Winning True Customer Loyalty and Trust in a recession

From MyCustomer.com - A blog I subscribe to....

I really enjoyed this article because it reaches down to the "gut" level in customer loyalty. The article discusses the role of "Trust" in customer loyalty.

Here's a great quote from the article:

"Loyalty is a misused term. Most organisations think that it is about customers being loyal to them when it should be the other way round."

Lots to think about. I encourage you to read it.

http://www.mycustomer.com/cgi-bin/item.cgi?id=134190

Customer Feedback - Near Term Value Impacts

Tough Business Environment? Try Customer FeedBack for Short Term Impact!
By Cedric Nash

Key Points

1. Reinforce relationships with your most valuable, core customers.
2. Identify immediate action situations & opportunities:

- unhappy customers at risk

- new sales opportunities.

3. Create a positive customer experience simply by asking for feedback.
4. Send a clear signal to employees about what’s important and being measured.

Most business managers would agree on the value of systematically collecting and using customer feedback. Few would argue that it’s not a good thing to know as much as possible about your customers’ perceptions and attitudes about your firm’s products or services. So why then don’t more firms make the effort and relatively modest investment to systematically monitor, measure and act on customer feedback?

Some smaller firms simply don’t see the need. They feel that their informal mechanisms and personal contact with customers provide a stream of feedback. Other firms understand the potential value but aren’t ready to make the commitment to both regularly gathering customer feedback and following through with appropriate actions. And they realize that a sporadic effort, or one with no commitment to follow-through, can actually be worse than none at all because false expectations are created.

Yet another reason is that feedback management programs are often viewed as investments with long-term ROI horizons, taking years to deliver quantifiable value to the firm. And in tough economic times they get pushed aside by more urgent budget priorities. This is a misconception. While it’s true that gathering and managing customer feedback does indeed deliver great strategic value when done systematically over time, even beginning the process can deliver tangible and significant short term benefits. This article discusses how.

1. Reinforce relationships with your most valuable, core customers

For many businesses the 80/20 rule applies when it comes to customers. 80% of revenue/profits come from 20% of customers. This 20% is the critical core of your customer base and you need to do everything possible to retain them when acquiring new customers may be difficult. In other words, you need to assure that they are completely, 100%, satisfied with your products/services, ideally to the point of being willing to recommend you. And if you find that any of them aren’t you must take quick action to address the source of dissatisfaction.

So how do you do this? If you have a “customer feedback” program or “customer experience “ program in place, chances are you already measure and know the current satisfaction/loyalty levels of your core customers. But if you don’t, starting such a program can quickly deliver actionable information about customer’s satisfaction and loyalty levels. And if done with the right tools, you can easily segment the data from your “key” customers and focus your efforts on this critical core. Where problems are identified you have the ability to reach out and correct them. So concerning your core customers, the result of initiating a customer feedback program has multiple near-term benefits:

• You get solid data indicating the satisfaction/loyalty levels of key customers at a point in time.
• For already satisfied customers, you’ve just provided further evidence that you value their business and respect them enough to ask for their feedback.
• For dissatisfied customers, you have the ability to identify them and directly reach out to them to “Save” them before they leave you for a competitor.

2. Identify “ Immediate Action” Situations/Opportunities

One of the nearly immediate benefits of launching a survey-based customer feedback program (with the right tools), is that some customer situations are typically identified which call for immediate action. If your survey tool supports feedback segmentation and “follow-up”, you can then take direct and immediate action with these customers. These situations tend to fall into two categories:

• Very unhappy customers who have clearly expressed their dissatisfaction. By openly expressing dissatisfaction in a survey customers are providing good-faith feedback. If you take quick advantage of this opportunity while the survey experience is fresh, you can often solve the problem and “convert” this customer to fully satisfied with a little effort. Being this responsive to customer dissatisfaction is unusual and it takes some preparation, but such a direct and rapid response shows serious concern about your customers and can have an immediate and positive impact on the customer base.
  
• Satisfied customers who are looking to buy more from you (that you were unaware of).
  Another opportunity for immediate action are those customers who express or somehow indicate in the survey that they have additional needs or would like buy more from you. By asking for feedback you are coincidentally uncovering new sales opportunities that you may not otherwise have found out about for some time.
  
• Quickly surface problems in your processes, products, etc., that are impacting your customers. Most problems will eventually find their way to your attention, but how many customers will have left you in the meantime? Asking for direct feedback will get you direct feedback – problems and all, and finding problems early before customers defect is like finding a solid gold nugget.

3. Create a positive customer experience simply by asking for feedback

What if you could contact all your customers in a non-sales mode, demonstrate how you value and respect them, and also portray your brand in a positive manner? In other words creating a positive customer experience that you control. This is an immediate by-product of initiating a survey-based customer feedback program. With a carefully crafted and branded online survey, you are creating a positive customer experience at the same time you are gathering vital data about your customers. Each time you do it (assuming reasonable intervals), you reinforce the notion that you value your relationship enough to ask for feedback. You can also create even more value by sharing some of the survey findings with customers and explaining how their feedback influenced your product or service decisions. It’s a real show of respect to close the loop this way, and it reinforces the collaborative nature of your relationship. Some survey tools make this easy to do.

4. Signal to your employees what’s really important (and being measured)

One of the major near-term benefits of initiating a feedback management program is that it sends a very clear signal to everyone in the organization that customer perceptions are critically important. This may involve some employee education and communication efforts to disseminate the information, but the gist of the message to employees is simple and clear:

• Customers’ perceptions of their experience matter! They pay the bills and if they’re not happy they can easily go elsewhere. The success of the organization is potentially at risk!
• Since customer perceptions affect the entire organization, everyone should be concerned about the customer experience reflected in feedback. Some may have a more direct impact on the customer experience than others, but it’s critical to the firm and therefore everyone’s concern.
• It’s important enough to management that it will be measured regularly and systematically! In other words, the firm is asking the customers to give them a regular “report card” on critical elements of the business. If problems surface they will get management attention and will be addressed.

Conclusion

Customer feedback management or customer experience programs designed to measure and quantify your customers’ opinions and attitudes are often incorrectly perceived as “long-term” efforts which don’t deliver near-term benefits. Its true that the “best of class” feedback programs are ongoing efforts which provide long-term strategic value to the organization. However, even getting started with a customer feedback initiative can provide surprisingly quick opportunities to positively influence your customers, and your bottom line. In fact, in a weak economic environment it’s more important than ever that you make customer feedback a basic part of your operation. You will typically see some very real short term benefits that will help assure that you’ll be there for the long term.

Getting Serious About Customer Feedback Management

"Feedback management technologies will be the top investment in 2009 to improve the customer experience ... in both a down economy where retention is key and a buoyant economy where growth is desired, customer experience remains a critical factor."

Gartner: "Predicts 2009: CRM Customer Service and Support", Jim Davies, November 2008

Customer Feedback Management is clearly a hot topic. Companies are being challenged to grow without spending on marketing, larger sales forces or other infrastructure. Naturally, many are turning their attention towards their existing customers as a strategy to grow within the constraints imposed by the environment. As a result many companies appear to be “Getting Serious” about customer feedback management – the topic of this article. If you are operating in a resource constrained environment and are looking to your customers for growth opportunities we think this article will help you organize to leverage customer insight.

Revisiting feedback management maturity

In our last column we introduced a framework for characterizing a company’s effectiveness with customer feedback management: The “Feedback Management Maturity Curve”. We defined three stages along the curve: “Getting Started”, “Getting Serious” and “Reaping the benefits”. We pointed out that becoming more mature was an evolutionary process. We outlined how customer feedback is used by companies at each stage and pointed out that the higher up the curve the greater the benefits. Lastly, we observed that most organizations today appear to be in the “getting started” stage along the curve.

Specifically we observed that companies with successful feedback management efforts often shared certain characteristics:
1. Senior management commitment, sponsorship, involvement.
2. Willingness to invest necessary time, resources, budget.
3. An empowered team with the right functions represented (including outside help if necessary).
4. An internal communications plan to get employees on board, to disseminate results.
5. A feedback management tool that meets the organization’s needs.
6. A “start small” and “prove- the-benefits” approach. Don’t take on too much initially.
7. Commitment to see it through.

In this column we’ll discuss how to organize a customer feedback management effort. The list above shows seven sets of observed characteristics of successful customer feedback managers. But for our purposes we’ll group them into four categories: Management Commitment, Feedback Objective(s), Process and Tools.

Management Commitment

Management commitment is essential. As in any business function customer feedback management requires a senior management sponsor - someone in the organization who can determine priorities, allocate and spend money and determine objectives. Here’s our list of things your sponsor should be prepared to commit to:

• Budget for out-of-pocket expenses (outsourced customer survey help, purchased tools, etc.).
• Personal leadership – to guide objectives and responses to feedback, to prioritize staff, for acquiring internal resources including things like I/T support, data access, etc.
• Staff time – both for providing input into the design of your customer outreach and for acting on results of the outreach effort.
• Project management – You should pick a resource (either internal or external) to manage the project.
• Multiple feedback cycles – In customer feedback management cycles matter. You need period over period comparison data to know if your feedback based actions are having an effect on the objective(s) being measured. Keep in mind that feedback management benefits accrue over time. We recommend at least three customer feedback cycles (more is even better).

Feedback Objective(s)

Obviously you’ll need an objective for your first feedback management effort. If you are still reading this article you may have one already in mind. Choosing an objective is normally a fairly simple matter. In your business there is likely a metric that will point to future behavior of your customers relative to their purchase or re-purchase of your offering(s). Some examples of feedback management objectives with this characteristic are: Customer loyalty (per Reicheld), Customer satisfaction, Customer support effectiveness or perceived value versus competition. All these are useful metrics and any one of them would make a good customer feedback objective. You may eventually want to try and track all of them.

Note: The key aspect of the objective you pick is its relevance to your success as a business. Customer loyalty is often chosen by “mature” feedback management organizations because it is a proxy for the overall perception customers have towards their company, for their intentions to re-purchase and likelihood of referring new business.

Picking a customer feedback management objective can have its challenges. In many companies lots of different business functions “touch” customers. Some of those functions may also gather customer feedback as part of their processes. Your customer feedback management effort may potentially highlight problems in the way other parts of your organization handle customers. It may be one of your goals to identify these kinds of issues. We think you would be well served to think about and involve representatives of other organizations in your planning process.

Process

Managing anything requires a process and customer feedback is no different. At a minimum you need to determine what to do with the feedback that you collect. This means some analysis of feedback is required and some set of actions will need to be taken based on the analyses performed. People will need to be assigned to both analyze and act on customer feedback. You will need a communications process both for disseminating feedback results (different analyses to different constituencies) as well as to communicate regarding actions to be taken. How much process you need depends on how much feedback you are collecting and what you want to do with that feedback. We recommend limited objectives and limited actions initially because it simplifies things, keeps cost low and improves chances for success. At the same time objectives and actions need to be designed so that improvement in the metric you choose can take place. Keep in mind that one of the objectives for your feedback management process should be to make customer feedback management a formal part of your company’s business culture. Communications planning is a key to doing this.

Tools

The right tools make organizing and implementing your feedback management process much easier. Using tools that support more of the entire feedback management process (rather than less) is a good idea. Using tools that also integrate or interface with your other systems (CRM, Sales automation, etc.) can be helpful as you get more “mature” with feedback management and you begin automating your feedback management process.

At a minimum, we think your feedback management tool set should support:

• Survey design and implementation
• Results analysis for aggregated response data
• Results analysis for comparison of response data against customer profile data (e.g. How do our most profitable customer’s responses compare to the aggregate reponses)
• Results dissemination
• Follow up action
• Period over period comparisons

There are many tools available that support one or more of these capabilities. There are relatively few that support all of them. Price ranges are from a few hundred dollars per user to several thousand dollars per user. We believe there are middle tier products available that support all these capabilities and which are available at reasonable cost. There are merits to both low and high end solutions. As a general rule, choosing low-end tools will require you to use suites of products and to manually perform a number of tasks. Higher end tools will do more within the tool and require less manual effort.

Note: We have observed that companies in the “getting started” phase of feedback management maturity often use low-end feedback tools. These tools offer low cost but typically require substantial manual effort to create analyses, do comparisons versus customer profile data, disseminate results, do period over period comparisons, etc. In fact most of this type of work is actually done using Excel spreadsheets or Statistical analysis packages (SPSS). More advanced feedback management tools have higher out-of-pocket costs but typically offer much better cost/benefit profiles in the context of an on-going feedback management effort as they often include analytical tools and other types of feedback management process support as part of their offering.

As vendors of a customer feedback management product we are probably biased towards tools – like our own – that are designed to support a customer feedback management process. That said, we believe the right tools are vital to making customer feedback management an automated (or at least automation supported) process, and we’ve attempted to outline the trade-off you will need to make as you choose tools to support your customer feedback management effort.

Conclusion

If you organize well, focus on limited initial objectives, define a team and choose the right tools - achieving success with customer feedback management can be surprisingly low in cost and powerful in results. You can do this kind of project yourself. Very often many of the skills required already exist in your company. For instance, if you have market research (MR) people you can call on, they often know how to design surveys and have experience using survey design tools. You’ll need to coach MR people on the “management” aspect of feedback management as they are mainly “feedback” oriented. You also may have access to business analysis (BA) skills and products. Again you’ll need to coach them on analysis for management of feedback. And lastly, it’s likely that you have access to project management people. So if you try and do it yourself use the people and skills available – but orient them to the purpose of the effort, to enable the business to take advantage of customer insights operationally.

If you don’t have easy access to these skills, or if you want all of the skills fully dedicated to your project, companies like Customer Centricity can take them on for you. It often makes sense to get help and guidance with organization and planning, objectives and process definition, survey design and implementation, results analysis and actions – all centered on your feedback management objectives. If you have MR and BA skills available you can always bring them on as you add feedback cycles over time and your process stabilizes.
So getting down to getting serious isn’t hard or necessarily expensive and help is available. Doing it has a great many benefits. We hope we’ve helped you understand the path to “getting serious” with customer feedback management.

Where is Your Firm on the Feedback Management Maturity Curve?

In our previous article on customer feedback management, we discussed the differences between simply collecting customer feedback and having systematic processes to both gather and make effective use of customer feedback. We call this Feedback Management – a set of techniques, processes and tools proven to offer major benefits when deployed consistently over time.

In this article, we introduce the concept of Feedback Management Maturity. We'll define some characteristics of organizations at different stages of the Feedback Management Maturity Curve and discuss some approaches companies can take to move up the curve and reap the associated benefits.

Some Definitions:

Feedback:

“Customer (and employee) feedback provides the foundation upon which successful companies are built. It delivers strategic guidance and actionable insights that enable companies to improve marketing and customer service, to deliver better customer experiences, to develop and refine their products and services over time, and to profitably grow the business.” Jeff Zabin – Analyst, Aberdeen Group

Feedback Management:

Feedback Management is a both discipline and a set of techniques, processes, metrics and tools for systematically collecting feedback, and systematically and effectively acting on the feedback - putting it to work to help achieve the organization’s strategic and tactical business objectives.

Feedback Management Maturity:

The degree to which an organization is effectively practicing the discipline of Feedback Management and realizing the associated benefits. Like many other disciplines, Feedback Management capabilities and practices typically progress through stages on the way to full realization.

The concept of "Feedback Management Maturity" has several implications:

1) it's a journey for any company to attain feedback management maturity;

2) there are some recognizable stages on the way; and

3) as with people, different firms embrace the journey with different approaches.

Some are in a rush to the top (perhaps forced by competition), while others stay at stage 1 indefinitely. The curve diagram above is an attempt to represent the stages that firms go though as they seek to become truly "customer centric" by developing and deploying mature, well-developed Feedback Management capabilities.

Characteristics of firms at different stages of the curve

What's the Value of being high on the curve?

It's simple: the further up the curve a firm is, the stronger the firm's ability to compete and prosper because it is better able to gather, manage and act on strategic and tactical feedback. This provides competitive advantage because the firm can:

• Continuously improve key processes like marketing and customer service
• Deliver superior customer experiences
• Attain high customer satisfaction and loyalty (reflected in metrics)
• Develop and refine new products and services over time
• PROFITABLY GROW THE BUSINESS!

Firms high on the Feedback Management Maturity Curve systematically measure key dimensions of their customers' experience and perceptions, and effectively utilize the insights to manage the business. They measure and manage the business to assure high customer satisfaction, high loyalty, high retention, to develop new products to meet evolving customer needs (which they track), etc.

Over time, these firms rise to the top tier of their industry in terms of growth and profitability. The correlation between strong feedback management capabilities and performance have been studied and documented by authors like Fred Reichheld, inventor of the "Net Promoter" method for measuring loyalty, and organizations like ACSI (American Customer Satisfaction Index). Companies with the highest Loyalty and/or Customer Satisfaction scores are invariably top performers in their sectors.

Where is your firm on the curve?

A few years ago a Gartner Group study found that while 95% of firms collect customer feedback (in one form or another), only 10% were acting on the feedback and only 5% were communicating back to their constituents what they were doing with the feedback. In other words, for the vast majority of firms in the study, the collection of customer feedback wasn't systematic, and they did not consistently or effectively take action based on the information gathered (including "closing the loop" with customers). Even today, the results from most feedback initiatives and/or surveys are treated like market research and end up as a report filed away on the shelf.

Most small and medium sized businesses would recognize themselves as being in the "Getting Started" stage of the curve.

Moving up the Curve
Clearly, effective feedback management gives companies a competitive "edge". So how can your firm go about moving up the curve and developing this edge for your business? Here are a few thoughts on what it typically takes:

• Senior management commitment, sponsorship, involvement.
• Willingness to invest necessary time, resources, budget.
• An empowered team with the right functions represented (including outside help if necessary).
• An internal communications plan to get employees on board, to disseminate results.
• A feedback management tool that meets the organization's needs.
• A "start small" and "prove- the-benefits" approach. Don't take on too much initially.
• Commitment to see it through.

Surprisingly, going from "Getting Started" to "Getting Serious" can be simple and affordable. There are cost effective yet powerful feedback management tools on the market, and if you need outside help, there are many smaller, focused firms you can engage as opposed to hiring expensive "big name" consultants. This way you can jump start your progress to the next stage on the curve, learn how to apply feedback management techniques to your business, and quickly begin to reap the proven benefits of effective feedback management.

EFM definition from Wikipedia

Wikipedia has an excellent description of EFM it is at:

http://en.wikipedia.org/wiki/Enterprise_Feedback_Management