Customers are increasingly less satisfied with organisations, products and services now than they were a decade ago, despite all the customer relationship management efforts being undertaken; and this holds true across a broad span of industries, as revealed by the most recent American Customer Satisfaction Index.
But, to answer the question: yes, there are still a handful of loyal customers around and it is vitally important that businesses do everything in their power, and do it wisely, to retain these customers. As Pareto states, 80% of business comes from 20% of customers.
Inspiring customer loyalty is only possible if companies truly understand who their customers are, what they want and how they want it. It requires a supreme effort to manage the customer relationship, going beyond merely answering the telephone within a certain number of rings or having a cheery call centre agent providing lip service to problem resolution. It demands communication that is targeted to the right audience, with the right message, in the right way and at the right time; personal, one-to-one "discussions" that address the individual`s particular needs, desires, wishes.
However, inspiring customer loyalty has another important element: the internal determination to hold onto those customers who are profitable and let go of those that detract from the company`s bottom line.
Know when to let go
The biggest mistake to make would be to try and personalise advertising and communication and get it wrong.
Rob Abraham, MD of Bytes Document Solutions
In the book Angel Customers and Demon Customers, authors Larry Selden and Geoffrey Colvin show that a company`s worst customers, which constitutes about 20% of all customers, can destroy as much value as the best ones can create.
Therefore, they suggest that organisations must identify their "demon customers" and then focus on turbo-charging their customer relationship management efforts on those customers that are worth the effort and expense.
This can be done in a variety of ways, once those "demon" customers have been identified. A decision can be made internally to limit low-margin customers to only a certain number of phone calls per month, or sales and promotions can be limited to only the customers the company wants to keep, providing those not wanted with incentive to move elsewhere. According to an article recently published by research firm Forrester, FedEx has opted to charge low-volume customers more than its high-volume customers. Would this not be motivation enough for the unprofitable customers to move to where prices are lower?
Weeding out the bad customers provides the means to focus all of the company`s attention on loyal customers; and this is where moneymaking opportunities reside.
Speak to loyal customers
When communicating with the customers the firm wants to keep happy and loyal, it needs to ensure this is done in the right way. Variable data printing technology makes it possible for organisations to personalise the interaction they have with those customers and in so doing, has a greater impact than generic mailers.
This technology allows organisations to print promotion mailers that advertise a range of products and services specifically targeted at each individual recipient. The letter is addressed to them personally, possibly using a nickname; a brief mention of what sales are running, where stores are located and what the shopping hours are; and then pictures of products can be displayed. All of this can be done without actually having to manually personalise each letter. The entire process is automated.
If the person being targeted is interested in hockey equipment, the mailer could maybe mention how the South African hockey team has been doing, and then provide images and details of all the hockey paraphernalia on sale.
Automating the personalisation of customer communication obviously requires the support of a good customer relationship management environment, where all the crucial customer data is stored and regularly updated.
The biggest mistake to make would be to try and personalise advertising and communication and get it wrong. Nothing amuses a customer more than being addressed as Mr when she is actually a Mrs. Nothing could irritate a customer more than receiving junk mail that is communicating a hair colour special when the recipient is bald.
However, if a customer relationship management system is in place, loyal customers can be made to feel special, understood and appreciated; and the financial and resource cost to company is not astronomical. The communication aimed at them will touch their specific interest buttons, while printing brightly coloured advertising material will touch their more instinctual consumerist natures.
Markets are impossibly tough, so it is important to choose customers wisely and then treat them like angels.
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