the buying or selling decision-making process. However, companies who not only say they care, but actually demonstrate caring about their employees, customers, and communities have a great competitive advantage.

Consider the saying, “People want to know you care, before they care about what you know.” As human beings, we have a natural desire to belong and feel valued. It’s the reason why people hate to be sold to … we don’t feel understood or valued for who we are.

Why do people want to hear positive message for their lives?

  • They have the desire to do more and be more.
  • They are looking for effective ways to make their dreams reality.
  • They need motivation and accountability to truly accomplish their goals.
  • Motivated employees will motivate customers to become loyal to your company. Likewise, motivated customers not only will continue buying from you; they will invite their friends and families to buy your products and services.

Using positive messages in your internal and external marketing campaigns, and caring about your community and its environment, will bring your company a competitive advantage and sustainable growth.

Contact me today to learn how Activate Group helps individuals to increase their success and works with organizations to attain consistent revenue and profit growth rates of at least 20% annually. Call 305.722.7213 or e-mail me at pjperez@activategroupinc.com.

Measure and Build Employee and Customer Loyalty

The two most important measurements in your business are not revenue and net profit. While these are clearly desired outcomes, to get them one must focus on employee loyalty and customer loyalty, in that order. More employee loyalty drives customer loyalty, resulting in more revenue and profit. It is that simple!

Employee and customer loyalty are the ultimate competitive advantages in any business. Think about it. What would it do for your business if your employees and customers stayed with you, no matter what incentives your competitors offered? The economics are huge. Every 10% improvement in customer loyalty should lead to a 100% increase in your revenue. The reasons are numerous and include:

  • Recruiting costs decline as more new employees are found through existing employees, and “outsiders” are knocking your door down to get in.
  • Employee turnover costs are minimized.
  • Employee sick days are reduced.
  • Legal fees decrease.
  • It costs 4 times as much to acquire business from a new customer as it does from an existing one.
  • Referrals for new business are plentiful.
  • Customers are willing to pay more, even if your product is not as good as the competition’s.

The Difference between Loyalty and Satisfaction

In order to embrace this principle one must understand the difference between satisfaction and loyalty. By definition, satisfied means contented or pleased with what has happened. “I am satisfied” can be interpreted as the experience was “not bad.” However, it was not exceptional. As Jeffrey Gitomer has put it “satisfaction is the measure of mediocrity.”

Loyal, on the other hand, means to remain faithful. In other words, no matter what others are offering, the customer will stay with the current company and/or person serving them. Loyal customers always come back to purchase your product or service and go out of their way to find it. Coca-Cola is a classic example. Many people will go out of their way to purchase a Coke instead of a Pepsi.

Manage Points of Connection

Imagine your entire organization as a linked chain. On one end is the vision of what you want your company to accomplish and on the other end are loyal customers. Each link in the chain is an employee, and they are grouped by department. Now imagine tension on that chain, which is the pull generated by your competition on your customers to leave your chain. If you have any weak links, your chain will eventually break, and you will lose customers.

There are many places that a potential customer touches your organization. Most leaders focus their concerns on their sales and customer service departments. However, there are many other points of connection. Here a few points overlooked:

  • When your employees are away from work, what do they say about where they work?
  • Are invoices and receipts correct, and how easy is it to get copies?
  • When customer invoices are past due, how well does your accounts receivable department manage interactions?
  • How much care do your warehouse and delivery employees put into preserving the quality and packaging of your product?
  • When a guest or customer is lost in your premises, does someone go out of their way to make sure they get to where they are going?
  • When someone calls your company and winds up in the wrong department, how is that interaction handled?
  • When you need to give negative strokes to an employee, do they walk away inspired or upset?

The key here is that everyone in your company needs to view themselves as the star in customer service and act accordingly.

Emotional Connection

In order to achieve loyalty, everyone in the organization must make a positive emotional connection with each customer. Research conducted by the Gallup Organization (Gallup’s Management Journal 6/17/2001) indicated that the key to winning customers is not price or even product. It’s emotion! We now know that loyalty is tied to consistent and positive points of connection. Because emotions are perceived as soft, messy, and hard to deal with, emotions make many organizations nervous. It takes skill to handle emotions properly. However, this is one skill everyone in your business needs to master.

How to Measure

Measuring customer loyalty is simple. In a recent book, The Ultimate Question: Driving Good Profits and True Growth, Fred Reicheild indicates that organizations need to know how their customers feel and how to create accountability for the customer experience. He believes there is one ultimate question that all organizations should ask their customers:

“How likely is it that you would recommend this organization and our products or services to a friend or colleague?”

We believe that the internal measure of employee loyalty can be just as simple:

“How likely is it that you would recommend this organization as a place to work to a friend, family, or former colleague?”

Using a scale of one to 10, ask all employees and customers the above questions.

In Conclusion

If you want sustainable growth and extraordinary profit you need to build employee and customer loyalty. Review our website to understand how an executive coach or business coach can help you increase the success of your career and business, or contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.

Reference and excerpts taken with permission from Customer Loyalty published by Resource Associates Corporation, Mohnton, PA

Customer Retention. The Road to Profitability

The notion that there is no linkage between customer retention and profitability is being proven false. There is a direct linkage between customer retention and profitability.

One survey found that a 5% increase in customer retention consistently resulted in a 25% to 100% increase in profits. These almost unbelievable results would suggest that there must be a powerful force, your emotional connection to your customer, which needs to be understood and effectively managed.

Customer retention is not only a cost effective and profitable strategy, but in today’s business world it’s necessary. This is especially true when you remember that 80% of your sales come from 20% of your customer and clients. With these statistics in mind, I am wondering why most marketing and sales campaigns are designed for the new customer.

Take for instance the wireless telephone companies; if you sign a new contract you are given a large rebate or even a free cellular telephone. If you are a current customer you have the privilege of paying full price. Can someone please explain that methodology to me. With this type of promotion are we not just pushing current customers and clients to seek services elsewhere when their contract ends?

Creating a new business model that focuses on customer loyalty and retention would show that there is, in fact, a linkage between all elements of a business system: your employees, customers, and investors—and the generation of profits. Providing customer value begins with a management philosophy that supports the cultivation of strong customer relationships and is implemented by having properly trained and motivated employees who know how to deliver value.

Research has shown that customers who have an emotional connection and feel valued will repeatedly be repeat customers as well as provide a strong referral base for new customers. Loyal customers repeatedly purchasing your product or service are what generate sustainable business growth and profit. However, your practices and processes that support loyal customer relationships must be in place first before you will begin to see a profitable impact. This model does not work in reverse, although many organizations seem to think the reverse is possible.

This new business model is important because it initiates a series of steps which cascades through the organization as follows:

  1. Revenues and market share grow as your best customers build repeat purchases and recommend you to others who also become loyal.
  2. Employee retention increases due to job pride and satisfaction, which in turn creates a loop that reinforces customer retention through familiarity and better service to the customers. Customers like doing business with people they know, and your employees want to do the right things because it makes their job far less stressful.
  3. As costs decrease and revenues increase, profits increase. Improved profits provide resources to invest in employee development and compensation (further increasing retention) and in new features and products that enhance customer value. Profits are important not just as an end in themselves. They also allow the organization to improve value and provide additional incentives and reasons for employees, customers, and investors to remain loyal to your organization.
  4. Costs begin to shrink as the expense of acquiring and serving new customers and replacing old customers declines. In our experience,  it is five times more profitable to spend marketing and advertising dollars to retain current customers than it is to acquire new customers.

So what can you do differently for your business? Perhaps a good place to start would be to find better ways to create and sustain a loyal customer base. While there will be the need for an investment, the advantages will be enormous to your customers, employees, and investors. Strictly from a financial perspective, increased revenue from improved service quality tends to be 10-20 times the costs associated with fixing the problem.

If you want more information or you are interested on increasing your customer retention ratios, please call 305.722.7213, or you may also send me an e-mail at pjperez@activategroupinc.com.

Reference and excerpts taken with permission from Customer Loyalty published by Resource Associates Corporation, Mohnton, PA.

Customer Loyalty

Last summer, during a deserved break from my coaching activities, I decided to spend four days with my family at a beautiful resort on the west coast of Florida. The experience was “ok”, except for the speed of the checking-in and out processes, pool services and other services.   In a nutshell, overall service was satisfactory but not memorable. If asked, I would relate to the resort that “I was a satisfied customer”.

However, would I stay at this resort in the future? Would I recommend the resort to my family and friends?   The answers toboth these questions area resounding “no.” In conclusion, I was a “satisfied” customer but not a “loyal” customer.

According to Jeffrey Gitomer of Customer Satisfation is Worthless:  Customer Loyalty is Priceless, “Satisfaction is not longer the acceptable measurement of Customer service success”. The Gallup Organization’s research also concludes that no matter how an organization thinks its customers are satisfied, if it hasn’t made an emotional connection with its customers to develop a long-term relationship, satisfaction will ultimately be worthless.

During my summer experience, there lacked an emotional connection with the resort, resulting in a loss of desire to return to the resort.

Great customer service is all about bringing customers back. And about sending them away happy – happy enough to pass positive feedback about your business along to others, who may then try the product or service you offer for themselves and in their turn become repeat customers.

Customers will come back and will bring family and friends to do business with you, if:

  1. The “emotion” experienced at every “point of connection” during the buying process is so strong that it leaves a mark on their memories.
  2. The relationship is based on “trust”. Customer will seek your personal assistance, and they are willing to pay for it.
  3. They feel you really care about their needs. Always put your Customer’s interests and needs ahead of yours.

Here are some statistics:

  • A typical dissatisfied customer will tell 6-10 people about the problem.  A typical satisfied customer will tell 1-2 people.
  • It costs 6 times more to attract a new customer than it does to keep an old one.
  • Of those customers who quit, 68% do so because of an attitude of indifference by the company or a specific individual.
  • About 7 of 10 complaining customers will do business with you again if you resolve the complaint in their favor.
  • If you resolve a complaint on the spot, 95% of customers will do business with you again.

What happens to angry customers?

  • 91% of any business’s angry customers will never come back.
  • 96% will never tell you the reason that they left.
  • 80% will do business with you again if their problem was handled quickly and to their satisfaction.

If the problem was quite bad, they will tell stories about it for years and years to come.

“Who is typically to blame when you lose a customer?” Most customer service providers will answer that it is the customer’s fault! (and here is the scariest percentage) .. 99% of the time that customer service provider only needs to look in the mirror to see who is truly at fault!

From a scale of 1-10, how likely are your Customers to recommend your organization to someone else? If your answer is below 7 or you don’t know the answer, it is time to think about developing a Customer Loyalty Strategy to start creating the “emotion” not only on your External Customer but also on the Internal ones (employees).

If you want to learn more details about our Customer Loyalty Development Program and how valuable for your organization it might be, please review our website, call Pablo J. Perez at 305.722.7213 or send an e-mail to pjperez@activategroupinc.com.

Reference and excerpts taken with permission from Customer Loyalty by Resource Associates Corporation.

Creating Loyal Growth – Part 2

Have you ever washed a rental car? This is a question I ask of managers and leaders of traditional businesses or non-for-profits, and 99% of the time the answer is a smile and a “no.” The sense of ownership has a direct link with loyalty, and loyalty has a direct link with business growth. In other words, if your customers and employees are willing to “wash the rental car” (the organization), then the chances of developing sustainable profitability are high.

If the reason for an organization to be in business centers on their customers or the community they serve, in order to achieve organizational success, the leadership team should assume the following critical functions as it relates to their customers:

  • Develop a customer-oriented strategy
  • Design and implement customer-friendly policies and processes
  • Develop employees’ skills
  • Monitor and improve processes on the issues that are defined as most important to the customer.

The customer is now the center of the business universe. Everything in the organization should rotate around increasing customer retention and having the right interaction with our customers, with the sole objective of creating loyal growth.

According to Barbara Glanz’s Human Business Model, whether you are serving employees as a leader or a manager or are serving a customer, you always have choices. There are two levels in any interaction that we have:the business level, which is focused on achieving external objectives and goals a specific person has, and the human level, which is all about how people feel during that interaction. Most of the training we have received is focused on creating interactions at a business level, but we have received little training on the human level interaction.

At the human level is where customer loyalty grows. According to the statistics, a 5% increase in customer retention consistently resulted in a 25-100% increase in profits. This unbelievable result is consequence of a powerful force created by the emotional connection to your customers.

Organizations invest a lot of money developing products and services to compete in the marketplace and also design and implement customer service strategies to provide support and generate customer satisfaction. Nowadays, customer satisfaction is synonymous with mediocrity. Using a grading system, satisfaction could easily translate into a “C” on a report card. When customers receive more value than they expected, then the grade rises to an “A,” which always equates to loyal customers.

If we draw the diagram of every Point of Connection that a potential customer has with the organization from before the sale is made to after the delivery of the product or service, we would be able to visualize the total buying process. We need to provide all customers with the level of value and emotional support they expect at every Point of Connection.

Every Point of Connection is an opportunity to connect emotionally with your customer and be sure they are receiving the value as they define it. It is an opportunity to interact at the human level generating the emotional contact that will make them come back and bring their family and friends.

If you are a business owner, or you are leading a business unit or a whole organization, in order to effectively manage Points of Connection; I want to encourage you to follow these steps:

  1. Identify all Points of Connection between your customers and your company.
  2. Once they are identified, you must understand what value your customer is looking for in each Point of Connection.
  3. If there is a gap between the value your customer is expecting and what currently exists, then it is management’s job to put in place proper employee development and process improvement to eliminate the gap.

If you want more information about the three above-mentioned steps to create loyal growth in your business, or you are interested in implementing a customer loyalty strategy for your organization, please call 305.722.7213, or you may also send me an e-mail at pjperez@activategroupinc.com.

Creating Loyal Growth – Part 1

The formula to achieve profitable organic growth should be as simple as attracting, developing and keeping profitable customers. Companies spend an important part of their budgets in marketing and advertising with the purpose of attracting new customers; however, keeping and developing your customers are the result of having a solid and aligned organizational culture.

If your customers can switch to your competition at any time, you should keep reading this article.

In all businesses we have four types of customers:

  • New Customers, who receive our biggest investment of attention and time;
  • Current Customers, to who we have been providing services for a period of time, giving us a “safe” feeling;
  • Past Customers, people who no longer are doing business with us;
  • Future Customers, who will do business with us in the future.

From the list above, who is your most important customer? I know the answers will vary; however, let’s focus on the Past Customers – those that decided to stop doing business with us.

The federal government carried out a research program and to find out why customers stop doing business with a company. The research discovered that:

  • 3% move away.
  • 5% develop friendships or business alliances with other companies.
  • 9% go out of business.
  • The other 68% don’t like the way they are treated.

As you can see from the above, the last two reasons make up 82% of the total lost business and both of these reasons are avoidable.  Now you might assume these customers were unsatisfied. However, maybe they were not loyal.  Or maybe they were both?

Is customer satisfaction equal to customer loyalty? Definitely not. A satisfied customer may keep doing business with you but will not create profitable organic growth for your company. A loyal customer will bring to your company not only her or his business, but will refer you business from family and friends.

Research prepared by Accenture concludes that customers who are highly satisfied for the most part are willing to switch providers if the incentive is right.

% Indicating Would

Reason to Leave                       Switch Provider

Any reason                                                    87%

Lower price                                                   79%

More reliable/better service                        58%

Better products                                             47%

Offers suited to my needs                           46%

Access to a real person                              36%

More product choices                                  27%

Rewards program                                        29%

More accurate billing                                   22%

However, according to the same research, these are the actions loyal customers are likely to take:

Continue purchasing

Recommend the company to others Respond to specials

Provide direct positive feedback

Provide personal endorsement

Share information with company for improved products and services

81%

74%

51%

38%

31%

20%

Most consumers believe good customer service should be a core competency of the companies with which they do business. Today, they need to receive more than good customer service to become loyal to your business.

Customer satisfaction surveys are useless in terms of creating loyal customers. 95% of dissatisfied customers will not participate in any survey. They just leave and never come back. Another thing you have to remember is that 8 out of 10 of those people who go away will bad-mouth you. They will tell somewhere between 25 and 250 people that they had a problem with your company, and they will actually enjoy saying it. It’s your job to keep that from happening.

Customer loyalty is based on four elements: price, service, trust, and emotion.

On “Creating Loyal Growth – Part 2”  I will describe in more details these four elements.

To discuss how I can help your organization to develop loyal customers for your organization, please call 305.722.7213, or you may also send me an e-mail at pjperez@activategroupinc.com.

Are you creating raving fans?

Customer service is a key opportunity for most businesses in today’s marketplace to add and keep more customers as well as increase the bottom-line. Unfortunately, today’s customers have been forced to accept poor customer service as many companies have cut back on customer care in order to compete on price and profitability. This decision is hurting top and bottom-line results.

I recently picked up a copy of “Raving Fans”, a Ken Blanchard and Sheldon Bowles book which is a simple-to-read and to-the-point book on handling external customer service. They do a great job of bringing together leading business concepts and creative story lines to effectively illustrate how to create outstanding customer service.

In the book they outline a three-part formula to create Raving Fans of your customers:

  1. Decide your vision for extraordinary customer service
  2. Discover what your customers want
  3. Finalize your vision and deliver plus 1%

This article is not meant to be a book review, just the opposite, as we believe simply following the points of this book will not make Raving Fans of your customers. Instead, we will look at the business structure from a more macro point of view.

Those who have worked with Activate Group know we do not believe that any one book has the magical answer to the success of your business. However, we do feel that this book has a wealth of knowledge and is a good one to add to your reading list if you are planning to improve the quality and response of your customer service.

From a macro basis, this book focuses on customer service primarily as an external function, and it significantly oversimplifies the execution of creating Raving Fans. First, let’s discuss the traditional organization and why customer service is truly lacking. In a traditional organization (depending on the size of the organization), there is a separate person or group of people responsible for developing strategy, managing and leading people, getting and keeping customers, and managing systems. Oftentimes there might as well be a wall that is 10 feet high and 12 feet thick between each department because each does not know what the other is doing.

Worse, many organizations have no customer service strategy at all, thinking they can hold off until the organization is larger and more established. However, many of those do not make it. They get complacent with their earnings, their customers leave, and they underperform from their true potential. And then there are organizations that have an established strategy. However, as many of us have experienced, it is not too unusual to find an organization where there is little resemblance between what is stated in the strategic plan and the daily operations, and if there is a resemblance, it is purely coincidental. This occurs as the different departments and people try to achieve their view of what the organization goals should be. The end result is organizational energy moving in different directions, resulting in dissatisfied internal and external customers.

With this in mind, how then does an organization successfully establish a defined strategy that both departments and people will support and follow? Inside of your overall strategy your customer service strategy should take into account both internal and external customers. As I mentioned in a previous article entitled “Leadership and Management Strategies: Finding and Polishing Your Gems,” to be truly successful, a business must understand that it has two customer bases – internal and external. And, it must cater to and serve both customer bases. The customer base most focused on is typically the revenue-generating ones. However, considering cause and effect, one would expect the internal customer (the employee) should be on at least an equal footing with the external customer. For example, if I report to you on a daily basis, we would have a customer relationship. If I do not keep you satisfied, you are going to help me get happily involved with a new career path in another organization. But if you are not keeping me satisfied, I have got two options, I can walk, or I can go on silent strike, putting forth minimal performance. You are never going to be able to get spectacular things from me.

Your customer service strategy must lie inside of your overall company strategy. Customer service is an integrated system that when combined with the overall corporate strategy becomes the powerhouse behind creating Raving Fans within your customer base.

Consider the following:

  • What is your strategy for managing people? You certainly do not say “Firings will continue until morale improves.”
  • What is your strategy for managing systems? How do you make yourself easily accessible to both internal and external customer needs?
  • What is the interdepartmental strategy? Does it take an Act of Congress in order to get something done? Or is the organization relatively fast on its feet?

Where these factors overlap is where our satisfied customers lie, both inside and outside the organization.

Now, back to the book, the first key to creating Raving Fans, according to Blanchard and Bowles, is to “Decide What You Want.” It is creating the organization’s vision of perfection centered on and around the customer. The point here is that you must mentally accomplish something before you can physically accomplish it. So what does the entire customer experience look like through every possible customer contact, and how will you create the ideal environment for Raving Fans? To that extent, your visioning phase should not be confused with “how to.” Just concern yourself with “what.” Otherwise, you will limit your thinking and fall short of potential.

The second key to creating Raving Fans was to “Discover What the Customer Wants.” This is a very important point. I strongly encourage you to hire an external party to help you discover your customer’s point of view. We are conditioned to see things a certain way, and this clouds our judgment. It is human nature to gravitate toward feedback that supports your own vision as opposed to listening and internalizing what the customer is telling you. Today, many businesses discard information that does not fit the vision, and those are critical components to achieving excellent customer service.

An organization’s vision is important, critical actually, and for several reasons. First, as the book mentions, unless you have your own vision, how can you understand your customer’s? Second, when you find out what customers really want, focus will be on one or two things. Your own vision has to fill in the gaps. Finally, you have to know when to ignore what the customer wants and, if necessary, tell the customer to take his vision elsewhere to be fulfilled. Your job is not to look after every whim of every customer.

The third key to creating Raving Fans was to “Deliver the Vision Plus One Percent.” There are two important points embedded here. First, you have to decide on a vision, and second, make a commitment. Many people think that they’ve made a commitment, and this is not always true. Any ambitious goal like creating Raving Fans is going to encounter problems. Commitment will work to overcome these problems. The typical response is to question the decision.

Finally and importantly, throughout the book Blanchard and Bowles point out that it is not realistic to deliver your entire vision all at once. Start with small achievable goals. As you deliver the goals through implementation consistently add another 1%. This gets down to the integrity of doing what you say you are going to do every time. Your customer will first see your organization’s shortcomings especially if you are over-promising and under-delivering. This will not be satisfactory to the customers even if you are ultimately delivering a lot more than your competition. Keep this in mind. Build what you can deliver consistently. and then add 1% at a time. Over time, you will see that the compounded return will be 100% of your vision and a lot more customers!

At Activate Group we have the methodology, expertise, and tools necessary to help your organization to strengthen its focus on attracting, servicing, and keeping internal and external customers.

Review our website to understand how an executive coach or business coach can help you increase the success of your career and business, or contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.