Wednesday, April 30, 2008

Creating Loyal Growth – Part 2

By Pablo J. Perez, Executive and Corporate Team Coach
Have you ever washed a rental car? This is a question I ask of managers and leaders of traditional businesses or non-for-profits, and 99% of the time the answer is a smile and a “no.” The sense of ownership has a direct link with loyalty, and loyalty has a direct link with business growth. In other words, if your customers and employees are willing to “wash the rental car” (the organization), then the chances of developing sustainable profitability are high.

If the reason for an organization to be in business centers on their customers or the community they serve, in order to achieve organizational success, the leadership team should assume the following critical functions as it relates to their customers:

• Develop a customer-oriented strategy
• Design and implement customer-friendly policies and processes
• Develop employees’ skills
• Monitor and improve processes on the issues that are defined as most important to the customer.

The customer is now the center of the business universe. Everything in the organization should rotate around increasing customer retention and having the right interaction with our customers, with the sole objective of creating loyal growth.

According to Barbara Glanz’s Human Business Model, whether you are serving employees as a leader or a manager or are serving a customer, you always have choices. There are two levels in any interaction that we have:the business level, which is focused on achieving external objectives and goals a specific person has, and the human level, which is all about how people feel during that interaction. Most of the training we have received is focused on creating interactions at a business level, but we have received little training on the human level interaction.

At the human level is where customer loyalty grows. According to the statistics, a 5% increase in customer retention consistently resulted in a 25-100% increase in profits. This unbelievable result is consequence of a powerful force created by the emotional connection to your customers.

Organizations invest a lot of money developing products and services to compete in the marketplace and also design and implement customer service strategies to provide support and generate customer satisfaction. Nowadays, customer satisfaction is synonymous with mediocrity. Using a grading system, satisfaction could easily translate into a “C” on a report card. When customers receive more value than they expected, then the grade rises to an “A,” which always equates to loyal customers.

If we draw the diagram of every Point of Connection that a potential customer has with the organization from before the sale is made to after the delivery of the product or service, we would be able to visualize the total buying process. We need to provide all customers with the level of value and emotional support they expect at every Point of Connection.

Every Point of Connection is an opportunity to connect emotionally with your customer and be sure they are receiving the value as they define it. It is an opportunity to interact at the human level generating the emotional contact that will make them come back and bring their family and friends.

If you are a business owner, or you are leading a business unit or a whole organization, in order to effectively manage Points of Connection; I want to encourage you to follow these steps:

Identify all Points of Connection between your customers and your company.
Once they are identified, you must understand what value your customer is looking for in each Point of Connection.
If there is a gap between the value your customer is expecting and what currently exists, then it is management’s job to put in place proper employee development and process improvement to eliminate the gap.

If you want more information about the three above-mentioned steps to create loyal growth in your business, or you are interested in implementing a customer loyalty strategy for your organization, please call (305) 722-7215, or you may also send me an e-mail at

Tuesday, April 22, 2008

Creating Loyal Growth – Part I

By Pablo J. Perez, Executive and Corporate Team Coach
The formula to achieve profitable organic growth should be as simple as attracting, developing and keeping profitable customers. Companies spend an important part of their budgets in marketing and advertising with the purpose of attracting new customers; however, keeping and developing your customers are the result of having a solid and aligned organizational culture.

If your customers can switch to your competition at any time, you should keep reading this article.

In all businesses we have four types of customers:
• New Customers, who receive our biggest investment of attention and time;
• Current Customers, to who we have been providing services for a period of time, giving us a “safe” feeling;
• Past Customers, people who no longer are doing business with us;
• Future Customers, who will do business with us in the future.

From the list above, who is your most important customer? I know the answers will vary; however, let’s focus on the Past Customers – those that decided to stop doing business with us.

The federal government carried out a research program and to find out why customers stop doing business with a company. The research discovered that:
• 3% move away.
• 5% develop friendships or business alliances with other companies.
• 9% go out of business.
• 14% leave because of quality issues.
• The other 68% don't like the way they are treated.

As you can see from the above, the last two reasons make up 82% of the total lost business and both of these reasons are avoidable. Now you might assume these customers were unsatisfied. However, maybe they were not loyal. Or maybe they were both?

Is customer satisfaction equal to customer loyalty? Definitely not. A satisfied customer may keep doing business with you but will not create profitable organic growth for your company. A loyal customer will bring to your company not only her or his business, but will refer you business from family and friends.

Research prepared by Accenture concludes that customers who are highly satisfied for the most part are willing to switch providers if the incentive is right.

% Indicating Would
Reason to Leave Switch Provider
Any reason 87%
Lower price 79%
More reliable/better service 58%
Better products 47%
Offers suited to my needs 6%
Access to a real person 36%
More product choices 27%
Rewards program 29%
More accurate billing 22%

However, according to the same research, these are the actions loyal customers are likely to take:

Continue purchasing .........81%
Recommend the company to others ...........74%
Respond to specials ........51%
Provide direct positive feedback ...........38%
Provide personal endorsement .........31%
Share information with company for improved products and services ........20%

Most consumers believe good customer service should be a core competency of the companies with which they do business. Today, they need to receive more than good customer service to become loyal to your business.

Customer satisfaction surveys are useless in terms of creating loyal customers. 95% of dissatisfied customers will not participate in any survey. They just leave and never come back. Another thing you have to remember is that 8 out of 10 of those people who go away will bad-mouth you. They will tell somewhere between 25 and 250 people that they had a problem with your company, and they will actually enjoy saying it. It's your job to keep that from happening.

Customer loyalty is based on four elements: price, service, trust, and emotion.

On “Creating Loyal Growth – Part 2” I will describe in more details these four elements.

To discuss how I can help your organization to develop loyal customers for your organization, please call (305) 722-7215, or you may also send me an e-mail at