Loyalty is royalty

Many small businesses throughout the industry run their company by striving to delight their customers. They believe that the foundation of a great customer experience is to give much more than what they promised in order to build a successful business. They constantly work to surpass their customers’ expectations.

In their new book, “The Effortless Experience: Conquering the New Battleground for Customer Loyalty,” authors Matthew Dixon, Nick Toman, and Rick DeLisi show that exceeding customer expectations does not, in fact, increase their loyalty. It does rise when the company goes from below satisfaction to meeting expectations, but the loyalty curve flattens out when the business exceeds what the customer originally wanted.

According to the authors, there are several ways to lose the loyalty of a customer during the customer service process.

1. Having to re-explain an issue to multiple people inside of a company or when they call back. Solution: The company needs to have a system in place (like a help desk database) to keep track of customer concerns.

2. Having to initiate a call back to the company to try to get their issue resolved instead of having the company call them. Solution: The company needs to have a system that will notify the staff to follow up and call a customer back.

3. Being transferred from employee to employee to get issue resolution. Solution: The initial point of contact (or secondary one) should be able to handle 99 percent of the issues raised by customers if the staff is trained correctly.
 

Customer retention

So how does a small business then retain loyal customers? Firmly set their expectations. Consistently meet them. Empower employees to resolve a customer concern the first time it arises.

Many companies use surveys to find out if they are meeting their customers’ expectations. Unfortunately, there are only three types of customers that always tell a company what they are thinking.

1. The very happy ones. They can’t wait to tell how great the product or service is and how it changed their life. They are falling over themselves to express their gratitude in person, by phone or on the web.

2. The very unhappy ones. They can’t wait to tell how the product or service just ruined “their life” and they wish they never met the company. They, too, are falling over themselves to express their dismay in person, by phone or on the web.

3. The people who are paid. Customers love to be “bribed” to tell their opinion. Many retail stores give a $2- $3 discount on a customer’s next order for simply completing a survey.

The majority of disgruntled customers will say nothing directly to the company. They will sulk away and never buy from that company again. In this case, no news is not always good news. It may be broken and the company may not even know it.

So while customers are more likely to complain, see this as a gift. They have taken their valuable time to give the feedback directly to the company instead of just complaining to their friends. The business benefits in two ways:

1. The company gets a chance to turn around their experience. Surveys show that a dissatisfied customer whose problem is fixed can again become loyal to the company.

2. The company gets valuable feedback that many other customers have experienced, but never mentioned. Customer service is a moving target so customer concerns may change every month.

What should a company do? Listen carefully to make sure they understand the concern. Try not to find blame or hide problems. Ask the customer for their best solution. Get back to the customer on how it will be solved. Collect all of these concerns so an overall trend can be spotted by the company.

Barry Moltz gets small businesses unstuck. He has founded companies with a great deal of success and failure for more than 20 years. He’s the author of four small-business books and a contributor to American Express Open Forum and Forbes. He hosts a weekly radio show for small business owners. www.barrymoltz.com.