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Tuesday, September 23, 2014

The Five Most Powerful, Yet Seldom Heard Words in Customer Relationship Management

Stories of dissatisfaction seem all too prevalent.  When things go wrong, it’s appropriate for customers to complain and today’s ‘enlightened’ management seems goaled to respond.  But less frequent are the stories of satisfaction.  Not because they occur less frequently.  No doubt, most service encounters and customer interactions end up with satisfactory if not delighted outcomes.  But, when satisfaction is delivered, there’s less motivation to act on it.  Appropriately, customers shouldn’t feel the need to compliment a business for simply doing ‘the right thing’.  But sometimes, when a customer is unexpectedly delighted, an acknowledgment is appropriate.
We write our fair share of letters of complaint; but we also try to send letters of compliment in situations of extraordinary outcomes.  Our complaints are almost always acknowledged.  But our compliments?  Funny thing, they’re almost never responded to!  So ask yourself, have you ever told a customer these five words, “Thank you for your compliment”? 

It's Not 'Rocket Science'! 

Acknowledging compliments should be one of the most obvious practices a business can undertake.  And yet, few businesses do so.  Why?  Well, first off, a compliment bears no troubling threat (“I’ll tell 100 people”, etc.).  Second of all, no one is in charge of compliments!  Larger, forward thinking organizations with Chief Customer Officers should probably institute “compliment departments”, but currently we know of none.
So why our concern?  It’s all about building relationships with customers, and these days nobody doesn’t want a relationship with their customers.  So, put yourself in the role of an enthusiastic customer.  He or she takes the time to reach out to a company or brand to exclaim their extreme satisfaction.  And then, what happens?  Nothing!  And lo and behold the bond with this customers has been weakened - if not destroyed!

An Example: We're Acknowledged

We were reminded of this issue because a month or so ago we wrote a note of compliment on a restaurant’s database counter card.  We noted that our server was extremely attentive, very knowledgeable and a real ‘host’ for the restaurant.  About a week ago (a bit late, but still exemplary) we received an email from Alyssia, the manager of the restaurant (Biggies of Hoboken), thanking us for our compliment.  Bingo!  The result?  We felt: listened to, appreciated, and acknowledged.  In short, we felt closer to this business; our relationship was strengthened - we'll definitely return.
Ever since our book, Aftermarketing, first published in 1992, we’ve recommended the following course of action for responding to compliments:

  • Respond as quickly as possible and use a medium of communication with a priority equal to or higher than that by which you received the compliment.  (Don’t respond by USPS letter to a compliment received by email.)
  • Restate the exact compliment you’ve been given.  This helps reinforce in the customer’s mind the praise they’ve offered you.
  • If you’re involved in a telephone call or on-screen chat, try to elicit the compliment from the customer again (further reinforcing the compliment).
  • Thank the customer for their business.  (If you have affinity merchandise, send something along to further bond with the customer.  A paperweight or other item can serve as a ‘conversation starter’ allowing the customer easier entry to telling others about their delight with your company/brand.)
  • Encourage advocacy.  If you have a user community or other channels for ‘privileged information’ about your company or brand offer the customer participation.  If not include some "insider news" about your company or brand - it'll give your customer something to mention to others (in the name of your brand).

Customers with compliments are everyday advocates asking to be reinforced in their zeal and commitment towards your brand.  Don’t let yourself down by failing to ‘close the loop’ with them!  Formulate your 'compliment handling process' today. 

9:48 pm edt          Comments

Monday, September 8, 2014

Loyalty Programs: Lots of Hidden Challenges

When thinking about ways to increase your customers’ loyalty it’s not surprising to consider adopting some form of a rewards program. Many have.  The fact is, whether effective or not, loyalty programs are being offered by just about everyone.  From your corner dry cleaner to American Airlines, marketers everywhere seem convinced that a loyalty program is a ‘must have’.  With such universal acceptance, we didn’t find the results of the 2013 Loyalty Census from Colloquy very surprising.  According to the investigation:

  • The average U.S. household is enrolled in 22 loyalty programs; (that's a 17% increase over 2010's 18 programs).
  • However, each U.S. household is ‘active’ in only nine programs!
  • And, the proportion of programs in which a household is 'active' appears to have peaked (2010's 46% exceeding 2012's 44%).
  • We all know that 'averages' are deceiving.  The Hannifin Loyalty blog reports that in one specialized segment of consumers, business travelers, the average number of loyalty program memberships is as high as an astounding 40 programs per traveler!



But Are We Asking the Wrong Question?


'Membership' numbers, active or not, can be a fickle indicator of effectiveness.  As opposed to mere ‘belonging’, a better question to ask might be how many programs are ‘top of mind’ for customers?  That is, how many programs are truly engaging members of the program?  More importantly, from the sponsor’s side, how many loyalty programs are actually influencing members’ behavior - increasing spending?
We use a
Value Equation as our model in considering how customers decide about repurchasing brands, products and services.  If they’re effective, the loyalty programs in which a customer is enrolled should become components in each customer’s value equation calculation for a brand.  The more effective the program, the more weight the program component should exert in urging repurchase.  This being said, here are several actions loyalty program owners should be considering:

  1. Is your loyalty program stimulating active engagement, or does your structure condone passivity - merely setting membership ‘hurdles’ but failing to involve members in your brand?
  2. Have you truly identified the behavior you want your program to influence?  While it sounds trivial, many loyalty programs suffer from weak or non-existent goals.  Be specific.  Do you want: to retain customers; to broaden the range of products they buy from you; to increase the frequency of their purchases?  The way you structure your program can help accomplish very specific behaviors.
  3. Do you recognize that your loyalty program is part of the total experience you provide your customers, not an isolated adjunct.  Whatever your loyalty program offers, however it’s conducted, all of the program's components contribute to the total experience you offer your customers.
  4. Are your program’s rewards significant, relevant and desired such that they actually possess motivating power?  Are your customers sufficiently familiar with your rewards so that they strengthen their emotional bonding to your brand?
  5. Does your program offer specialized rewards consistent with your typical customer’s needs and interests as determined by his/her status in their life cycle with your brand.
  6. Do your program members spend more and behave more positively toward your brand than they did prior to becoming members?  Is that increased spending more or less than the total cost of planning and executing the loyalty program?
  7. Are you certain your loyalty program is more than just a ‘mileage program’?  A mileage program will only perpetuate current purchasing.  A true loyalty program should impact many different aspects of your customers’ interactions with you.

All said and done, creating a loyalty program may be your easiest task; keeping it engaging and motivating is the real chore.  And, there's also the frequently overlooked implicit obligation of justifying your program by tracking its ROI.



7:13 pm edt          Comments

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