Commentary & Analysis
The Customer Loyalty Top Ten
By Ed Marino of Presstek March 6,
By WhatTheyThink Staff
Published: March 6, 2006
By Ed Marino of Presstek March 6, 2006 -- As 2006 begins, it is a good time to take a fresh look at your customer relationships. Without customers, no business can be successful, and it is a time-tested truth in business that it is much less expensive to retain and grow relationships with existing customers than it is to acquire new ones. In my new book, The Loyalty Payoff: How Building Customer Loyalty Boosts the Bottom Line, I cite Dr. Micheal LeBoeuf, a professor of management at the University of New Orleans and author of the classic book How to Win Customers and Keep Them for Life, who says: * A typical business hears from only 4 percent of its dissatisfied customers; the other 96 percent just quietly go away and 91 percent will never come back. * A typical dissatisfied customer will tell eight to ten people about his problem. One in five will tell twenty. It takes twelve positive service incidents to make up for one negative incident. * Seven out of ten complaining customers will do business with you again if you resolve the complaint in their favor. If you resolve it on the spot, 95 percent will do business with you again. On average, a satisfied complainer will tell five people about the problem and how it was satisfactorily resolved. * The average business spends six times more to attract new customers than it does to keep old ones. Yet, in most cases, customer loyalty is worth ten times the price of a single purchase. It is no wonder that companies invest heavily in retaining customers and building loyalty. A culture of loyalty begins at the top. Customers have lots of options for almost everything, including their printing needs. Customer loyalty can be defined as the propensity of a customer to choose one business or product over another for a particular need. In today's highly competitive world, customers have lots of options for almost everything, including their printing needs. Their loyalty is demonstrated by their actions--by how they choose to vote with their wallets as they make each and every buying decision. Here is my Customer Loyalty Top Ten for your consideration as you examine your own customer loyalty strategies. * Invest in employee loyalty. The best companies understand that you build customer loyalty by focusing on employee loyalty first. The more dedicated and loyal your employees are, the happier your customers will be. Last month's Presstek Perspective focused on employee loyalty and has some great tips from Cathy Cavanna, Presstek's Vice President of Corporate Human Resources. * Establish frequent communication with your customers. By staying in frequent contact with customers, you stay top of mind. Consider producing an printed or electronic newsletter on a monthly or quarterly basis. It should contain information your customers will find useful in improving their business communications strategies and can also be used as a marketing tool with special offers, announcements about new services, etc. * Survey your customers. How will you know that your customers are happy and likely to continue using your services. Many times, customers simply disappear from your landscape and you may never know why. Ask them. And ask them frequently--include a survey with every job you deliver. Conduct a more in-depth survey on at least an annual basis. And when you uncover issues, take prompt and proactive measures to resolve them. * Know your customers. We all like to be recognized and remembered. When you walk into a business and they call you by name, regardless of what type of business it is, you feel valued and your positive feelings about the company are enhanced even more. Make it a priority for you and your staff to recognize and remember customers. * Invest in effective prospecting techniques . Prospecting should be based on gaining an understanding of the prospect's business objectives and communicating how your business can help in achieving those objectives. That may include subscriptions to the local business journal or online resources such as Hoovers.com. It almost certainly includes some sort of sales automation package like Salesforce.com, GoldMine, or ACT! By investing the effort in understanding more about customer business objectives and responding to them, you will build greater customer loyalty. * Manage customer expectations. It is better to exceed expectations than to set expectations that are not reasonably achievable in the first place and then not be able to meet those unreasonable expectations. * Conduct regular employee round tables . By soliciting frank and honest feedback from cross-functional teams of employees, you will help foster relationships between departments and identify ways in which your shop can run more effectively. This in turn leads to happier employees and a better framework for serving your customers and retaining their loyalty. * D o a thorough analysis of your customer base. This should include how much it costs to acquire a customer and the lifetime value of each customer, or type of customer, to the enterprise. This will allow you to take a fact-based approach to decisions relative to investments in customer retention and customer loyalty programs. Know how much it costs to acquire a customer and the lifetime value of each customer to the enterprise. * Stop selling printing. If you look closely at what your customers are buying, it is not printing. They are buying the ability to promote their products (brochures) or their business (signage). They are buying the tools to efficiently run their businesses internally (forms and business stationery). They are buying the ability to have a better educated customer base and reduce the load on their call centers (product and training manuals). By addressing those specific business needs with creative solutions, you will build loyal customers who are not as likely to put every print job out to bid. * Make sure you extend your loyalty-building efforts to partners and suppliers. It is almost impossible to be successful in business without a reliable set of suppliers. Whether it is the paper merchant, the equipment manufacturer, or the night cleaning crew, suppliers fill an important role in the daily conduct of business, providing raw materials, production tools, and a set of services that let us focus on our core competency--the manufacture of print. It can be disruptive and expensive to constantly change suppliers or to worry about their reliability when you are trying to meet a customer deadline. By specific business needs with creative solutions, you will build loyal customers who are not as likely to put every print job out to bid. Remember that a culture of loyalty begins at the top. Take the necessary steps to ensure good leadership at your company and you will reap the benefits of those actions for many years to come. Sit down with that leadership team and brainstorm how you can leverage my "Top Ten" to improve the loyalty of your employees, partners, suppliers, and of course, your customers. This is one of the most important investments you can make in your business.