The iMpact of Customer Loyalty

How Does Apple Do It?

 Now that you’ve discovered the sparkling gem known as customer loyalty and we have discussed asking the ‘Ultimate Question’ as a way to determine how loyal your customer base is currently, let’s look at how one company has put this concept into practice and wins over customer after customer – continuing to boost profits and market share year after year in the tight competitive market of consumer technology products.

 Yes, you guessed it! Whenever there is a new multimedia “anything” nowadays, it seems there is an iThing!

And consumers clamor for the brand and can’t stop talking about how much they love it!!  Isn’t that our dream?

Some think Apple has a “secret” – well, they do but it’s not like the recipe for the Colonel’s famous Kentucky Fried Chicken or anything. It’s spelled out in everything Apple does in their daily business practices.

Call them Mac Loyalists, MacHeads, or just plain zealots, Apple’s vocal customer following is one of the most loyal out there. Its customers will defend the company and its products tooth and nail every time.

Why are they so passionate?

The simple truth: Apple’s attention to detail, their commitment to giving customers the products they want, and their consummate, personal customer service all work together to create customers who are simply delighted with everything Apple.

In 2006, Satmetrix Systems ranked Apple as the computer company with the highest customer loyalty. Satmetrix sought to discover how likely customers were to recommend the company to a friend or colleague, comparing the likes of Compaq, Dell, Gateway, IBM and others with Apple. Said Dr. Laura Brooks, then vice president of research and business consulting at Satmetrix: “Apple, whose score far outranks its closest competitor, is well known for its passionate and dedicated customer base.”^† That same year, a Harris Poll of “best brands” put Apple in the top 10 for the first time. Apple’s successful branding finds it in the company of Coca-Cola, GE, and Kraft, among others.

In June 2011, The Wall Street Journal published “Secrets from Apple’s Genius Bar: Full Loyalty, No Negativity”.* WSJ investigates how Steve Jobs, CEO and co-founder of Apple in 1976, has revolutionized the world of consumer technology – and not just through its innovative product line. They interview current and former employees to learn some of Apple’s secrets to customer interaction that help foster the high level of customer enchantment and loyalty the company has achieved.

The article uncovered some basic guidelines Apple provides its employees for handling customer service interactions. Referred to as “steps of service”, they are spelled out in the acronym of the company’s name:

• Approach customers with a personalized warm welcome
• Probe politely to understand all the customer’s needs
• Present a solution for the customer to take home today
• Listen for and resolve any issues or concerns
• End with a fond farewell and an invitation to return

 PRODUCTS DON’T SELL. PEOPLE DO.

Think about it! Apple does not merely sell you an MP3 player – they invite you to experience the Apple lifestyle, which you see happy customers living in brilliant color in every commercial they produce. Product features don’t create enthusiastic and loyal customers — how people feel when they use your product or service is what drives them to action… whether that is to re-purchase or to recommend.

 Surprise and delight your customers!

One blog post about Apple by InsideCRM.com, a Customer Relationship Management (CRM) firm, elicited over 45 user-generated responses and 87% of those were overwhelmingly positive with regard to their perspective on the Apple brand.

Are your customers sleeping outside of stores just to be one of the first to buy your product? If so then you, much like Apple, must be doing something right! It’s obvious that Apple enjoys a fanatical customer following. This loyalty is not just a lucky coincidence; it is due to Apple’s long time commitment to deliver the best customer experience through its products and services alike.

According to several employees and [Apple, Inc.] training manuals, sales associates are taught an unusual sales philosophy: not to sell, but rather to help customers solve problems. “Your job is to understand all of your customers’ needs – some of which they may not even realize they have,” one training manual says. To that end, employees receive no sales commissions and have no sales quotas.^≠

In Marketing Apple: 5 secrets of the World’s Best Marketing Machine, Steve Chazin, former Apple marketing executive, addresses some principles that helped establish the company’s brand identity and loyalty and earn them such a huge market share.

So what are some practices you can embrace if you want to build that same kind of enthusiastic – overzealous even – customer base that is enjoyed by Apple today?

Be sincere – Every customer interaction is an opportunity. Make sure you are approachable, pleasant, and professional.

Ask, then Listen – Allow your customer to have a voice. This is a cornerstone of a trusting relationship. Lead with questions as needed, but allow the customer to fully express themselves.

Provide solutions – Remember you are the “fixer”! Once you have learned what the customer is really looking for you must convince them you have the answer.

Overcome obstacles – Be prepared when bumps arise along the path. Handle issues promptly, respectfully, and fully. Your customer will feel like they are important to you.

Show appreciation – Thank your customer for every opportunity, even if you do not make a sale. Demonstrate that you consider every moment of their time valuable and that you are available if they ever need anything.

Driving true customer loyalty must start with understanding your customer and must be maintained by providing a consistently sublime customer experience. Every interaction with a customer impacts their future buying decisions and a positive outcome is essential to creating customer evangelists, maximizing revenue, and growing your business.

The economic power of high-quality customer relationships is evident. Look at the correlation between the level of satisfaction your customers experience and your repeat sales performance and direct referrals from those customers who are in love with your product.

Continually meeting your customers’ needs – and making them feel good about their decision – creates a greater sense of value. They in turn are excited to share that feeling with others they know, which creates a “win-win” scenario for everyone involved and will help your business grow and your profits soar!

 
^† Arstechnica.com,“Apple shines at customer loyalty and branding”

* Full article viewable only to WSJ subscribers

^≠ Courtesy of Hi-TechAnalogy.com

What is Customer Loyalty?

We’re not talking about a traditional loyalty program that brings a customer back because they get the seventh sandwich free or they get frequent flyer points for future travel.

We are talking about the kind of loyalty derived from an overwhelming feeling of immense satisfaction with a product or service – a feeling that elicits an emotional reaction and drives a decision to recommend a particular service or product to a friend or colleague.

• Why does a fan of America’s Team, the Dallas Cowboys, paint their truck silver and blue with a star on the door?
• Why does an individual proudly wear a shirt emblazoned with the Coca Cola logo?

For the same reasons your loyal customer will recommend your product or service – it goes beyond mere customer satisfaction.

What we are referring to is sustained customer relationships based on utter enchantment with you and your product/service, which lead to not only repeat business but also to referrals for new business.

Wikipedia calls it the loyalty business model, but however you want to refer to it the simple idea is that building and maintaining a customer base who loves your product and will recommend it to people they know is the best way to achieve long-term growth and profitability.

The concept of customer loyalty is long-standing, though the term itself only dates back a few decades. In The Loyalty Effect (1996), field expert Fred Reichheld lays out the basic economics behind developing a loyal following of customers. The principles in the book not only have remained applicable over the years, they are magnified by the impact of the Internet on today’s business practices.

Still think a customer only tells 10 friends about a bad experience? Think again!

• Two thirds of the world’s Internet population now visit a social network or blog site weekly
• The average American has over 634 social connections on the Internet^†
• 52% of people forward information through social networks, email, and online forums

Ready or not, your company’s profitability is linked directly to the word of mouth advertising that is drawn from the experiences of customers who have been exposed to your products and services. Their ratings, reviews, and testimonials are communicated like a viral marketing campaign to everyone they know and thousands of individuals surfing the Internet – good or bad! Creating loyal customers who will share positive experiences is vital to your organization.

Harnessing the power of loyal customers allows you to grow almost effortlessly while increasing your overall margins.

But developing real customer loyalty is a process – it requires buy-in from all levels of your organization and is geared toward keeping customers truly enchanted so they not only remain loyal but also will share their excitement with others resulting in new business for you.

Providing top-notch customer service is a primary element in gaining customer loyalty, but do not mistake it is the only consideration.  Today’s customers already expect excellent service as a basic principle – meaning to be treated in a friendly, polite and professional manner along with responding timely to their needs is a given.

Customer loyalty we can say is derived from three main components:

1) The customer’s perceived value of the product/service

2) How well that product/service meets their needs

3) Exceptional customer service you provide

These three components cannot be weighted equally from one customer to the next. They are variable in importance depending on the customer – because no two customers are exactly alike!  For this reason, you must seek to understand your customer and what drives their decision process in order to find the ultimate key to unlocking the door to greater customer loyalty.

If your customer has a problem, you should do whatever it takes to make things right and just as importantly to resolve the concern in a timely manner. Hint! Customers know you are not perfect – but letting them witness how earnestly you strive for perfection can be a powerful customer service weapon! Social media interconnectivity and blogging present opportunities not only for unsolicited accolades but also for you to address issues in a forum where potential customers can gauge your responses even in the least tenable situations.

In our previous blog, we discussed The Ultimate Question and how it relates to customer loyalty. The first step for any organization in developing a program to establish and improve customer loyalty is to understand where you are now. Only then can you define ways to improve and focus on efforts to maximize results. The responses you receive when you ask your customers the Ultimate Question can give you an idea of where you are succeeding as well as areas where you can improve.

ASK for feedback. LISTEN to what your customers say. ACT accordingly.

Consider this. A mere 5% improvement in customer retention rates will yield between a 25% to 100% increase in profits across a wide range of industries.^≠ To sum it up – Happy customers spend more money more often! 

Simple satisfaction does not equal customer loyalty. Customers need to find value in your product, receive remarkable customer service every time, and feel like any complaints are dealt with professionally, fairly and promptly. To build customer loyalty you must focus on clearly defined goals derived from analyzing feedback from your customers to improve their overall experience.

The fast-track to increasing customer loyalty – retention and referrals – is to determine and put into effect changes in your organization that will elevate your customer experience to the level where they will shout your name from a mountaintop!

Walt Disney once said, “Do what you do so well that they will want to see it again and bring their friends.” These words have become a well-known maxim for pursuing excellence in customer service, but they are also the foundation of understanding what customer loyalty is all about. When we’re excited about something we can’t wait to tell someone… or even everyone!

When you are ready to develop and implement a program to help you gauge and improve your customer loyalty, Ellis, Partners in Management Solutions is proud to share our exciting product, the Customer Intelligence Application, with you. Contact us for more information.

^{† Pew Research, 2011}

^{≠The Loyalty Effect, F. Reichheld}

What is ‘The Ultimate Question’?

In The Ultimate Question: Driving Good Profits and True Growth, customer loyalty pioneer and expert Fred Reichheld proposes there is a single question you should be asking your customers that will provide you with a clear and easily understandable measure of your company’s performance as perceived by the most important person to your business – your customer!

Without understanding what exactly your customer needs and wants and what value they find in your product or service, how can you ensure repeat business and true customer enchantment?

Being satisfied is not enough. Satisfied customers are sitting ducks – waiting for the newest, cheapest thing to come along. They have no loyalty to your company or brand because you are not exceeding their expectations. They continue to use your services or buy your product because they do not have another or a more appealing alternative currently, but they are not excited enough to be “evangelists” for you, thus creating referrals and new business.

That is why the feedback you receive from asking The Ultimate Question is so vital. You will be able to identify how your customer base is divided between Promoters (people who absolutely love your product), Detractors (those who do not like your product) and Passives (ones who are indifferent).  As you come to understand these customers and implement practices to build greater satisfaction and ultimately increase your overall customer loyalty, you will find the percentage of Promoters will grow – right along with your company and its profits. Promoters are in essence a whole new, motivated, and enthusiastic sales team that doesn’t cost you a dime!

So what exactly is ‘The Ultimate Question’?  Simply put:

“How likely is it that you would recommend this company to a friend or colleague?”

In principle, it’s a simple concept. But it packs a lot of punch! Ask yourself – If I am completely thrilled with a service I receive or a product I purchase, what is the first thing I do? I tell my friends!  And not just one friend – I tell everyone I know, which in today’s booming social media environment could be hundreds or even thousands of contacts instantaneously.

Why is it important to have customers who are so enchanted with your product or service that they tell their friends, family, co-workers, and maybe even people they meet in the check-out line?  Because research shows that today’s consumer will take the recommendation of a peer (another customer or potential customer) – even someone they do not know personally – 78%^† of the time before they will trust the hype created by advertisements and promotions your own company generates. In fact, companies with a higher NPS Score (i.e. a greater percentage of Promoters) actually grow 2.5 times faster than their competitors!

Once you have made the decision to ask your customers The Ultimate Question, you must determine the best approach to asking it and then, further, learn how to process the feedback you receive in order to most effectively increase your number of Promoters and the resulting profitability of your organization. You must LISTEN to what your customers say and follow through with ACTION.

We recommend you check out the book, which is based on extensive research in conjunction with Satmetrix (a recognized provider in customer experience management) and Bain & Company (an established management consulting firm) and contains real stories of success through utilizing The Ultimate Question and Net Promoter Score to enrich the customer experience. Reichhold clearly correlates the conversion of customers into Promoters with generating ‘good’ profits and true and enduring growth for your organization.  Remember – customers won’t brag about you when you merely satisfy their needs – you have to truly exceed their expectations.

If you are interested in learning more about how Ellis, Partners in Management Solutions can play a part in this process and in helping you increase customer loyalty and overall profitability, contact us for more information about our exciting new product, the Customer Intelligence Application.

^†Socialnomics.net