3 Questions Companies Must Tackle To Attract & Retain Customers

The best leaders in my life asked more questions than they gave answers.  Too often we jump to prescribing.  We feel we know what customers want.  We believe we know the answers.  But the real difference between an “everyday” company and a “beloved” company is how they answer questions.  How they make decisions.  It’s the intent and motivation that guides decision making that separates these companies from the rest.

Here are a few questions from my book, “I Love You More than My Dog: Five Decisions that Drive Extreme Customer Loyalty in Good Times and Bad.”

Question 1:  Do You Consider Customers an Asset or a Cost Center?

The everyday company thinks about their business as getting sales out of customers. That’s the name of the game.  The beloved company understands and believes that the real goal of the business is to grow the asset of the customer base.  And to grow their customer base, they employ practices that “earn the right” to growth.  For example Zane’s Cycles in Connecticut knows that the lifetime value of every customer is about $12,500 – if they punctuate the experience correctly and honor the customer.  This belief motivates Zane’s to abolish “bad profit” practices, such as nickel and diming customers on services.  They instead invest in the relationships.  One of the greatest examples of this is that they have a pat rule that anything a customer needs that costs a dollar or less, they always give away.

To believe in your customers as the asset of your business, you need to be able to measure that asset.  One of the first actions we always take when we begin the customer experience transformation journey with clients is to quantify the value of customers.  Initially, this is a culture and alignment exercise:  to gain agreement on what is a “new” customer and what is a “lost” customer, and to agree on how we assign value to customers.  That in itself is powerful cross-silo work critical to your experience transformation.  Then, we work inside the company databases to align the data to enable us to do the “customer math” to know incoming and outgoing customers each month.  We often kick-start this focus by having leaders begin each meeting with the growth or loss of the company’s ability to manage the customer asset.  Only when you begin to think this way, will you rethink policies, processes and commitments regarding growing your business from a customer perspective.  Where are you in this process? Do your leaders commit to viewing and managing customers as an asset of your business?  Is your customer data clean and consistent enough to get an accurate measure of customer value?

Question 2: Do You Know Your Customers?

Frequently product development, or process or engineering decisions are made inside conference rooms.  We need to understand our customers’ lives to serve their lives.

Understanding how your customers go through their day, how you intersect their day and what motivates their behavior in interacting with you are the keys to building an operation that pulls customers back to you.  ZARA, a retailer based in Spain has designed their complete product manufacturing process around knowing their customers, around tracking their buying habits, and around hard wiring customer listening into their sales cycle.  They employ over 200 designers to keep the fashion cycles fast because they know that’s what their customers desire. This operational commitment enables ZARA to get a new product into the stores within 15 days when the requests warrant it.  As a result, their customers go into their stores an average of 17 times a year.  85% of Zara’s merchandise sells at full price.

How much do you know about your customers’ lives and what makes them tick?  Are you out in the field talking to them and understanding their habits?  Do you watch their buying, service and support habits inside your database?  And most importantly, have you used that knowledge to define your operation, your processes, your goals and your staff?

Question 3: How Proactive Are You?

We have all invested a great deal of time in our businesses on IT recovery systems.  We know when our systems shut down, we have back up plans, we know who to call and when, and we have clear processes to put all this into play when the inevitable (sorry IT) happens.

Why don’t we have this same type of full blown recovery processes for saving customers in distress?

Most organizations know failures will occur from time to time.  But most companies don’t plan with rigor on how they will reach out to customers, how they will engage the organization to decide on a response, and how they will decide on the gestures and support for the frontline that interacts with customers in distress.  Southwest Airlines is an exception.  Every day they convene something called a “Morning Overview Meeting,” or a “MOM” meeting where they review every flight that went out the day before.  They know what flights were disrupted and by how much time and know which customers were impacted.  After the meeting a team called the “Proactive Customer Service Team” goes to work to reach out to these customers – before the customers reach out to Southwest.  Southwest Airlines earns the right to keep on flying profitably when other airlines falter because of this type of proactive decision making.  Over 70% of customers contacted through this process return – with additional passengers on the airline.

So how proactive are you? What would it take to become a proactive customer company?  Are you ready to engage cross-company operations to unite their view of the customer experience so that you can see how your customers are experiencing your company?  Can you align that information across your operation so you can make decisions based on knowing customers with repeat customer service calls, customers with disrupted services, or customers on the verge of leaving you?  Investing in this type of proactive service is often what is cited by the most loyal customers.  In fact research proves that if you make a mistake and correct it in a manner that honors your customer, you have a stronger relationship than if you had not made a mistake.

I had the pleasure of recently speaking on a webinar, where I discussed the five decisions.  If you’d like to hear that webinar, please go to www.informatica.com/customercentricity

6 comments to " 3 Questions Companies Must Tackle To Attract & Retain Customers "

  • Today, we are witnessing customer-driven marketing through empowerment, self-management, and consumer generated media; and many companies have found themselves in the back-seat of the new age vehicles used in customer-supplier relationships. They are forced to modify existing communication techniques, or create new ones, and re-think interactions between employees and customers, and how they hire and train employees, and the experience processes they utilize, so that they can be positioned to generate advocates among their customer bases. How they use, or misuse, these techniques, and how they assess the return-on-customer effectiveness, and level of monetization, of their initiatives will change how word-of-mouth is pursued by both small and large enterprises.

    Our primary and secondary research into the underpinnings and drivers of customer loyalty behavior show that organizations can manage customer commitment and advocacy only to the extent that they can create and sustain strength of the brand or company’s value proposition franchise. This is ‘inside-out’ advocacy creation.

    In a recent study by the Chartered Institute of Marketing in the United Kingdom of 1,000 adults, only 8 percent believed that regular contact with suppliers is more beneficial to them than suppliers, while 50 percent thought that such an ongoing relationship benefited the suppliers. Worse, only 9 percent of the respondents said they wanted that contact to be driven by the supplier. These are alarming numbers, and they strongly suggest that consumers are rejecting common customer relationship practices.

    To succeed at customer relationship and experience management, the cold reality is that frequency programs are not enough. Great product is not enough. Exceptional service and customer-sensitive staff, though incredibly important, are not enough. Use of new communication technologies and multiple channels is not enough. Tight, efficient operational processes are not enough. Reputation, though also extremely important, is not enough. What really leads to loyalty and advocacy is the company-wide commitment to customers—strategic customer-centricity if you like—along with the ongoing creation of customer-perceived value and “barriers to exit.”

    Success in the marketplace will be defined by three outcomes: the highest share of customer
    possible, optimal lifetime customer value generation, and the lowest voluntary churn. This
    requires both discipline and commitment from the entity endeavoring to reach this goal. It’s not
    easy, and nobody promises it will be. But it is elegantly simple.

  • Hi, Jeanne. Just happened to read your post and found it very engaging, especially the last paragraph. We as an organisation did actually face similar questions some time back. We’ve tried a number of measures to be a more proactive customer company. One among them has been switching to a customer support tool, HappyFox (http://www.happyfox.com). This switch has actually helped us improve our efficiency in addressing incoming customer support requests.

  • Thanks Cassy for the great resource. This is one of the key challenges in engaging execs and the organization in understanding this is about driving profitability! Charge on!

  • Great article and good food for thought for executives committed to having customer experience as a differentiator. The social proof is sound and comes from leaders in their market categories. Thanks for sharing this.

  • Nam

    Thank you Jeanne for the great article. I just started the learning journey about customer experience and found your web very helpful.
    Thank you

    • jeanne

      You are so welcome! The most important thing I feel I should be doing right now is paying it forward….it’s so rewarding to know you are getting value from this content!

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