THE CHICKEN OR THE EGG?
During 2011 customer loyalty dropped from 70.3% to 58.8% according to the 2012 CSO Insights report. The reasons for this are many, but the bottom line is that companies need to invest more in ensuring a great customer experience that drives loyalty or face the fact that they need to generate 18% more business from new customers just to stand still in revenue terms. Anecdotally and statistically it is far more expensive to acquire business from new customers than from existing ones. There are some other related issues; customer satisfaction, business results and employee satisfaction run in parallel. If one goes down so do the others. It is extremely unusual to find a highly motivated workforce where business’ numbers are poor or high customer satisfaction where employee morale is low. It is a bit like the chicken and the egg but with another dimension – which one of the three is the cause?
Customer loyalty is generated through the people who serve the customer. To the customer your people are your business. According to Gallup sales people generate four times as much loyalty than the product or service. 90% of all loyalty is generated by the top 25% of the sales force. The Harvard Business Review concludes that a 5% increase in employee satisfaction generates a 2% increase in customer satisfaction resulting in a return of up to 1.8% of additional profit.
So where is the best place to start to reverse a customer loyalty issue? In a difficult business environment more and more controls are imposed. These controls often cause the wrong behaviour and limit people’s ability to do the right thing for their customers and as a consequence fuel demotivation. One, if not the biggest motivator is trust or empowerment. It will help deliver self motivated people who have the single mindset of continually improving the customer experience yielding better business outcomes for their customers and their company.
It must though be within the context of a plan the sole objective of which is to give customers the best possible experience. Such a plan should have some objectives and below are some suggestions.
* Customer retention metrics consistently improve
* Customer satisfaction survey scores have positive trends
* Customer feedback is predominantly positive and regular
* People satisfaction increases
* Market share improves
* Customer lifetime values increase
* Key customers deliver sustainable revenue/profit growth
* Sales win rate better than 80% of qualified bids
* Customers ask for advice on a broad range of topics
* Customers ask how they can expand the partnership
* Customers continually provide you with referral business
and of course business and profits improve.
If you would like to know more about developing a business to business customer loyalty programme why not join our webinar on Tuesday June 25th. To book your place click on this link www.korusales.com/about//events/