Customer loyalty is dying. You can blame the Internet. The economy. The competition. Even yourself. Or you can follow the lead of some stellar companies that use customer service to continually win loyalty.
The scary truth: Only about 25% of consumers feel very loyal to any of the companies they do business with. Just as many feel no loyalty at all, an Accenture study found.
Business relationships aren’t as sacred as they once were — when deals were sealed with handshakes, not pages of legalese, and employees knew customers by their names, not their account numbers.
Now that customers are often treated more like signatures and numbers, they don’t feel connected to businesses and their employees, leaving them less compelled to stick around.
From Green Stamps to Frequent Flyers
Enter the loyalty program, which could be dated back to the late 1800s with the likes of Green Stamps. Airlines could be considered the father of modern day loyalty programs when they introduced frequent flyer programs in the early 1980s. The travel and hospitality industry quickly followed with their own versions, and these days every business from the local craft shop to the major credit card companies have some kind of loyalty plan.
But, they’re not working.
Most households are enrolled in 18 loyalty programs, and are active in just eight of them, a Colloquy study recently found. What’s more, researchers found:
- 85% of loyalty program members haven’t heard a single word from the company since the day they signed up for its loyalty program,
- More than 80% of loyalty plan members don’t know the benefits of the plan or if, how and when they’ll receive rewards, and
- Just 17% of customers say loyalty programs are “very influential” in their decision to make purchases.
It’s the experience, not the reward
In many cases, customers sign up for loyalty plans to get a fast discount or immediate reward. They don’t come back every week in pursuit of discounts, rewards or small perks if the experience isn’t worth their effort and dollars spent.
Savvy companies have come to realize that loyalty isn’t built on a program that gives periodic 10% discounts, free flash drives or surprise overnight shipping. It’s built on experiences that leave customers feeling good about doing business with them and wanting to come back and deal with good people providing great services and quality products.
Here are companies that increased customer loyalty with better service and better experiences. No matter the industry, their approaches can be translated into useful ideas for just about any business.
1. Thank the top
Customer loyalty can be built on the most basic grassroots efforts. Any big corporation can learn from the sincere outreach approaches that small- and mid-size organizations make.
Case in point: The owner of a small framing company in the Windy City.
When business dipped because of a stalled economy, Jay Goltz, owner of Artists Frame Service, felt particularly appreciative of the customers who stuck with him. So he pulled together a list of his 100 best customers based on how much they spent and how frequently they contacted him or bought each year.
He sat down and wrote a letter explaining why they were his best customers, and thanked them for making doing business with him a priority. He included a small gift certificate, asking them to continue the relationship and promising to continue to provide them with great, personal service every time they contacted him and his employees.
2. Make the mundane special
Most companies make a special point to reach out to customers after a major sale, huge problem or complex situation. It’s a smart gesture, but it probably shouldn’t be left to just those circumstances.
At least that’s what the people at Groff Tractor & Equipment think. Tom Jamieson, VP of product support at the Mechanicsburg, PA-based company, had his customer service reps carve out time each day to call customers after routine service, repairs and small complaints or issues.
Reps called to make sure everything was OK. In many cases, they ended up leaving a courtesy message. If it was a big issue, Jamieson made the call himself. No call took long. And all the calls made a lasting impression that has led to year over year records in customer loyalty.
3. Hold hands, let go
Do you know which of your customers are most likely to leave? Knowing that can help you determine the best way to treat customers during the course of the relationship so it lasts longer.
Northeast Delta Dental was concerned about decreasing customer loyalty. So Catherine Frankel, customer service manager at the Concord, NH-based supplier, along with her team of reps, looked at in-house data to determine when customers were most likely to stop doing business with the company. In their case, customers who’d been with the company less than two years were more likely to jump ship than longer-term customers.
With that knowledge, they listened to recorded calls and hunted through some account history to find the breaking point in customer relationships. Turned out, customers who experienced more “hand-holding’ and were shown more appreciation in those early years stuck around more.
So reps changed their approach a bit based on how long customers had been with them: Newer customers were offered more attention. Veteran customers got fast, efficient help (unless they needed extra attention, of course). And loyalty from new customers quickly rose.
4. Take them by surprise
When customers contact an organization, they’ll be satisfied if their expectations are met quickly and efficiently. Problem is, satisfaction doesn’t equate to loyalty. In fact, most satisfied customers will leave a business for a better deal.
That’s why much customer loyalty depends on meeting unspecified needs and sometimes even taking customers by surprise.
At Freshbooks, customer service reps do what customers ask, then are encouraged to listen for things customers want or need but don’t outright ask for them. It’s led to some interesting situations that have built loyalty and positive viral word-of-mouth campaigns, according to CEO Mike McDerment.
Example: When a customer mentioned she was having a bad day — and apologized for venting about the situation that was unrelated to her call to Freshbooks — the attending rep had a bunch of flowers sent to her.
Another time, a customer mentioned off-hand on a company blog that he couldn’t get Triscuits where he lived. A Freshbooks employee saw the post and had a few boxes shipped to the customer.
5. Make it easy to connect
Nearly every company keeps an account record that employees who deal with customers can access when they talk to customers. It’s filled with customers’ names, addresses, contact information and buying history.
And it should be loaded with personal information to be used as an arsenal for building loyalty.
From the first day a customer signs on, service reps at Packing Corporation of America add personal information in accounts. As soon as they dig up a small detail in a conversation — say a birthday, recent accomplishment, product preference, loved one’s name, recent trip or favorite hobby — they note it in the account.
That way, the next time a customer contacts the company, anyone who pulls up their account can make a personal connection by commenting on something in the “personal list.”
Result: Customers have said they feel like friends are helping them, not just a company. And friendship loyalty tends to last longer than business loyalty.
6. Learn from each other, reward everyone
Who has the best ideas for building customer loyalty? Marketing might say they do. Sales or Service might claim the same.
Bottom line: They might have some great ideas. They just need an outlet to share them.
At D.O. Weaver and Company, everyone — yes, all employees — got together and were asked to share one thing they did for customers or the betterment of the company in the past week.
Janice Hayes, business development manager at the Colorado company, along with her colleagues, kept a handwritten record of what employees said.
Example: “A customer showed up at closing time and I stayed late to help him” or “I dealt with a demanding customer who often pays late. I worked with him for some time, and now he wants to pay us.”
Employees were encouraged to try the best ideas themselves when facing similar situations.
They were also asked to talk about issues they heard from customers and request ideas on how to resolve them so customers aren’t affected again.
The executive team stood behind their desire and commitment to improve customer loyalty by rewarding employees for their ideas and efforts. Everyone got a bonus based on continuing loyalty.
The group think sessions and follow-up efforts helped the company keep 99% of customers loyal — a result that fattened every employees’ wallet.
