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Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
Report 17-seven-factors-building-extreme-customer-loyalty
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Report 17-seven-factors-building-extreme-customer-loyalty

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  • 1. Expert InsightsSeven Factors for Building Extreme Customer Loyaltywww.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.
  • 2. Seven Factors for Building Extreme Customer Loyalty. Copyright 2009 by Profiles International. Printed and bound in the United States ofAmerica. All rights reserved. No part of the report may be reproduced in any form or by any electronic or mechanical means includinginformation storage and retrieval systems without written permission from the publisher.information storage and retrieval systems without written permission from the publisher.PublisherProfiles Research InstituteDario Priolo, Managing Director5205 Lake Shore DriveWaco Texas 76710 1732Waco, Texas 76710-1732Profiles International(800) 960-9612www.profilesinternational.comAcknowledgementsCEO, Co-founder, Profiles International: Jim SirbaskuPresident, Co-founder, Profiles International: Bud HaneyEditor-in-Chief: Dario PrioloSubject Matter Expert and President, The Chapman Group: Dennis J. Chapman Sr.j p , p p pManaging Editor: Carrie D. MartinezCreative Director: Kelley Taylorwww.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.Loyalty Indicators | 2
  • 3. S I di t f E t C t L ltKnow Your Customers — Keep Your CustomersSeven Indicators of Extreme Customer LoyaltyA Satisfied Customer is NOT always a Loyal Customer!For many decades the goal has been satisfied customers . While satisfaction is important, it is not sufficient to guarantee that your customers will continue to buy from you. The world  changes quickly and the minute you get complacent, BANG, a new competitor surfaces with a solution they claim is better, faster or cheaper.  Suddenly  your customer no longer needs you. We all know it costs a whole lot more to acquire a new customer than to maintain an existing customer. Existing customers play an even greater role in our ever‐changing global economy – we must keep them and grow them. We know that there are actions we can take and behaviors we can th t t l t l ti hi b t ll d bmeasure that create long term relationships between sellers and buyers. So, what really drives customer loyalty?Josiah Royce, an American philosopher in the mid‐to‐late 1800’s, claimed that the trait of loyalty was most often associated with political institutions, religion, war, and family. In these situations, people had one key influence in common – a passionate link to a “common cause ” We believe thatpeople had one key influence in common  a passionate link to a  common cause.  We believe that you build loyalty when you and your customers are aligned on seven key factors. These factors are:1. Emotional Dependence2. Structural Dependence3. Business Dependence4. Satisfaction5. Performance6. Economic Value Proposition7. Alignment and FitThi t d th i di t d ill h l b d i l ti f iwww.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.This report expands on these seven indicators, and will help you go beyond simply satisfying customers to protecting and growing your strategic accounts. Loyalty Indicators | 3
  • 4. S I di t f E t C t L lt1. Emotional DependenceSeven Indicators of Extreme Customer LoyaltyI Will Always Be…E‐mo‐tion‐ally Yours (Bob Dylan)Emotional Dependence is the psychological commitment from the customer. It is the customer’s reliance on an organization for support, guidance, and decision‐making – the tendency of the customer to see help from you as a supplier in making decisions or in carrying our difficult actions. When an individual is emotionally d d t d thi d t t d th di t th l d k t l ti hi th tdependent and things do not go as expected, they can distance themselves and seek out a relationship that provides the support they need. Emotional Dependence includes;  integrity, reliability, depth of relationship, and empathy.Ritz‐Carlton hotels are widely recognized for their exceptional job of creating an emotional bond with their clients. They make an effort to know you and your preferences, and then go above and beyond your expectations to satisfy your emotional needs. For example, they may provide you with your local newspaper instead of a generic USA Today, or they may surprise you by making reservations at your favorite restaurant. Sometimes the smallest things can make the biggest difference.Conversely, a negative experience can have a detrimental effect on customer loyalty when you’re in a heighted emotional state.  For example, when your IT staff can’t get the right engineer on a support hotline g p y g g g ppafter your network has crashed, or if the on‐line flower shop botches your order and your wife doesn’t receive her gift in time for Mother’s Day. These are both performance issues, but the emotional element magnifies the impact.How to Create Emotional Dependence• Learn what your customers value on a personal level and go beyond their expectations to demonstrateLearn what your customers value on a personal level and go beyond their expectations to demonstrate that you care about them.• Show a high degree of empathy and responsiveness when you sense your customers are getting emotional about an issue. Even if you can’t solve the problem on the spot, let them know they are important and that you will do what it takes to satisfy their personal needs.• Put the right person on the job.  This person should be able to connect with the customer on a personal level Make sure your employee can provide this support and that you have the right processes in placewww.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.level.  Make sure your employee can provide this support and that you have the right processes in place for triaging issues.  Make the customer feel good about working with your organization.Loyalty Indicators | 4
  • 5. S I di t f E t C t L lt2. Structural DependenceSeven Indicators of Extreme Customer LoyaltyCan You Help Strengthen Your Customers’ Weak Links?Structural Dependence is the operational foundation of the relationship and consists of people, facilities, systems, and distribution channels. Structural dependence builds a common cause between the buyer and seller, and this helps build loyalty.Accenture is a good example of a company that creates structural dependence by providing clients a wide range of outsourced IT services. This enables clients to run their businesses more efficiently and focus on their core business, and it enables Accenture to provide services at a lower cost by building scale and operating expertiselower cost by building scale and operating expertise. UPS is another good example. It has re‐positioned itself from a company that merely delivers packages to one that can manage an organization’s complete supply chain function around the world. They can do this because they have the people, equipment, facilities, and operational expertise in an essential function that is difficult for the average organization to manage on itsexpertise in an essential function that is difficult for the average organization to manage on its own.Once organizations outsource non‐core operations to companies such as Accenture and UPS, it is much more difficult for them to bring these functions back in house because the investment is high and expertise is scarce. Although switching service providers is possible, it is difficult and risky. Structural dependence is among the most powerful loyalty builders.   How to Create Structural Dependence• Understand how your customers’ businesses operate. Then determine where they have gaps or inefficiencies that would enable you to operate portions of their businesses better, cheaper and ith fe er headaches or risks for o r c stomerwww.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.cheaper and with fewer headaches or risks for your customer.Loyalty Indicators | 5
  • 6. S I di t f E t C t L lt3. Business DependenceSeven Indicators of Extreme Customer LoyaltyYou Scratch My Back and I’ll Scratch Yours! Business Dependence is the marketing positioning of the relationship. This includes how you help your customer create go‐to‐market  solutions, grow and retain their customers, and be i i l d i h i kcompetitively sound in their market.The relationship between Apple and AT&T is a good example of business dependence. When Apple decided that it wanted to launch the iPhone, it entered into an exclusive distribution agreement with AT&T. Apple distributed the iPhone through AT&T’s massive retail network and, in turn AT&T built its subscriber base by attracting customers from competing providers suchin turn, AT&T built its subscriber base by attracting customers from competing providers, such as Verizon and T‐Mobile, who couldn’t offer the iPhone. By combining forces to sell the iPhonethrough the AT&T sales channel, both organizations benefitted significantly. Another good example is the business dependence between a pure‐play biotechnology firm, such as Amgen, and the “big pharma” company Wyeth.  Wyeth has a large sales force that goes g , g p p y y y g gdoor‐to‐door calling on doctors and keeping Wyeth drugs top‐of‐mind. However, they have issues with their drug development pipeline, especially in new and emerging fields such as biotechnology. Conversely, Amgen had deep expertise, but lacked a sales and market presence. By combining forces to market certain Amgen drugs through the Wyeth sales force, both organizations benefitted significantly.    How to Create Business Dependence• Identify areas where your customer is weak but you are strong, as well as areas where you are weak and your customer is strong. After conducting this analysis, identify opportunities for building on each other’s strengths and minimizing each other’s weaknesses. Then, start to envision how the relationship would work operationally and financially to build mutualwww.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.to envision how the relationship would work operationally and financially to build mutual value.Loyalty Indicators | 6
  • 7. S I di t f E t C t L lt4. SatisfactionSeven Indicators of Extreme Customer LoyaltyCustomer Satisfaction Influences Loyalty, but it isn’t the Only PredictorCustomer Satisfaction is often an indication of how well your organization performed during a recent event. This often includes elements of service, support and delivery ‐ delivering a new d i l i i i i i i ilproduct or service; solving a service or maintenance issue; or executing a campaign, pilot program or evaluation. For example, JD Power and Associates is well‐known for its customer satisfaction surveys on automobiles, consumer electronics and financial services. Among the most widely known are Power Circle Ratings related to the J D Power and Associates Initial Quality StudySM whichPower Circle Ratings related to the J.D. Power and Associates Initial Quality StudyS , which measure consumer perceptions of automotive new‐vehicle quality after 90 days of ownership. Power Circle Ratings are important and influential measures, but a high score doesn’t necessarily mean that customers will be loyal to the model or the brand. Customer Satisfaction measures are too limited to be an accurate predictor, especially when it comes to complex business solutions. p , p y pSatisfaction ratings are important because we need to know that if we’ve been tasked to deliver something, we have successfully done so. But we need to be careful that we don’t use that as the only driver or only metric of our loyalty assessment. How to Create High Customer Satisfaction• Creating high customer satisfaction starts with a careful assessment to determine needs and uncover expectations with regard to price, impact and level of service. Then you must meet or exceed expectations. “How” you deliver can be as important as “what” you deliver, so don’t underestimate the impact emotions play in satisfaction scores. Formal surveys and properly designed questionnaires are a big helpwww.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.designed questionnaires are a big help.Loyalty Indicators | 7
  • 8. Seven Indicators of Extreme Customer Loyalty5. PerformanceSeven Indicators of Extreme Customer LoyaltyNot Too Hot, Not Too Cold – Just Right!“Performance“ refers to how a product or service holds up to expectations and required industry standards. Measurements of performance can include meeting ISO and Six Sigma requirements Typically performance is measured over a longer period of time and with morerequirements. Typically, performance is measured over a longer period of time and with more objective criteria than the measurement of satisfaction, which is event‐based and emotionally influenced.Performance is important, but is not the sole predictor of loyalty. For example, BMW makes some outstanding automobiles that perform superbly when it comes to acceleration, braking,some outstanding automobiles that perform superbly when it comes to acceleration, braking, handling and quality. All of these can be measured against a standard. However, “The Ultimate Driving Machine” is tuned with a stiff suspension that makes for a ride that is too hard for some people. Catch a person who is tired of feeling every bump in the road and he may tell you that he would prefer a Lexus the next time he’s in the market for a new car.Know What Matters and What is ExpectedIt is also important to know which performance factors really matter to your customers and which don’t. Your customers might not care that you have a 97% on‐time delivery rate for air freight if they sell a bulk product that can only go by ground.For the factors that do matter to your customers, it is important to understand how your customers define different performance levels and their minimum acceptable performance criteria. From the example above, don’t assume that a 97% on‐time delivery rate for your air freight service is acceptable. Your customer might need 98% and your competition might boast 99% Find out where you stand so you know for surewww.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.99%.  Find out where you stand, so you know for sure. Loyalty Indicators | 8
  • 9. Seven Indicators of Extreme Customer Loyalty6. Economic Value PropositionSeven Indicators of Extreme Customer LoyaltyShow Me the MoneyEconomic Value Proposition refers to the financial implications in the relationship with a customer, such as the economic impact of having or not having a supplier’s products or services In better words it answers the question “How do we help each other make moreservices. In better words, it answers the question,  How do we help each other make more money and stay in business?”A customer who has a great appreciation for the return on her investment in your solution will have a higher propensity to remain a customer. You typically help her create value through one or more of the following three ways:or more of the following three ways:1. How you help them reduce expenses2. How you help them avoid expenses3. How you help them increase revenue and profitWhen value creation is a mutual goal then loyalty prospers; but when value is one‐sided, loyalty suffers. For example, if your customer only buys from you at the lowest possible price, ties‐up your support resources, and pays only after repeated collection calls, then you’ll feel taken advantage of. In fact, you may come to the conclusion that you can’t afford to keep them as a customer and  therefore look to fire them before they bankrupt you.How to Create Mutual Economic Value• Collaborate with your customers to understand how your solutions are impacting them. Then ask yourself, “What’s the impact of having or not having this solution?” It is very important to document this information and validate it with the client, and then ensure that this is communicated inside the customer organization The more people inside yourwww.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.this is communicated inside the customer organization. The more people inside your customer organization that understand the value you bring, the more loyal they will be.Loyalty Indicators | 9
  • 10. Seven Indicators of Extreme Customer Loyalty7. Alignment and FitSeven Indicators of Extreme Customer LoyaltyCustom fit or off the rack?Alignment and Fit in a buy/sell relationship includes factors such as shared mission and vision, culture, collaborative practices, leadership and expectations. The higher the degree of alignment and fit, the greater the degree of loyalty. For example, Google is a company that places a high value on innovation; but they also highly value intellectual and technical rigor. They have grown organically and have a rigorous selection process that enables them to create a consistent corporate culture. On the other hand, Oracle has grown through acquisitions. The company is in a perpetual state of flux where the culture is aggressive and much more individualistic. Those who can deliver technological breakthroughs or land the 7‐figure deals are praised while others walk.  These are two very successful companies with two very distinct cultures. Expect them toThese are two very successful companies with two very distinct cultures. Expect them to behave differently as customers and understand that you might “fit” better with one than the other. It does not mean that you walk away from those with whom you do not fit, but you will probably need to work harder and endure some discomfort.How to Create Alignment and Fit• First, you need to know yourself. Think back to the customers who work best with you. Why do you believe this is the case?  Are there any common characteristics? Conversely, can you identify the customers you wish would go away? Are there any common characteristics that predict poor fit? Then use your criteria to segment your accounts into those who fit well and those who do not. Ask your customers “fit” questions as part of your strategic account l i d th di lwww.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.planning process and manage them accordingly.Loyalty Indicators | 10
  • 11. Seven Indicators of Extreme Customer LoyaltyImportant Rules for Applying the 7 IndicatorsSeven Indicators of Extreme Customer LoyaltyBringing Your Customer Loyalty Program to Life1. You don’t need to track all 7 indicatorsEach company is unique and for that reason you may not be able to measure all 7 Loyalty Indicators. It is recommended that you track a minimum of 5 and track all 7 when appropriate. For example, in some organizations Performance or Alignment and Fit may not be measurable – or even appropriate to measure. 2. Gather insights from multiple contacts in an account Having multiple points of contact within an account is a sign of a healthy account It is veryHaving multiple points of contact within an account is a sign of a healthy account. It is very important to gather insights from multiple players in the customer organization to get the most accurate measure of loyalty. Large differences between groups signals a major issue.3. Knowledge + Relationships + Economic Value = Exponential SuccessYour success in an account will increase exponentially as you increase your collectiveYour success in an account will increase exponentially as you increase your collective knowledge, relationships and economic value. Remember, a strategic account is an extremely valuable asset and must be managed accordingly.4. Prioritizing your loyalty building activity• Where are you today?• Where do you need to go?• What needs to happen to get there?www.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.Loyalty Indicators | 11
  • 12. Summary of Lessons Learned:“An ounce ofloyalty is1. Emotional DependenceSeven Indicators of Extreme Customer Loyalty“worth apound ofcleverness2. Structural Dependence3. Business Dependence4. Satisfaction“cleverness.Elbert Hubbard4. Satisfaction5. Performance6. Economic Value Proposition7. Alignment/Fitwww.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.Loyalty Indicators | 12
  • 13. imagine great people™imagine great peopleC Gf The Chapman GroupProfiles International – Who We AreProfiles International helps organizations worldwide create high‐performing workforces. The Chapman Group helps organizations optimize field sales performance.  Through our comprehensive employment assessments and innovative talent management solutions, our clients gain a competitive d b l h h l dOur core competencies include:• Strategic Account Management• Sales Training and Management Coachingladvantage by selecting the right people and managing them to their full potential.• Account Loyalty Assessments• Metric‐based sales performance and diagnostic software toolsContact UsProfiles InternationalContact UsThe Chapman Grouphapmanhq omwww profilesinternational com www.chapmanhq.comwww.profilesinternational.comwww.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.Loyalty Indicators | 13
  • 14. About Profiles InternationalProducts of InterestAbout Profiles InternationalLoyaltyPro™ is a web‐based customer loyalty surveying tool Loyalty as determined through theLoyaltyPro  is a web‐based customer loyalty surveying tool. Loyalty, as determined through the “voice of the customer”, is a leading indicator that predicts the “staying power” of an account. LoyaltyPro™  offers companies a tool to gather ongoing , critical account intelligence that helps to assess the relationship between the buyer and the supplier, ultimately driving customer improvement action plans. Having insight into your customer’s perception of your relationship allows you to steer strategic business efforts and initiatives of the account team to continually improve customer relationships and build a network of loyal customersrelationships and build a network of loyal customers.Customer Service Profile (CSP) – measures key characteristics of exceptional customer service. How much easier is it to drive performance when the people  engaging the customer on a daily basis are all on the same page? The CSP looks at what our current and future employees believe is a high level of customer service, while at the same time showing us where they align (or not) with our company’s perspective.www.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.Loyalty Indicators | 14
  • 15. About Profiles InternationalAdditional Reports from Profiles Research InstituteAbout Profiles InternationalAmerica’s Most Productive CompaniesIn economics, “productivity” is a measure of output per unit of input. For purposes of this study, we defined labor productivity in terms of revenue produced per full‐time employee. Calculating this required us to analyze financial data from over 1,600 publicly traded companies that we then organized into over 175 sub‐industry groups.We then identified the companies that ranked highest in each category and took a closer look at the practices that enable them to out‐produce their peers. By understanding these practices, we hope to educate ourselves and our clients about the practices that can help them run more efficiently and become more competitive in the marketplace.5 Critical Management Derailers: Symptoms and RemediesWhy do front‐line managers fail and what can be done to avoid failure? We polled our experts to identify our top five most common management derailers. They are:1. Poor interpersonal and communication skills2. Inadequate leadership skills3. Resistance to change4. Inability to deliver expected results5 Inability to see beyond their functional silo5. Inability to see beyond their functional siloThis report elaborates on these five issues and offers some common sense advice for helping your managers avoid them.www.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.Loyalty Indicators | 15
  • 16. About Profiles InternationalAdditional Reports from Profiles Research InstituteAbout Profiles InternationalSelection Strategies for Re‐organization, Re‐deployment and Recovery: Comprehensive Report of FindingsProfiles International researchers conducted a comprehensive review of organizational design and talent management practices to identify over 50 “best practices” in the context of organizational restructuring. Wemanagement practices to identify over 50  best practices  in the context of organizational restructuring. We then asked several experts to rank order their top 20 best practices from this list. From this, we determined our “Top 10” best practices list.Selection Strategies for Re‐organization, Re‐deployment and Recovery: C‐level vs. Non‐C‐level Comparison ReportProfiles International researchers conducted a comprehensive review of organizational design and talent management practices to identify over 50 “best practices” in the context of organizational restructuring. We then asked several experts to rank order their top 20 best practices from this list. From this, we determined our “Top 10” best practices list.  From these “Top 10” best practices we designed a brief 10‐question survey to poll our clients on how well they believed their organizations followed these practices and how well they would be prepared for a major re‐organization and re‐deployment event. Nearly 800 people (over 30% in companies with over 500 employees;  50% of participants had Director‐level roles or higher) participated in p p y p p g ) p pthe study.Our findings highlight some considerable differences between the perspective of C‐suite and non C‐suite participants on nearly every dimension we measured. This heightens concerns that the C‐suite may be out of touch with what is actually happening on the front lines as it relates to re‐organizing and re‐deploying talent in the midst of change. www.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.Loyalty Indicators | 16
  • 17. About Profiles InternationalAdditional Reports from Profiles Research InstituteAbout Profiles InternationalFour Essential Tactics for Optimizing Organizational Talent Now more than ever you have the opportunity to optimize your organizational talent. While cost cutting may be inevitable, it’s important to avoid some of the common traps that will put you at a disadvantage when the economy turns around. The bottom line is that you need to know your human capital inventory well enough to make the best decision. Our researchers have identified four essential tactics to optimize your organizational talent.  These are: 1. Remove your chronic underperformers2. Remove your bad apples3. Uncover your hidden gems4 N t h t f hi h lit t id hi4. Never stop your hunt for high‐quality outside hiresThis paper elaborates on these four essential tactics.5 Lessons for Upgrading Talent with Outside SuperstarsThe supply of talented individuals, many of whom were cultivated and trained by some of the world’s most innovative and productive companies, has never been so plentiful or affordable.  Throughout the last 20 years we have learned from our clients’ experiences, and we have summarized five key lessons to help optimize the upgrading process:1. Identify your current and future internal stars first.2 Align your hiring decisions with your need for current and future talent2. Align your hiring decisions with your need for current and future talent.3. Temper your expectations; high performance isn’t always portable.4. Don’t let eagerness short circuit your selection process.5. Underpromise and overdeliverThe report drills deeper into each lesson to guide you through the talent upgrade process and help you avoid common mistakes.www.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.Loyalty Indicators | 17
  • 18. imagine great people™imagine great peoplewww.profilesinternational.comProfiles International – Contact Usp(800) 960‐9612 (254) 751‐1644www.profilesinternational.com©2009 Profiles International, Inc. All rights reserved.Loyalty Indicators | 18

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