Customer Loyalty Customer Loyalty That Drives That Drives Business ResultsBusiness Results

David P. ScurlockDavid P. Scurlock

Training and Development that Training and Development that Drives Business ResultsDrives Business Results

Research Research

Field ExperienceField Experience Business Week March 9Business Week March 9thth

The Customer Service EliteThe Customer Service Elite Harvard Business Review (Feb. 07)Harvard Business Review (Feb. 07)

Understanding the customer experienceUnderstanding the customer experience The Ultimate Question –Driving Good The Ultimate Question –Driving Good

Profits and True GrowthProfits and True Growth Fred Reichheld - authorFred Reichheld - author

DefinitionsDefinitions

Customer Customer SatisfactionSatisfaction State of being gratifiedState of being gratified Compensation for a wrongCompensation for a wrong Act of fulfilling a desire or needAct of fulfilling a desire or need

Customer Customer LoyaltyLoyalty Feelings of allegianceFeelings of allegiance The act of binding yourself (intellectually or The act of binding yourself (intellectually or

emotionally) to a course of actionemotionally) to a course of action Commitment, dedication.Commitment, dedication.

Satisfaction Satisfaction == Loyalty Loyalty

Short TermShort Term

Can be costlyCan be costly

Long TermLong Term

ProfitableProfitable

True Customer LoyaltyTrue Customer Loyalty

Customer Loyalty measures the Customer Loyalty measures the emotional attachment

that a customer has with your that a customer has with your product/service/organizationproduct/service/organization. .

That attachment is created through That attachment is created through relationships developed by your relationships developed by your employees.employees.

Business Week Business Week (March 9, 2007)

““The Customer Service Elite”The Customer Service Elite” Companies rated very high in customer Companies rated very high in customer

loyalty.loyalty. Survey asked how many would Survey asked how many would

recommend the company to others..recommend the company to others.. # 1 company 79% would# 1 company 79% would # 25 company 40% would# 25 company 40% would

The Loyalty Effect*The Loyalty Effect*

Products are homogenous Products are homogenous

Technology is leveling the playing fieldTechnology is leveling the playing field

Lots of information availableLots of information available

Customer service is the difference and a link to Customer service is the difference and a link to loyalty.loyalty.

*”The Ultimate Question- Driving Good Profits and True Growth” Fred Reichheld*”The Ultimate Question- Driving Good Profits and True Growth” Fred Reichheld

The Loyalty Effect*The Loyalty Effect*

Customer Loyalty

Investor Loyalty

Employee Loyalty

Adapted from the “Loyalty Effect” , Fred Reichheld

The Loyalty EffectThe Loyalty Effect

Central gauge that integrates all dimensions of business and measures how well company is creating value for its customers.

What do they want? What do they like about your offer? What is missing?What can be improved ? Why do they goto the competitor?

The Loyalty ImpactThe Loyalty Impact

Competitive AdvantageCompetitive Advantage

Employee MoraleEmployee Morale

Unexpected gains inUnexpected gains in ProductivityProductivity GrowthGrowth Reduced costReduced cost

Customer Loyalty Starts Customer Loyalty Starts With The EmployeesWith The Employees

Southwest Airlines ExampleSouthwest Airlines Example Hire “Attitude” Look for the following Hire “Attitude” Look for the following

skillsskills EmpathyEmpathy Listening SkillsListening Skills Problem Solving SkillsProblem Solving Skills

Don’t rely on resumesDon’t rely on resumes Use behavior based interviewingUse behavior based interviewing ““Past experiences predicts future Past experiences predicts future

behavior”behavior”

Train Existing EmployeesTrain Existing Employees

Listening SkillsListening Skills Pivotal communication skillPivotal communication skill Key to internal communication between Key to internal communication between

employees.employees. Key to developing emotional connection Key to developing emotional connection

between front-line employees and between front-line employees and customers.customers.

Active Listening SkillsActive Listening Skills

Hearing vs. ListeningHearing vs. Listening Start with empathy (other’s shoes)Start with empathy (other’s shoes) Do not react or take personally when the other Do not react or take personally when the other

person is expressing their feelings and emotions.person is expressing their feelings and emotions. Listen for the key message that person is sending Listen for the key message that person is sending

or expressing.or expressing. Restate in your own words what the other person Restate in your own words what the other person

has stated.has stated. Confirm that the other person agrees with your Confirm that the other person agrees with your

understanding.understanding.

Creating Customer Creating Customer LoyaltyLoyalty

Expectations Perceptions

Fail

Disappointed

Meet

Exceed

Greatly Exceed

F

D

C

B

A

Creating Customer Creating Customer LoyaltyLoyalty

If the customers perceptions exceed their If the customers perceptions exceed their expectations customers are highly satisfied and expectations customers are highly satisfied and develop loyalty.develop loyalty.

If their perceptions are about equal the customers If their perceptions are about equal the customers are neither satisfied or dissatisfied. They are are neither satisfied or dissatisfied. They are somewhere in the zone of indifference.somewhere in the zone of indifference.

If their perceptions are below expectations If their perceptions are below expectations customers move to a degree of dissatisfaction customers move to a degree of dissatisfaction resulting in disloyalty. resulting in disloyalty.

Satisfaction – Dissatisfaction Satisfaction – Dissatisfaction ModelModel

Zone of Indifference

Satisfaction High

Customer Loyaltyexist in this area

Dissatisfaction

High

Service providers need to understand how to move customers to a level of high satisfaction

What Customers ExpectWhat Customers Expect

ProcessProcess ExecutionExecution

PredictablePredictable RepeatableRepeatable

Empower them with informationEmpower them with information

First Time Resolutions First Time Resolutions

Do you have any Fred Do you have any Fred Taylor’s ?Taylor’s ? Southwest AirlinesSouthwest Airlines

Customer Communications SpecialistCustomer Communications Specialist

Focuses on Service RecoveryFocuses on Service Recovery

Communicates resolutions to fieldCommunicates resolutions to field

Service RecoveryService Recovery

Listen to the concerns of the customerListen to the concerns of the customer

Listen to what the customer wants.Listen to what the customer wants.

Make it easy for the customer to resolve Make it easy for the customer to resolve their concern.their concern.

One size solution doesn’t fits allOne size solution doesn’t fits all

The Four Steps of The Four Steps of Service RecoveryService Recovery

Apologize sincerelyApologize sincerely- don’t become - don’t become defensive or make excuses. Show defensive or make excuses. Show empathy.empathy.

Fix the problem-Fix the problem- Listen, empathize, and Listen, empathize, and ask open-ended questions that allow the ask open-ended questions that allow the customer to express what they really customer to express what they really want. Act quickly with a sense of urgencywant. Act quickly with a sense of urgency

The Four Steps of The Four Steps of Service RecoveryService Recovery

Do something extra as atonement-Do something extra as atonement- does not have to be expensive or elaborate. does not have to be expensive or elaborate. Show the customer that you appreciate their Show the customer that you appreciate their business, you’re sorry for what happen, and business, you’re sorry for what happen, and you want to add value to the relationship.you want to add value to the relationship.

Follow up-Follow up- A call from management or the A call from management or the service person to ensure that the customer is service person to ensure that the customer is satisfied.satisfied.

U.S. Office of Consumer U.S. Office of Consumer Affairs FindingsAffairs Findings

Of the customers who register a complaint, Of the customers who register a complaint, between 54 and 70 percent will do business between 54 and 70 percent will do business again with the organization if their complaints again with the organization if their complaints are resolved. That figure goes up to a are resolved. That figure goes up to a staggering 95 percent if customers feel that staggering 95 percent if customers feel that complaints are resolved quickly!complaints are resolved quickly!

Service SellsService Sells

Enhance the perception of your brand in Enhance the perception of your brand in the eyes of the customers during the the eyes of the customers during the service interaction.service interaction.

Service Margins (post sale)Service Margins (post sale) 30% to 200% greater than product margins30% to 200% greater than product margins 25% of total revenue25% of total revenue 50% of operating profits 50% of operating profits

Thank youThank you

David P. ScurlockDavid P. Scurlock