Business Success | By Brian Tracy | April 16, 2012
If sales are the engine that drives your business, then good customer service and building a high level of customer satisfaction is the fuel. Your ability to satisfy your customers to gain customer loyalty is the critical determinant of your success in driving sales and growing your business. There are four levels of customer satisfaction, all based on the degree to which you meet customer expectations. The higher the level you achieve, the more you will build customer loyalty and the greater will be your success.
Rule #1: Build Customer Satisfaction by Meeting Their Expectations
The minimum requirement to simply stay in business—to survive—is to meet the expectations of your customers. At this level, your customers have no complaints. They are satisfied for the moment but at this point, customer loyalty doesn’t exist. If a competitor demonstrates that it can and will do more than merely meet their expectations, your customer will very quickly become ex-customers. Moreover, if you fail to meet their expectations, perhaps only one time, they will leave and give their customer loyalty to someone else who will. It can be instructive to observe your local merchants—true entrepreneurs.
Rule #2: Exceed Customer Expectations
This higher level of customer satisfaction is reached by surprising your customers, going beyond what they expected. Fast, friendly, and good customer service, followed up by a phone call to make sure everything is all right, might put you into this category. So does a product or service that is a cut above that of your competitors. The second level of customer satisfaction moves you beyond mere survival, building a measure of customer loyalty and giving you an edge over your competitors. It can also increase your profitability. Customers who experience the kind of service that exceeds their expectations are often willing to pay for it, enabling the supplier to raise prices and thus improve profit margins.
Rule #3: Remember, Delight Brings Customer Loyalty
Have you ever experienced a level of good customer service that not only exceeded your expectations, but actually brought a smile to your face? A customer served at this level is truly delighted. Not only have the customers’ basic needs been met, or even exceeded, but they have truly been touched on an emotional level. And once customers have enjoyed this experience, you will gain customer loyalty and it will be very difficult for a competitor to pry them away. When you delight your customers, you are on the way to creating an exceptional and highly profitable business. There are countless cost effective ways to delight your customers and build your customer loyalty. Consider the difference between first-class and coach service on most airlines. To delight your customer is to show that you care—about them. NO wonder it brings a smile to their face! The greater your success in delighting your customers and providing good customer service, the greater success you will enjoy in your business.
Rule #4: Amaze Them With Good Customer Service
This fourth level of customer satisfaction is what will propel your business into the stratosphere. It requires you to, not just meet or exceed your customer’s expectations, nor to simply delight them, but to truly amaze them. When you are able to accomplish this on a regular basis, you will be in a position to dominate the marketplace and achieve remarkable rates of revenue growth and profitability. Examine your business. How might you amaze your customers? The only limit is your own imagination.
What are you doing to exceed your customers’ expectations?
What are other ways your can increase customer satisfaction?
1911 Main Street | By Chad Thiele | October 30, 2012
Some products or services fail because they fix a problem that too few people need fixed. Others fail even though there is a demand for a product or service to fix a problem, it’s just that the company didn’t create the right product or service to fix it.
I think from the title of the post, you can see where I am going with this. But, before I get into it further, let’s get a short history lesson from 3M.
The History of Scotch Brand Tape
According to the book, “Symbols of America: A Lavish Celebration of America’s Best Loved Trademarks and the Products They Symbolize, Their History, Folklore, and Enduring Mystique,” (affiliate link) by Hal Morgan, “Pure serendipity led the Minnesota Mining and Manufacturing Company, more commonly known as 3M, to the name Scotch Brand for its tapes. In 1925 the fad for two-toned automobiles created a demand for masking tape coated with a thin strip of adhesive on each edge. When the tape failed to stick properly, a disgruntled auto-body painter told his 3M salesman to take the tape back to his “Scotch” bosses and tell them to put the adhesive all over the surface of the tape. The slur stuck, the company took the painter’s advice, and 3M has been marketing tapes under that name with the familiar tartan trim ever since.”
Just to verify the validity of the story, I double-checked with Wikipedia.
While some of the details are slightly different, the key element of the story remains. That is, a customer was not happy with the product and let the company know about it instead of just changing suppliers without an explanation.
By taking the time to let 3M know how the product was not meeting his needs and offering a solution, the customer gave 3M the information needed to improve the product. And, by actually listening to the needs of the customer, 3M not only made a product that satisfied the needs of one customer, it helped meet the needs of many of its customer and, in the process, launched one of the most successful brands of tape in history.
Customer Complaints Are Gifts
If the example that I just gave hasn’t convinced you of the value of listening to the feedback that customers give you, I don’t know what will. But, for those of you who do need some additional convincing, I’d suggest reading a recent blog post by Adam Toporek on customersthatstick.com, titled “What Are Customers Complaints? They’re Gifts.” In the post, Toporek outlines some of the concepts that are introduced in a book by Janelle Barlow and Claus Moller, titled, “A Complaint Is a Gift: Recovering Customer Loyalty When Things Go Wrong.” (affiliate link)
The blog post suggests that businesses need to change the way that they think about customer complaints. Instead of thinking of them as an annoyance or an indication of failure, businesses need to think of customer complaints as a way to identify customers’ needs that have not yet been met and as opportunities to turn dissatisfied customers into satisfied ones, and possibly create brand advocates in the process.
As Toporek points out, “The most important point about complaints is that they are an opportunity. Complaints are gifts because they are not silence. Silent attrition, when customers leave but never say a word to the company, is a huge issue in many businesses. According to Andrea J. Ayers of Convergys, companies, as an average across industries, lose 12% to silent attrition. In the credit card industry, the number is 43%!”
Customer complaints are gifts, indeed!
Customer Feedback on the Internet
As the 3M example shows, customers have been giving companies advice about how to make a better product for many years. In fact, they may have been doing so since the beginning of time for all I know.
However, in the past, it was very easy for the message to get lost before the right person at the company received it.
Just think about what would have happened if the customer who had complained about 3M’s tape told a person who did not care enough to relay the message to a person who could do something about it. If that had happened, 3M would have left a lot of money on the table and might not have become the company it is today.
Luckily, it is now much easier for the customer to get his or her suggestion into the hands of the right person by posting a complaint on the Internet. Or, to state it a different way, it is now easier for the decision makers in a company to get access to the suggestion.
Also, keep in mind, not all feedback is bad. If a company is doing a great job of meeting the needs of its customers, there is a chance that they will let others know about that, too. Positive feedback in the form of reviews on review sites is one of the best types of advertising that a company can get. This is even more important given the fact that review sites tend to rank well on search engine results pages. This is another reason to pay attention to the feedback that your company receives, good or bad.
No matter how much a company likes its own product or service, customers will only buy it if it fills a need better than the competition’s product or service. Therefore, the feedback that a business receives from its customers might be more valuable than one might think. When the feedback is good it acts as an advertisement for the company. On the other hand, customer feedback can also tell a company that they have not yet met their customers’ needs. This gives them the opportunity to make changes to the product or service that might benefit many of their customers, and in the process, increase sales. It is for this reason I can confidently say that, whether good or bad, customer feedback is definitely a gift.
What does your business do with negative feedback?
Where do you see me most of your feedback, (i.e. online reviews, Facebook, in person, calls)?
Do you consider negative customer feedback a gift? Why or why not?
Service Group Advisor | Volume VIII, Issue 1 – When a dealership offers a prepaid maintenance program (PPM) to customers, what is the dealership hoping to get in return? Certainly one answer is to gain customer affinity for the dealership.
That affinity is profitable too. Experience shows that customers who use a dealer’s repair facilities are 17 times more likely to purchase their subsequent vehicles from that dealer. As fortunate as that is, the true long-term benefit is that PPM plan customers frequently purchase additional customer-pay retail parts and labor services that boost repair order profitability.
Necessary for the dealership to capitalize on this opportunity is the dealership’s commitment to deliver a safety and reliability inspection to every vehicle owner. This inspection helps verify the needs that brought the vehicle into the shop in the first place and for technicians to identify other legitimate maintenance and repair needs beyond those covered by the customer’s PPM plan.
Boosting a PPM repair order with another $150 to $350 of additional up-sold retail customer-pay business will add serious money to the bottom line. When a PPM plan is built into used vehicle prices, a dealer can bump after-sale service use of his or her dealership from about 15% to upwards of 50%.
One dealer who plugs a basic three-product PPM plan into every one of the 600 used units it sells yearly expects to generate more than $1.3 million in total incremental service revenue. This return is based on a $682 retail upsell per customer per service visit over the two-year plan term, even after factoring in a 55% utilization rate and plan costs.
Studies of current customers purchasing one company’s PPM program reveal a remarkable statistic: while current industry statistics indicate that roughly one in five customers return to the dealership for service, this company’s plan holders are visiting their servicing dealers at a rate of 72%.
Further, plan holders that return to the dealership to redeem their plan elements also purchase incremental retail service about 90% of the time. In addition to the increased visit frequency, those plan holders are spending an average of $128 per visit for incremental retail service upsell products and services.
A dealer that writes 1,500 repair orders per month can easily sell 150 to 200 maintenance policies just by asking the customer. In F&I, it takes a 500- to 600-unit store to generate the same 200 maintenance policies.
So, given these upsell profit opportunities, why are some dealers’ prior experiences with PPM disappointing? Many have said that customers simply won’t buy these plans. However, this may not tell the entire story. When those programs are examined, it is clear why customers wouldn’t be interested – they were loaded with services of low value to the customer yet priced quite profitably for the dealership. This is unfortunate, as the nature of these plans and dealers’ inability to sell the plans cost dealers much lost service business.
Newer, redesigned PPM programs help to eliminate this downside. Today’s programs offer a wider range of products and services. These programs, usually administered and managed to offer what is considered valuable to the dealership’s customers and market, seem to really work – for consumer and dealer.
Finally, today’s PPM plans are software-driven, handling once time-consuming chores like plan registration, service claim and premium submission. Because dealers control these programs, any reserve or forfeiture is immediate. Forfeiture is money remaining in the reserve for plan services not redeemed by purchasers.
Every plan will experience forfeiture. It results when a customer terminates the plan early or for whatever reason does not use the plan. For most traditional PPM plans, the third-party administrator holds this dealer-funded reserve. It is from this reserve that the administrator would often take up to 60% of the value of the cancelled services as part of its fee structure.
The new generation of self-administered, self-manager PPM plans offers attractive advantages to today’s market and value-conscious buyer. Custom plan content really appeals to them. That richer content makes these plans more attractive. These plans also enhance the owner’s investment in having the vehicle maintained by the dealership where they bought the PPM plan. This, in turn, enhances opportunity for alert advisors to upsell additional services for healthier repair orders.
Different customers have different buying habits; whether we are playing the role of retailer or the role of consumer, we understand this foundational principle without giving it much thought. It is, in many ways, the basis for our desire to understand our clientele; understanding individuals’ buying habits helps us be better marketers, better salespeople and better retailers overall.
Our buying habits as consumers are determined first by our circumstances (e.g. geographic location, family situation, financial status, lifestyle) and second, by our relationship with the retailer and its products. This relationship – or relative attachment – is, in turn, influenced by our general need for the retailer’s goods or services, the opinions of our friends and family and by our past experiences with the product or the retailer.
In her book Customer Loyalty: How to Earn It, How to Keep It, Jill Griffin cross-compares low and high relative attachment with high and low repeat purchase frequencies, and discusses the four distinct types of customer loyalty revealed through this comparison.
For varying reasons, some customers do not develop loyalty to certain products or services. For example, I know a manager of a travel agency who goes anywhere in town to get a haircut, so long as it costs him $10 or less and he doesn’t have to wait. He rarely goes to the same place two consecutive times. To him, a haircut is a haircut regardless of where he receives it. (The fact that he is almost bald may have something to do with it!) His low attachment toward hair services combined with low repeat patronage signifies an absence of loyalty. Generally speaking, businesses should avoid targeting no-loyalty buyers because they will never be loyal customers; they add little to the financial strength of the business. The challenge is to avoid targeting as many of these people as possible in favor of customers whose loyalty can be developed.
A low level of attachment coupled with high repeat purchase produces inertia loyalty. This customer buys out of habit. It’s the “because we’ve always used it” or “because it’s convenient” type of purchase. In other words, nonattitudinal, situational factors are the primary reason for buying. This buyer feels some degree of satisfaction with the company, or at least no real dissatisfaction. This loyalty is most typical for frequently bought products. It’s exemplified by the customer who buys gas at the station down the street, dry cleaning from the store down the block and shoe repair from the nearby cobbler. This buyer is ripe for a competitor’s product that can demonstrate a visible benefit to switching. It is possible to turn inertia loyalty into a higher form of loyalty by actively courting the customer and increasing the positive differentiation he or she perceives about your product or service compared to others available. For example, a dry cleaner that offers home delivery or extended hours could make its customers aware of this fact as a way to differentiate its service quality from that of competitors.
A high relative attitude combined with low repeat purchase signifies latent loyalty. If a customer has latent loyalty, situational effects rather than attitudinal influences determine repeat purchase. I am a big fan of Chinese food and have a favorite Chinese restaurant in my neighborhood. My husband, however, is less fond of Oriental food, and so despite my loyalty I patronize the Chinese restaurant only on occasion and we go instead to restaurants that we both enjoy. By understanding situational factors that contribute to latent loyalty, a business can devise a strategy to combat them. The Chinese restaurant might consider adding a few all-American dishes to its menu to pacify reluctant patrons like my husband.
Premium loyalty, the most leverageable of the four types, prevails when a high level of attachment and repeat patronage coexist. This is the preferred type of loyalty for all customers of any business. At the highest level of preference, people are proud of discovering and using the product and take pleasure in sharing their knowledge with peers and family. Loyal Swiss Army Knife users are constantly telling friends and neighbors how valuable the knife is; how many handy uses it has; and how often they have used it in a day, a week or a month. These customers become vocal advocates for the product or service and constantly refer others to it. When I was starting my business, a friend was newly inspired by the Quicken software program, which automates one’s checkbook. He insisted on bringing his program over and demonstrating it to me on my computer. He was displaying premium loyalty.
Jill Griffin. Customer Loyalty: How to Earn It, How to Keep It. Revised & Updated. Jossey-Bass, 2002.
What examples do you have of these four types of loyalty at work in your store?
How have you encouraged Premium Loyalty in your customers?
What can you do (or suggest others do) to promote better customer attachment and/or improved visit frequency, particularly in “no loyalty” customers?
Increasing Store Profits
The purpose of the LoyaltyTrac Service Rewards program is to increase dealer profits by decreasing the rate at which existing customers defect to other service providers. The LoyaltyTrac program, when implemented properly, will provide two essential benefits of a loyal customer: first, the customer will visit your dealership more often; second, when they do visit they will spend more. It’s a simple concept – higher visit frequency and increased spend equals more profit.
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