Retention,Good.defection,Not So Good.
If it costs, on average, 6 times more to attract a new customer, than it does to keep an existing one, why does so much marketing effort (and budget) go into acquisition, and so little into loyalty programs. Here are 9 questions every business owner needs to be asking regularly to stay on top of their customer loyalty program.
Are you willing to put customer loyalty at the center of everything you do within your business? And I do mean everything, from the products you offer to people you hire, to the thank you notes you design, to the sales processes you create, to your marketing, fulfillment and after-sales service?
Have you introduced all of your employees to the meaning and importance of customer loyalty? Does your team understand the concept of the lifetime value of a customer? Most business I've worked with spend a little time training their customer facing employees but forget about those behind the scenes, like your accounts receivable department, or your web developers, or the shipping department, whose roles impact your customer's experience just as much as those on the front lines.
Are customer loyalty goals built into employee performance and compensation plans? In addition to keeping customer loyalty front of mind, this rewards those employees whose service and support is not only delighting, but bringing your customers back.
Is your team involved in the deployment and maintenance of the loyalty program? Do they have a say in the development of the programs, in the implementation, and in taking action to correct course when a client has a less than positive experience? Ensuring they do will build commitment, ownership and engagement. Leaving them out of the process could result in them feeling the loyalty program is a measure of their performance... one which is they have no control over.
Is there an assortment of marketing, selling and customer-care tools aimed at cultivating loyalty at each customer stage? Social Media, in particular is a powerful tool for building customer loyalty (or destroying it). Does your business have a systemized process for
Have you identified the five biggest loyalty breakers in your company and developed and executed plans for eliminating them? When a customer defects, don't be afraid to ask what went wrong. As with any relationship, how you handle the 'tough times' can be an opportunity to forge even stronger loyalty. Periodic customer or exit surveys and Client Advisory Boards are useful tools for gathering this information.
Do you continually look for ways to modify and fine-tune your loyalty program? Many of my clients implement a weekly 'Sharpen The Saw' meeting where suggestions for improving business processes are welcomed, from any employee, regardless of their role, tenure, or rank.
- Do you have a way to evaluate and review loyalty rates regularly? I'm a fan of the Net Promoter Score, or NPS®, developed by Fred Reichheld of Bain & Company, which is based on the fundamental perspective that every company’s customers can be divided into three categories: Promoters, Passives, and Detractors.
By asking one simple question — How likely is it that you would recommend [your company] to a friend or colleague? — you can track these groups and get a clear measure of your company’s performance through your customers’ eyes. Customers respond on a 0-to-10 point rating scale and are categorized as follows:
- Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
- Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
- Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.
To calculate your company’s NPS, take the percentage of customers who are Promoters and subtract the percentage who are Detractors.
9. Do you reinforce the company’s commitment to loyalty by posting the rates for everyone to see? Only by sharing this information, can you inspire ownership over the results.
About Kerry Payne:
Kerry Payne is a documentary photographer, the co-founder of Principa - a global business development network of CPA’s, and founder of Principa Biz - a business growth resource for small and medium sized business owners.
For the past 16 years Kerry has worked with accounting and consulting firms worldwide in the development, delivery and implementation support of value-added services, marketing programs and SME consulting systems. Prior to that, she worked with the Australian government as an advisor to small-and medium-sized businesses where she gained invaluable experience in coaching business owners to improve their organization and grow their bottom line. Kerry is an accomplished presenter who has produced and delivered seminars and workshops to thousands of business advisors and their team members across Australia, New Zealand, the USA, Canada and the United Kingdom.
Specialties:
- Marketing, sales, strategy and business development.
- Workshop & seminar production and delivery.
- Product and content development.
- Team development and leadership.
- Documentary and fine art photography.