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Assess and Improve Your Customer Loyalty
By Maura Gallagher Ardis Staples Editor
The Girl Scouts sing a catchy tune that surprisingly can be
translated into sound business advice.
Make new friends but keep the old. One is silver and the other
Acquiring new customers can be exciting, even profitable. However,
your current customers are gold.
According to Joanna Brandi, customer care consultant and author of
Winning at Customer Retention, 101 Ways to Keep 'em Happy, Keep
'em Loyal, and Keep 'em Coming Back, it pays to treat your
current clientele well. It costs "six to ten times more time,
energy, and money to [acquire] a new customer than it does to
pretty adequately take care of one you already have," say Brandi.
Do your operating policies — the way you deal with customers
— make them want to patronize your business time and time
again? Brandi recommends asking yourself the following questions.
Q: Do you know the top three reasons your customers leave?
Many business owners mistakenly believe that customers choose to
patronize other companies solely because of better prices. While
pricing can be a concern, customers often head to the competition
when they don't feel valued.
A change of lifestyle may have also created a situation where
customers no longer need your product. By staying in touch with
their needs, you might be able to adjust your offering to continue
Q: Do you know what your customers' number one expectation
Maybe it's reliability, or speed, or cost-savings. Your company
should know your clientele's number one priority and consistently
deliver it. Remember, customers' desires change frequently, so ask
yourself this question every six months.
Q: In the last three months, have you personally contacted a
handful of former customers to find out why they stopped using your
Talking with former customers can help you solve issues that may
increase future customer loyalty. Plus, these frank discussions may
give you some ideas about what you need to fix in order to convince
departed customers to come back.
Brandi recommends asking former customers simple questions such as
"why did I lose you? What did we do wrong? Is there something we
could do to make it up to you? What would we have to do to get you
to come back?"
Q: Do you know the lifetime value of your customers?
The lifetime value of your customers is the income you would gain
if a customer stayed with you as long as they could possibly buy
your product or service. For example, the lifetime value of a
customer employing a financial advisor could be several decades and
could span several generations. Treat the parents well and you
could win the children's business. However, if you sell baby
accessories like strollers and cribs, the lifetime value of your
customer may be significantly shorter. Once the children outgrow
these necessities, your clients may move onto other stores.
Knowing the lifetime value of your customers should act as further
incentive to maintain high customer care standards. As long as
they're buying, you want them buying from you.
Q: Do you have written customer care policies?
Take the time to write down exactly how you would like each of your
customers to be treated.
Be very specific and hand out these standards to all current and
To achieve the best results, hold training sessions to teach
employees the interpersonal skills needed to deal with customers
effectively and respectively. Be sure to explain to your employees
how you will measure whether or not your staff is handling clients
Q: Do you offer employee incentive programs?
Companies often reward sales teams for acquiring new customers.
Brandi recommends doing the same for the employees who care for
and, in the end, retain customers. Give your staff concrete
motivation to treat clients well. Consider offering movie tickets,
massages, or free lunches.
Developing quality customer care programs may take time, but
customers are one of your most valuable assets. According to a 1994
Harvard Business Review study, Putting the
Service-Proft Chain to Work, found "an increase of 5% in
customer loyalty can increase profitability by 25-80%."