David Evans speaks to The Business Times
At the heart of customer loyalty
The way to retain customers is to understand if they perceive true value in products or services, says DAVID EVANS
Fuelled by rapidly expanding economies, Asian consumers are enjoying greater freedom and choice.
This has meant more pressure on brands as they navigate their way through the various options to keep customers loyal. However, before investing significantly in customer relationship management or loyalty programmes, the best way to retain customers is to start with the first principles of understanding whether the product or service proposition represents true value in the eyes of the consumer.
A consistently well-delivered product or service, provided at good value, goes further than shorter-term initiatives that try to retain customers through the offer of gifts or points alone.
Loyalty is ultimately about how people feel about the organisation and how the organisation responds to its customers. It is an emotional reaction.
Companies that regularly elicit feedback and integrate this into their consumer proposition or use it to coach employees will always come out on top.
But a word of caution, this does not mean a company should embark on a campaign of “death by survey”. There is, however, a lot to be said for a well-planned and strategically-placed survey at key milestones in the customer journey, which provides the opportunity for meaningful feedback.
The last thing the customer should feel is that their feedback is going to simply disappear into a data vortex.
The Lexus story
One example of how a company has integrated into its business process the gathering and use of feedback to boost its customer loyalty is Lexus.
The company set up a system where every Lexus owner in the UK would be telephoned just three times a year. The calls were timed to be linked to key moments in their customers’ contact with Lexus dealerships.
Lexus wanted to understand and measure their customers’ experience and follow their interaction with the brand. In this manner, they were able to hear the true voice of the customer and where relevant, respond in a practical manner, to demonstrably improve their consumer proposition.
If a customer indicated they were not completely satisfied with their experience, this was red-flagged and followed up by Lexus.
In cases where there was a negative comment, the customer would receive a call from senior Lexus management, to find out what the problem was and how they could improve.
The programme’s core objective is to connect the customer (through their feedback) to the people within the Lexus network, who can make a difference to the customer’s experience (the front line dealer teams) as quickly as possible.
Lexus continues to implement this phone survey in the UK to monitor customer satisfaction.
For Lexus, getting its value proposition right was and still is a top priority.
There is no other incentive to stay loyal to Lexus, except for the brand’s engineering perfection, reliability and excellent service. Clearly, this has been enough, demonstrated by Lexus’ continuous top ranking in customer satisfaction studies conducted within the automotive industry around the world.
The most glamorous loyalty programme will not be able to camouflage the product or service’s shortcomings. A quote by Mahatma Ghandi is most relevant here – “Take care of the means and the end will take care of itself”.
Nevertheless, loyalty programmes do have a role to play. They are a very effective way for companies to establish a database of their customers. Once a company has built this database, regular and targeted communication is key.
This can often be the important differentiator in competitive retail sectors. For example, Tesco, the leading international supermarket retailer, used a loyalty programme to communicate directly with customers.
More importantly, Tesco made these communications relevant, by understanding how customers shopped, what they purchased and what they looked for from their supermarket.
This allowed Tesco to treat their customers as individuals, by discovering which benefits in the loyalty programme were the most relevant to them, establishing Tesco as their supermarket of choice.
Keeping the customer King and valued is, at the end of the day, the ultimate objective. Some easy tips for valuing a customer include returning their calls or e-mails promptly, respecting their time or keeping things personal.
A good example on keeping it personal can be seen by two banks. The first one spent a fortune on a customer relations management technology, to provide information on its clients and what they were doing at what time.
However, they did not take any further steps to translate this into a benefit for the client, and as such, their investment was wasted. This differs from a personal banker, who has serviced the same client for the past two decades. Whenever they met, the personal banker asked the client about his children (remembering their names and where they are studying) and provided tips on new improved interest rates or schemes appropriate to the client, at the relevant stage of his life.
This is what customers want. This is what keeps the customer loyal and turns them into enthusiastic advocates.
At the end of the day, customer loyalty is a bit like yoga – a never-ending journey and something that needs to be practised every day in order to keep the company limber, flexible and strong.
The writer is chairman and CEO of Grass Roots Group, a performance improvement company that helps organisations achieve their goals through providing services in communications, education, measurement, rewards and events, targeting employees, channel partners and customers. He will speak on boosting customer loyalty at The Customer Show in Singapore next week.
www.terrapinn.com/2010/customerasia/
"Source: Business Times copyright Singapore Press Holdings Limited. Reproduced with permission"