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Growing Business: Is Customer Loyalty Dead?

How does your business rate on the customer service scale? And, how important do you think customer service is to your organization’s success?

According to a 2011 Consumer Reports’ survey65 percent of people are “tremendously annoyed” by rude salespeople and 64 percent of respondents said that they had left a store in the previous 12 months because of poor service.

Not the best way to build your business and certainly not customer loyalty.

If you think of a place you give your business to on a regular basis - a favourite haunt  or other service provider, like a restaurant, gym, grocery store, financial institution, auto mechanic, drug store, hairdresser or barber, website and/or graphic designer, auto dealer - what is it that keeps you going back? What stops you from taking your business elsewhere?

  1. Is it because they serve a niche market? Do they provide a great product or service that you can’t get anywhere else, at least at this time? Chances are, that if the product and/or service you’re receiving aren’t worth what you’re paying, your loyalty will vanish fast if and when a competitor enters the game. In fact, the game may even be over for the niche business once a new player enters the market - especially if customer service isn’t great.
  2. Is it because they are close by and simply easiest to do business with? Not great customer service, just convenient? When another business - new or existing - ups the quality of their product, reduces their prices and/or delivers superior customer service - and is just as close in proximity as your current provider - you will likely be making a move. In fact, you may even make the move if you have to travel a bit further and pay a bit more - especially if customer service at the new place is great.
  3. Is it because of pricing? Plain and simple pricing? Not great customer service or a better product? Not more convenient or a niche market? Just plain and simple pricing? Chances are if their service isn’t at least average, and even if it is, you’d still consider switching to a competitor who upped the ante with superior service, an equally good product and maybe even a bump in the price.
  4. Is it because of great customer service? The product or service is readily available in your area, not just at the business you happen to be dealing with, and the pricing is comparable to others, maybe even a bit higher. But the level of service is the stuff dreams are made of. They under promise and over deliver. They care and they show it, by providing good products and services, a well taken care of business environment (in-store and online) and knowledgeable, engaged staff who are empowered to make appropriate decisions.

According to the 2011 American Express® Global Customer Service Barometer, “seven in ten Americans (70%) are willing to spend an average of 13% more with companies they believe provide excellent customer service.” The same survey found that Canadians would pay an average of 12% more.

Whether we are micro, small or large business owners, we are clients of other businesses of all types and sizes too. The same is true of those we employ, our staff and team members. As such, it can help to take a good look at what we respond to when we are customers of other businesses.

How important is the quality of the products, services and customer service we receive when we’re 'the customer' and dealing with other service providers? This is an important question for both business owners and staff to consider, whether front-line employees, CEOs or those behind the scenes. It can help us evaluate our own attitudes and behaviours and that of our business as a whole when it comes to dealing with our customers, and this awareness and insight may just help us take everything we do to a whole new level.

According to Jim Bush, Executive Vice President, World Service for American Express, “Getting service right is more than just a nice to do; it’s a must do,” He notes, "American consumers are willing to spend more with companies that provide outstanding service, and they will also tell, on average, twice as many people about bad service than they are about good service. Ultimately, great service can drive sales and customer loyalty.”

Is it possible for businesses we feel extremely connected to, loyal even, to lose our business? Absolutely! But it takes more than a reasonable increase in price.

A good product coupled with knowledgeable, pleasant and sincere staff and a business environment that communicates we care (like clean washrooms and tidy stores, and an attractive, functional and easy to navigate website) means a lot to consumers. It is a combination of good products, good services, living up to our promises and all the other things mentioned so far that constitutes great customer service.

Great customer service is both simple and complex. We can sometimes think that delivering "service with a smile" or never making a mistake constitutes great customer service, but it is so much more than either of these. In fact, making mistakes and fixing them promptly and with a great attitude can strengthen customer loyalty! Delivering "service with a smile" and a bad attitude, that so easily creeps through in a number of ways, can completely undermine customer loyalty.

That said, customer loyalty isn’t dead! It may be on life support in some businesses but there is still hope. Earning and re-earning customer loyalty can be done. It requires ongoing effort and commitment to earn it and maintain it. It requires a clear understanding that everything we do and how we do it ultimately impacts customer loyalty. And, it requires the involvement and commitment of everyone on the team, including the head honcho and every other person at every level of the organization.

But hey, isn’t that what business is all about?

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