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Companies get points for focusing on valued customers

by Katie Ford

Why are customers loyal to certain brands or products? To answer that question, it's worth looking at why some customers stop coming back for more. According to research in Michael LeBoeuf's How to Win Customers and Keep Them for Life, 14 percent stop doing business because of product dissatisfaction; however, 68 percent say good-bye because they perceive an attitude of indifference from the owner, manager, or an employee.

"A good product or service by itself is no longer enough; the market is saturated and customers have options," says Barbara Glanz, speaker, consultant, and author of CARE Packages for Your Customers: An Idea a Week (McGraw-Hill, April 2007). "To keep customers loyal, you have to convince them that you care -- that they really matter to you."

Glanz says customer loyalty begins with employee loyalty. "You will never get employees to treat customers any better than how they're being treated in the workplace," she says. "You have to create an environment where they feel supported and enabled to give good customer service. If they don't want to do that, it doesn't matter how much training you give them or how skilled they are."

Building a CARE package for employees means creating a workplace that promotes:

• Creative communication
• Atmosphere of appreciation
• Respect
• Empathy and enthusiasm

Once the right tone is set within the company, it's time to show the customers how much you care. While rewarding customers for their business is part of the equation, it's not all of it.

"To drive loyalty, you must be able to see your business from the customer's perspective," says Luc Bondar, vice president of loyalty for Minneapolis-based Carlson Marketing. "It's about finding out what could make your product or service even more relevant to their lives."

Bondar says that companies must do four things to build customer loyalty:

• Identify your best customers.
• Differentiate those customers. Where and how do they bring value to your business? Is it online, in-store, or some other way?
• Identify the needs of your customers. Why do they seek your company and not the competition?
• Tailor your business model to meet those needs. What would make it easier -- or even more satisfying -- to continue doing business with you?

"Many customer loyalty programs are about bribing transactions: I'll give you points if you buy something from me," says Martha Rogers, founding partner of the Pepper & Rogers Group, a customer-focused management consulting firm in Norwalk, Conn. "This approach misses a critical piece of the equation. The best customer loyalty programs look like this: In exchange for your business and a little information about yourself, I'll give you points or special recognition."

By asking your customers who they are, why they shop with you, what they're buying, and other telling data, you then have the ability to better answer their needs and deliver an above-and-beyond experience the next time they visit.

Rogers cites a retail store in the United Kingdom that uses data gathered through shopping club cards to produce mass customized mailings. "Let's say they have 100 different promotional items and coupons that they could include in this mailing," Rogers explains. "Based on what they know about their customers' purchasing habits, a computer will pull the 10 most relevant promotions and coupons to that customer."

"You can have great customer acquisition activity and customer up-sale strategies in place, but the largest driver of an organization's value is retaining the right customers," Bondar says. "It goes back to 20 percent of your customers driving 80 percent of your business. A company can only retain a competitive advantage if its focus is on the customer."