7 Principles and Related Action Steps in Building Customer Loyalty

One of the core beliefs of the value of CRM, involves its use in retaining profitable customers.

The loyalty bond between the solutions your business provides, the people who represent your business and your loyal customers can become stronger by following these principles and related actions steps.

1. Practice the 80/20 rule.

Roughly speaking, 80 percent of your revenue is being generated by 20 percent of your customers. (For 2011, our business was at the 85/15 ratio). All customers are not created equal. Some represent more long-term value to your firm then others. A smart business uses CRM to segment customers by value and monitors activities closely to ensure high value customers get their fair share of special offers, attention and results.

Action step: Rank your customers according to actual net revenue generated over the past year. Next, rank your customers regarding life-time value and yes this takes some time but its really an eye opener. Compare the two lists and make sure you are adequately investing in customer appreciation programs that provide for high-ranking customers on both lists. We have several clients that have added an A/B/C type scoring to the company account profile, which makes this segmentation very visible.

2. Aggressively seek out customer complaints.

How many times did you have poor service but did not complain and just never returned to support that business? It’s probably the same for many others. For most companies, only 10% of complaints are very articulated by customers. The other 90 percent manifest themselves in many negative ways: late payment, unpaid invoices, lack of courtesy to your service department or worse yet, negative word of mouth. With the Internet, an unhappy customer can now reach thousands of your would-be customers, fast.

Action step: Review all the touch points a customer has into your company. Brainstorm with staff on how to turn each customer touch point into an opportunity to capture customer complaints and other feedback. Educate your staff for keywords to listen for and tonal changes in a person’s voice and develop a plan of action. Capture feedback from satisfaction surveys as they can begin to detect downward trends before unarticulated complaints occur. Use the customer service/support capabilities of Sage SalesLogix tickets system or cases found in Sage CRM to capture, categorize, investigate and resolve.

3. Serve first – sell second.

Today’s customers are smarter, better informed, and more intolerant of being “sold” than ever before. Don’t you just hate it when out of the gate this occurs to you? Customer expect doing business with you to be as hassle-free and gratifying for them as possible. When they experience good service, they are more open and faster in knowing and liking you. They believe you can earn their business with service that is pleasant, helpful and personalized.

Action step: Using your customer list in your CRM system, identify those high-value customers that are most demanding. Next, isolate the needs, expectations, and request that make these customers more demanding than others. Ask yourself: “What can we do to upgrade our systems and processes to better provide this high level of performance? Which of our other customers would likely benefit from these upgrades”? Let this thinking help guide your improvement priorities.

4. Build from the inside

It’s a fact that any business with a high level of customer loyalty has also earned a high level of staff loyalty. It’s almost impossible to build strong customer loyalty with a staff that is in constant turnover. Customers buy relationships and familiarity. They want to buy from people who know them and their preferences. Key loyalty rule: serve your employees first so they, in turn, can serve your customer.

Action step: Hold regular meetings with staff and ask “what can make our company an even better place to work.” Take action on what you learn.

5. Be consistent. Use multiple channels to serve the same customers well.

Have you ever bought a new car and the front sales office did everything right but when you took your car in for service they were rude and seemed to not have their head in the game? Customers who engage with a business through multiple channels exhibit deeper loyalty than single-channel customers. Customers expect the same level of quality service whether coming into a store, logging onto the Website, or calling custom service.

Action step: Using customer feedback as well as formal customer research processes, monitor customer performance levels from every channel. Isolate a sample of customers who experience in two or more channels and look for differences. Things to watch for: in your customer’s eyes, are you providing equal service in each channel? Is one channel preferred over another? If so, why?

6. Give your front line the skills and tools to perform.

Increasingly, the employee front line is a call center or a group of CSR’s- customer service representatives. These people are the loyalty warriors of the future and truth be told, have been for a long time. These agents of service all need to be equipped as much to produce a well-written e-mail reply, navigate the company web site and find information in the internal systems, as to be helpful and friendly on a phone call.

Action step: Review your hiring policies for front line workers to ensure candidates are being screened for adequate communication skills, especially often missing writing skills. Consider making a written test part of your screening tool. Consider education to build active listening skills and being able to detect inflections in the voice. Perform role playing during your hiring and regularly during internal improvement program reviews.

7. Store your data in one centralized database.

Most businesses lack a 360 degree view of their customer because they have no centralized customer relationship database. Billing departments, sales divisions, and customer service centers all have their own database, with no effective means for creating a complete information knowledge base. To effectively implement a sound customer loyalty strategy, data from all customer touch points must be combined into a centralized customer (CRM) database. Without it, the business is greatly handicapped in its efforts to serve the customer.

Action step: Review your company’s current database situation. How many customer databases exist? We often find that each sales rep keeps her own customer database before they invest in our CRM solutions. Brainstorm with staff on how to start consolidating the databases, with the ambitious goal of moving to one centralized database over time.

P.S. It is very possible that your business already has an accounting or fully developed ERP system in place but the CRM components are weak or non-existent. In fact this is the predominant situation with new clients that come to us. So our CRM solutions will have a seamless, behind-the-scenes synchronization with the accounting AR customer database. Now the marketing, sales and customer service departments all have that centralized database and can easily perform their specific functions without touching the master AR billing system.

Recommendation: This article was inspired by Jill Griffin’s book, “Customer Loyalty: How to Earn It, How to Keep It”. Visit her site www.loyaltysolutions.com for more valuable strategies and actions for becoming excellent in Customer loyalty – your customer will greatly appreciate it and you may become positively ‘remarkable’…