How Customer Loyalty Has Changed

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In the 1990s a wealth of studies in academia and business established loyalty as one of the most influential factors in profitability. At the time there was a predominant theory that quality products and good support were therefore the basis of a successful company. A report by Bain & Company, “The Loyalty Effect,” went so far as to say that modern business managers who focus on loyalty instead of profitability may actually grow profits faster as a result.

Today the elements of loyalty have changed. Clients have radically different expectations from their vendors, and the product itself is only 20 percent of what they are paying for. Customers are purchasing a relationship, an ally and a customer experience. Especially in high-value business-to-business deals, clients are investing internal political capital to make the deal or putting their performance reviews on the line based on making the right vendor decision. 

As a result, clients need extra assurance that they are making the right choice. They expect vendors to be allies in championing their project, boasting their successes to their boss and helping them advance professionally. These client-vendor exchanges aren’t about trading cash for a product -- they are about two teams of people making sure the other is successful.

When a company realigns its marketing, sales and support with the customer instead of the product, it can grow profits faster through stronger customer relationships and experiences that result in repeat customers, referrals and renewals. To achieve this, vendors must understand the customer, establish customer-driven processes and facilitate cultural changes. 

Understanding the customer

Vendors have a wealth of valuable new tools to explore customer sentiment. In addition to net promoter scores, most large corporations are using social media analytics, automated surveys, support feedback and other automated systems.

These offer a great supplement to traditional voice-of-the-customer programs, but they don’t replace actually talking to customers. When the sales staff is evaluated by their reviews, sales may pressure customers to give them five stars. Customers who don’t want to reprimand their support agent will only respond to a survey honestly if they are angry. Customers who are impatient or only want a chance at a prize will answer surveys in a rush to get straight to the incentive.

The largest gap that most companies have in understanding their customers is in actual conversations.

A customer-driven process

One key aspect of a customer-driven organization is aligning business processes with a continuous and growing customer relationship. Each hand-off the customer experiences from marketing to sales to support brings disruption to the customer and starts the relationship over with a new contact. These disruptions give the customer an opportunity to second-guess their choice, instill doubt, or disrupt the social chemistry.

By storyboarding the process that customers experience, we can detect disruptions in the customer experience and find ways to improve them with smoother hand-offs and a more continuous relationship. If contextual information about the customer is maintained and used across hand-offs, we can grow the relationship over time, instead of starting from scratch with each hand-off. Smoother transitions from one department to the next can make the experience less disruptive to the customer.

A culture of genuine customer relationships

Customer relationships cannot be play-acted. They require a culture and attitude by employees that is personable and genuine. Changing a workplace culture is no easy task. We could train managers to encourage different behavior, modify incentives or do off-sites and other activities to foster camaraderie. The best starting point is to have an independent consultant assess the company culture to find the approach that is best suited to your organization.

Marketing, sales and support have a long tradition of marketing, selling and supporting a product rather than a customer. A holistic look at customer alignment is critical to thriving in today’s environment through strong loyalty.

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1 comment on "How Customer Loyalty Has Changed".

1. Shep Hyken from Shepard Presentations
   

   commented on: October 15, 2012 at 10:19 a.m.
   Great article on the importance of loyalty. It takes more than just good customer service to create loyalty. It takes confidence and a relationship that borders on becoming a partner with your customer, not just a vendor or supplier. The three concepts in this article will help any company start to build, or enhance, the relationships they have with their customers.

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