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 [phone link=”true”] or shoreh@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 [phone link=”true”], or you may also send me an e-mail at pjperez@activategroupinc.com.

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 [phone link=”true”], or you may also send me an e-mail at pjperez@activategroupinc.com.

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 [phone link=”true”] or send an e-mail to pjperez@activategroupinc.com.

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

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 [phone link=”true”], 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.

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 [phone link=”true”] or shoreh@activategroupinc.com.

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

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 [phone link=”true”] or e-mail me at pjperez@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 [phone link=”true”] 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 [phone link=”true”] or shoreh@activategroupinc.com.

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 [phone link=”true”] or shoreh@activategroupinc.com.