The military is probably the only organisation in the world that has not adopted the ever-popular clich'e "the customer is king". Perhaps it`s the only organisation that is honest about how it views its customers as it strives to fulfil its objectives.
Other organisations, across almost all industries and markets, on the other hand, seem to have their sights clearly set on serving customers better in order to improve financial performance and deliver better returns to shareholders. In this pursuit they have spent millions, if not billions on customer relationship management and related technologies and programmes - with limited results.
It`s not that these applications are rip-offs or yet another IT bomb. Their limited scope is merely a reflection of each business`s failure to put all the pieces of the customer puzzle together to obtain the benefits of improved loyalty. External factors are often given most attention as companies try to create a positive facade for customers and potential customers, but the piece they almost always forget is the contribution of staff to customer loyalty.
It`s on the inside
The first step to gaining customer loyalty must start with management taking the responsibility to guide employees instead of managing them.
Doug Leather, CEO, Doug Leather & Associates
Successful business leaders who are close to their customers and employees know that the best way to deliver outstanding service is by inspiring, motivating and training their own staff. This is not some wishy-washy New Age philosophy of being nice to staff in the hope they will reciprocate when dealing with customers, but the acknowledgement that effectively managing and motivating employees is a key determinant of effective customer management - a critical factor affecting customer satisfaction, retention and profitability.
Being a good, effective manager is, as every manager knows, easier said than done, especially in the current climate of cost cutting where many companies have adopted the attitude that staff are expensive and expendable resources. This attitude may appear to assist in reducing bottom line expense, but it does nothing to motivate people to deliver better service, which would build revenues.
An effective manager`s role is therefore to create the conditions that engage and motivate employees, leading to better customer experiences and hence loyalty.
When Sears Roebuck decided to measure the nebulous concepts of employee satisfaction and customer loyalty, it found that every five-point increase in employee satisfaction correlated to a 1.7% increase in customer loyalty and this produced a 3.4% increase in earnings. What the company came to understand is that employee attitudes about their job and company are two critical factors it could use to predict their behaviour with customers. And, naturally, customer attitudes, satisfaction and retention are heavily influenced by employee behaviour and their personal belief in the company and its products - messages they unconsciously broadcast during every interaction.
Good managers empower
The first step to gaining customer loyalty therefore must start with management taking the responsibility to guide employees instead of managing them, empowering them to deliver the best service they can. And let`s not forget that management is not something one person in a company does, it is an attitude that pervades the environment from the CEO down to line managers and supervisors.
At the opposite end of the scale, bad management demotivates, leading to poor customer interactions and spreading a general distrust of the company and its products or services. In addition to losing clients, bad management increases the company`s monthly expenses with no corresponding increase in revenue.
An organisation of unmotivated employees suffers higher disciplinary costs, lower productivity, more demands on managers to spend time training and monitoring staff, more days lost to sickness, lower sales and high employee turnover.
These costs place an enormous burden on companies` finances, but to many executives these are simply the non-negotiable, normal cost of doing business. The real danger is that these negative sentiments are also adopted by customers, and who wants to spend money with people and an organisation one is not comfortable with?
Customer loyalty is an executive concern as well as a financial imperative for companies wanting to remain a step ahead of their competitors. While there are many aspects to gaining and maintaining the loyalty of one`s customers, the first steps must happen within the organisation as employees are transformed into motivated ambassadors bringing customers back time and again irrespective of what competitors may do.
To discuss these and other customer-centric issues, contact Doug Leather on 083 327 1010 or doug.leather@mweb.co.za.
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