Editor's note: Marion Smith Picard is a senior research analyst, and Kathi McGregor is COO, at Service Strategies International, a Dallas, Texas, research firm.
Step 1 - First touch
The opportunity to develop loyalty-based customer relationships begins with the first transaction between the customer and a company. Whether the transaction takes place in-person, via the Internet or through a call center, the quality of that first experience can set the tone for the duration of the relationship. As a result, it is very important to recognize that the first impression many customers get of your company is created by some of your lowest-paid employees. To enhance the opportunity to satisfy customers and obtain repeat business, it is important to ensure employees responsible for customer interface are well-trained and understand the company's mission.
Step 2 - Capture transactional data
To assess the success of the first time you touch a customer, it is important to have a record of every transaction. Many companies capture transaction-based information only in the form of sales records. Other companies, depending on the nature of the sale, capture extensive data including demographics and/or firmographics. The more valuable an individual transaction (or customer) is, the more important it becomes to be able to assess the value of a transaction. The company's goal for each customer interaction is to provide the customer an experience that is more valuable to them than just the product or service purchased, and at an internal cost to the company that is less than the price paid. This type of customer exchange leads to repeat sales, recommendations, and higher profits.
- How do you judge whether a transaction was a success or a failure?
- How do you recreate your successes without adding unnecessary internal costs or costly product modifications?
- How do you continually create service value for customers, and earn their loyalty?
Step 3 - Measure satisfaction
An important component of a quality-driven company's loyalty-building process is to measure customer satisfaction. Talking to customers about how transactions are handled, problems are resolved, and questions are answered will provide direction on what improvements can be made that will positively impact your relationships.
Measuring satisfaction on individual attributes can be followed by another key component of the loyalty-building process, the modeling step. Customer satisfaction models help explain the interaction of product and service characteristics with customer's expectations and can quantify the impact of demographic, environmental, and lifestyle factors on expectations and perceived value. The model also can help quantify the impact of different characteristics, to facilitate a company's ability to make process changes that are meaningful to consumers.
Step 4 - Customer satisfaction model
A customer satisfaction model helps identify the relationships in the data that are not visible with simple reporting such as percentages, means and crosstabulations. It is through modeling interrelationships between study attributes that action items can be most easily drawn from the data. This can lead to meaningful, and often inexpensive, process change improvements.
Modeling techniques also allow firms to identify customer segments. Through the identification and characterization of customer segments, targeted marketing campaigns can be developed and implemented. For instance, a firm can isolate customer segments based on similarities in attitudes, demographics, products purchased, and attributes that are most important to that segment. These results can be used to develop marketing campaigns with products and promotional offers that coincide with that segment's preferences. The promotional literature can include wording that reinforces those attributes. Customers are more likely to buy from companies that make offers tailored to them, and talk to them using language that they can relate to.
Step 5 - Initiate meaningful changes
The analysis of customer satisfaction data, including modeling, will derive those items which, when acted upon, have the greatest potential to drive satisfaction, leading to word-of-mouth referrals and increased loyalty. For example, imagine you are calling a company to have a billing issue resolved. You were supposed to receive a credit to your account, which has never appeared on your statement. After navigating an automated call routing system, you finally talk to a person. That person is unable to help you and puts you on hold. Two transfers later, your problem is solved.
Several action steps with different cost implications might be potentially recommended, such as empowering your representatives to solve all billing problems, having a group of clerks set aside to handle billing issues, or adding a code to your call routing system to send a customer directly to the person in charge of issuing credits.
An analysis of satisfaction drivers might indicate that the last choice, adding a code to the routing system, is optimal. This is because "saves me time" was the most important component of the desired solution. Coincidentally, this is also the solution which is easiest to implement for the company, and least expensive as well.
Well-designed and analyzed research can help a firm make changes which are the most meaningful. Repeating the measurement process at a point of time after changes have had a chance to take effect will indicate their impact on stated loyalty, as measured by customers' stated future purchase intent and likelihood to recommend.
Step 6 - Increase value
All companies compete on price, up to a point. The more differentiated your product or service is, the smaller the role price plays in many customers' decision to purchase. While price can never be ignored, the company that demonstrates it are adding value to the relationship has a competitive edge.
If you are measuring satisfaction and acting on it, talk about it. Say "We listened to you, and here's what we did as a result." Solicit feedback. Don't assume your customers intrinsically know what you are doing. This simple action helps create a partnership between the customers and you, which increases perceived value.
Increasing value does not necessarily mean you have increased your costs. If you are allocating your resources more effectively, your costs may actually decrease. In the example above, less CSR time is needed to solve the specific issue.
Step 7 - Achieve loyalty
Customers have a finite amount of time and money to spend. Companies that demonstrate they value both resources come out winners. Customers want a reason to be loyal. Companies that plan to achieve loyalty, and put a Stepwise Process™ in place to meet their goals will ultimately earn it.