business process of customer retention and loyalty, The

Today, it is imperative that customers' needs drive the direction of a company's business to achieve customer retention and loyalty. To compete, companies need to become purely marketdriven. In its purest form, customer loyalty is the consistent delivery of products and services that are valued by your customers. Capturing, analyzing and using all the customer data available to the organization, and extending customer ownership beyond the customer service environment, determines that value.

Smart companies with market-share savvy are moving to establish a pervasive customer retention and loyalty business process across the enterprise. Building customer loyalty becomes an ongoing process of measuring the organizations performance against customers expectations. The organization can then continually improve upon and adapt their processes, products and services) offerings to better meet and exceed those expectations.

The Reason For Change

In a variable economy, businesses tend to shift focus from customer acquisition to customer retention and loyalty. The days of freewheeling venture capital and unabashedly spending five to ten times more to acquire new customers are gone. The focus is now on customer retention and loyalty. The challenge? Ask 50 companies how to define customer loyalty and what they are doing to achieve it, and undoubtedly, just as many responses will be given.

Many attempts are being made to establish customer loyalty with price incentives, product discounts, loyalty card programs, highly targeted marketing campaigns and investments in customer service and CRM technologies. Yet companies continue to struggle with how to better satisfy their customers to retain true, long-lasting customer loyalty. Knowledge leaders know it is a struggle well worth making to attain bottom-line benefits on business performance.

"Disloyalty at current rates stunt corporate performance by 25 to 50 percent, sometimes more," according to loyalty industry guru Frederick Reichheld in The Loyalty Effect. The Hidden Force Behind Growth, Profits and Lasting Value. It's a fact: high service companies gain six percent market share per year, and low service companies lose two percent market share per year (Reichheld).

Making The Change

The way in which organizations ensure loyalty is a statement of how the company values its customers. Simply handling occasional customer complaints doesn't ensure repeat business anymore. Collecting sales-related data and using it to better segment and market to customers has little proven effect on loyalty. Today's customers are looking for more than a good price or better offer. Customers demand that companies consistently meet their needs or will jump to the competition.

Companies must ask themselves:

* What data do we have to help measure whether or not our customers needs are being met?

* What processes do we have in place to ensure all sources of customer data are being captured?

* How do we use this data most effectively to ensure we continue to meet customers' needs?

Incomplete Data

Quantitative, sales-- related data help companies get a better view of the customer. This data helps organizations improve sales processes, better acquire new customers and cross- and upsell current lines to existing customers. But this data is incomplete. To accurately gauge performance against customers expectations, organizations also need to collect and utilize the qualitative, experiential data customers provide.

Customers interact with companies every day in many different ways, from a telephone call to the receptionist to a billing inquiry to golf course conversations with senior management. Each time this happens, valuable customer feedback is accumulated. This is the key experiential data that must be captured, analyzed and applied against customer expectations to help shape the company's future and keep customers coming back for more.

Adopting A Customer Retention And Loyalty Process

Who "owns the customer" in most organizations? Predominantly, it is the customer service or consumer relations department. But other departments also interact with customers and receive vital feedback data the organization needs to improve customers' experiences. Organizations must expand their view of customer ownership and their process for collecting customer qualitative data enterprisewide, to everyone who interacts with the customer. If a company doesn't change, it loses focus on customer retention and loyalty and, hence, profits. Sixty-eight percent of customers abandon a business because of poor service, and fourteen percent defect for product reasons, according to a leading customer retention and loyalty firm, TARP/eSatisfy.

When an organizations entire enterprise focuses on customer loyalty, a pervasive loyalty business process, the business becomes centered on meeting and exceeding customers' expectations. The result? Customers see results from feedback they've provided, feel more valued, are highly satisfied, make repeat purchases and refer the company to others.

Use

Once in possession of all the data available, both qualitative and quantitative, organizations must take the (often not taken) next step - using the data to better understand customer expectations and applying the data to improve the way they do business, to deliver better products and service(s). With a "bank"of customer feedback collected at all enterprise touch points, coupled with the quantitative, sales-related data, a company establishes the ultimate database of customer information. It can be continuously searched and analyzed to a depth that is simply untouchable by "paid for" marketresearch studies. The database becomes a strategic tool to improve business and better satisfy customers needs. And that means more business.

Summary

Customer retention and loyalty are the result of continual process measurement and improvement of an organizations performance against customers expectations. The process for this is capturing, analyzing and applying both quantitative and qualitative customer data to give customers the products and services they are demanding. By consistently responding to and acting on their feedback, true value is created in the eyes of customers, resulting in very satisfied and truly loyal customers who repeat business with the organization and refer others with passion. Reporting isn't improving; acting upon the information customers provide is the key to better understanding their needs and demonstrating a commitment to better meeting their needs. Furthermore, when the loyalty process extends across the enterprise - to every customer touch point, from the reception desk to senior-level executives - companies glean more insight into what customers value and how the company can better meet their needs - for life.

For information and subscriptions, visit www.TMCnet.com or call 203-852-6800.

Richard Morrison is president U.S. Operations, of Respond, Inc. (www. respond-inc.com), a provider of software and services that help companies build better business through customer feedback Morrison joined Respond in July 2001 to lead strategic growth and market penetration in the U.S.

Copyright Technology Marketing Corporation Oct 2001
Provided by ProQuest Information and Learning Company. All rights Reserved