February 2005

Want Loyal Customers? Don't Stop at Satisfaction

By Todd Beck, AchieveGlobal

Basic service delivery isn’t enough to differentiate an organization in today’s competitive marketplace. Understanding which service qualities customers value, and leading employees toward incorporating these qualities into their daily interactions, can propel an organization beyond customer satisfaction to the type of loyalty that can drive business growth.

Over the years, business leaders’ focus on improving customer service has produced a host of messages, well-worn phrases such as “anything for the customer” and “the customer is always right.”

Certainly, failure to meet a customer’s expectations of a service experience can prove quite costly. Countless research studies throughout the past few decades have quantified the costs of losing a customer due to a poor service experience. Consider this statistic: Effective organizations spend only 10 percent of their operating budget on problems related to poor service. However, organizations that have not learned to deal successfully with service issues can spend as much as 40 percent of their operating budget on those issues. Meanwhile, it costs an average of five times more to win a new customer than it does to retain an existing one.

Core Service Isn’t Enough
As customers become increasingly savvy, products more commoditized and choices more abundant, companies are finding that simply meeting customer expectations (i.e., creating customer satisfaction) doesn’t automatically translate into repeat business. Indeed, among customers who switch to a competitor, up to 80 percent report being satisfied before making the move. It’s when customers feel loyal to an organization that they behave in ways that help grow the business.

For example, when entering a service transaction, customers already expect to have their business needs — the practical reason for their call — satisfied. If a customer service representative at a financial services firm answers a customer’s call promptly and successfully addresses a credit card billing issue, that interaction does little to inspire loyalty. The customer called the contact center expecting the billing issue to be resolved. Meeting that expectation won’t guarantee the customer will choose to continue using that credit card in the future.

Instead, organizations must earn loyalty by creating positive defining moments that both demonstrate value and exceed the customer’s expectations. A defining moment refers to any point in the service transaction at which a customer judges the service that was provided. When the representative answers a call, greets the customer, offers a solution and closes the call, each segment is a defining moment. Although some defining moments carry more importance than others, each affects customer impressions and either strengthens or weakens customer loyalty.

In order to be positive and memorable, every interaction must include some human elements. Successful service providers learn to assess each customer’s service expectations and adjust their approach according to that person’s predispositions. Some customers like simplistic chitchat, while others prefer business transactions with only limited personal interaction. While finding the balance is not easy, it is essential for creating the positive defining moments that inspire customer loyalty.

For example, if the representative from the financial services firm solves the credit card billing issue but also adopts a pleasant demeanor, behaves professionally and takes the time to detail a different set of options that would avoid the problem in the future, that interaction exceeds the customer’s expectations, makes an impression and increases the likelihood that the customer will continue doing business with the company.

What Customers Want
With all of the lip service paid to customer loyalty in today’s marketplace, one would think that organizations understand the value of a loyal customer base. Why, then, do so few provide the kind of customer service that generates loyalty? The challenge lies in human nature and in the ability of service providers to develop the right attitudes and supporting behaviors.

To deliver service performance that inspires customer loyalty, organizations must first understand what customers really want from a service transaction. Research has shown that, regardless of industry, product, age, gender or location in the world, consumers want the following four qualities:

1. Seamlessness. A service provider must have the ability to manage service factors that are behind the scenes and invisible to the customer, sparing customers the need to deal with multiple organizational layers or complicated procedures.
   For example, when customers call a financial services company with questions about their credit card statement, they don’t want to be transferred from department to department, or to repeat basic information for every new voice on the other end of the phone. They expect the initial service provider to coordinate everything for them.
2. Trustworthiness. Customers wish to feel they are in capable hands and that commitments will be kept. They want and expect things to be correct the first time. Should something go amiss, they expect a quick and thorough recovery.
   In the case of the financial services company, the credit card customer wants assurance that the new options offered by the service representative are available as promised and will be reflected on next month’s bill.
3. Attentiveness. Customers want to be recognized quickly, politely and with respect. Although this may seem a basic tenet of customer service, attentive service — the quality valued most highly by some customers — tends to be the point at which many organizations fall short. We know from our own experience that if someone tells a story about being ignored by a customer service representative, listeners often respond with their own “horror stories,” each worse than the one before.
4. Resourcefulness. Providers who take a fast, flexible approach to the service interaction appeal to customers’ desires for resourceful service. If needed, customers also expect prompt and creative problem solving in the service recovery.
   For example, the credit card customer wants the service provider to be able to suggest other options that would alleviate the billing issue. If the solution offered isn’t reflected on the next billing statement, that customer expects the provider to fix the problem quickly and without complication.

Securing Internal Buy-In
Once an organization understands what customers expect from a service transaction, the next step is to ensure employees both understand and commit to service improvement goals. To generate employee acceptance and to ensure that frontline service delivery reflects the qualities customers value most, organizations should consider the following actions:

Communicate. Impart a vision of customer service to your employees that includes clear and understandable long-term goals. Once employees know the direction the organization plans to take, they are more likely to get behind the effort.

Empower. Allow employees to exercise the flexibility and judgment that customers expect. Employees need to be able to answer a customer’s questions and to make basic decisions.

Guide. Hold supervisors and managers responsible for modeling the skills you expect to see in frontline service personnel.
Show value. Employees who understand the payoff are more likely to support the organization’s service improvement goals. Help employees see how creating a positive customer experience benefits them, their customers and the organization.

Equip. Provide the resources your staff requires to succeed, including coaching and training.

Evaluate and compensate. Establish qualitative evaluation factors, in addition to more objective metrics; then adjust compensation to encourage behaviors that create positive experiences for customers.

Build for the future. Recruit and hire employees whose principles and priorities match those of the organization.

A Few Final Thoughts
To foster a loyal customer base, organizational leaders must understand that simply satisfying customers won’t differentiate their company from the rest of the marketplace. Instead, leaders must commit to delivering the type of customer service that exceeds expectations and inspires customers to continue doing business with the organization. Companies that instill the right customer service attitudes and behaviors into both their workplace culture and daily practices will be well positioned to improve customer loyalty, to drive business growth and, ultimately, to achieve and maintain a leadership position in the marketplace.

Todd Beck is senior product manager, service portfolio, for AchieveGlobal (www.achieveglobal.com), international provider of skills training and consulting services in customer service, sales performance and leadership. A former call center supervisor and trainer with Continental Airlines, Beck received an MBA in marketing from Brigham Young University.

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