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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 gold. 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.

Lost customers

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 servicing them.

Top priority

Q: Do you know what your customers' number one expectation is? 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.

Take an interactive test to assess your customer care knowledge.

Contact former customers

Q: In the last three months, have you personally contacted a handful of former customers to find out why they stopped using your company? 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?"

Lifetime value of customers

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.

Written customer care policies

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 new employees. 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 appropriately.

Employee incentive programs

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.

The potential payoff

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%."

The information contained in this article is only an overview of the subject matter made for general guidance to the reader, and is subject in all cases to limitations and disclaimers set forth in Staples' Legal Terms and Conditions.

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