The aim of any business is to maximize its profits. Therefore, it must strive to ensure that it attracts as many customers as possible and get them to buy its goods and services. However, the continued success of the business is determined by how well it succeeds in managing relationships and building loyalty from its customers.
Inspiring Customer Loyalty
Customer loyalty is something that develops over time and which is affected by a host of factors. A customer will want to remain loyal if an entity treats them well and meets their needs. The decision by an individual to continually patronize a particular brand or business is down to the relationship that has been created and maintained with the business (Cook, 2016). It is a product of many actions and initiatives on the part of the organization which are meant to give the customer an exceptional experience. One of the most important determinants of customer loyalty is the way in which the organization responds to customer complaints (Frisk & John, 2013). Customers are likely to stick to the business if that is done in a professional manner and in a way that the shows customers that they are valued and highly regarded by the business.
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The aim of any business is to grow its customer base and to continue generating more sales. Therefore, it is common to see businesses focusing on initiatives to acquire new customers. However, some entities fail to realize that retaining existing customers may be more valuable that acquiring new ones. Research has shown that keeping 5% of customers is likely to increase profits by anything from 25% to 95% (Cook, 2016). There is value in keeping customers coming back to the business. It has been shown that those who remain loyal are likely to spend more each time, and that means increased earnings for the organizations. As a business that is keen on keeping its customers, it is important to keep track of churn rate which tracks how fast the entity loses customers. An organization with high churn rate should be concerned as that would imply that it is losing valuable customers and missing out on cashing on its patrons.
The Loyalty Wheel
Maintaining customer loyalty is a continuous undertaking that requires continuous cultivation. The loyalty wheel represents the different facets of the business that need to be addressed to ensure satisfied customer (Hoffman, 2016). The wheel can have three parts representing the sequential steps to be taken to fulfill the needs of customers and inspire loyalty. The first involves the business building a foundation of loyalty. The entity can take several actions under this including segmenting the market and delivering quality service to all its customers (Sucky, 2014). The leadership of the firm must entrench a culture of quality service and set high standards with which it will be treating its customers.
Having laid the standard for the services that the firm will provide, the firm then moves to start creating bonds of loyalty with customers. The aim is to build higher level bonds that build on the already- existing connections created between the business and the customers (Hoffman, 2016). The management must be driven by the need to deepen the relationships that it has with its customers on a continued basis, focusing on the need to create new ways of engagement and channels of value with the customers. One of the ways to do that is to award loyalty points to customers (Lamb & Hair, 2012). Such an undertaking is commonplace in the service sector such as supermarkets and hotels. Customers should be given the option of redeeming the loyalty points for tangible goods and services, which will open the door for them to want to grow their loyalty to the business even further.
As earlier noted, losing customers should be a concern for the business. Therefore, the third aspect of the loyalty wheel is reducing the rate of churn among the entity’s customers. First, the business would need to conduct a thorough churn diagnostic exercise to understand the nature and extent as well as the causes of churn (Verma, 2012). After the diagnostics, the firm then needs to address the key aspects seen to drive the churn (Moahana Rao, 2011). The information gathered should be used to inform the policy actions to be put in place to ensure that the firm stops bleeding customers. One of the actions that the entity can do is to implement complaint handling and service recovery (Sucky, 2014). It is highly likely that the customers who leave the business have made complaints before and which were not addressed to their liking. It would be important for the company to address any issues raised and conduct the necessary follow up to ensure that they are resolved.
Customers as Value
The underlying goal for any business would be to increase the number of people that it serves. However, it would be more sensible to consider the quality of the customers attracted and retained as opposed to just the quantity (Peppers & Kotler, 2017). Actions that involve targeting customers for their value as opposed to mere numbers is something are in line with steps taken to retain customers in the business. The business should focus on things such as upselling to increase the average spending by customers and maximize firm- level revenue (Peppers & Kotler, 2017). It would be important to treat the customers in the best way possible to ensure that they will want to keep coming back to the business.
Testing Customer Satisfaction
Any business would like to know whether what it does satisfies its customers. However, ascertaining whether customers are satisfied may prove harder than it might sound (Verma, 2012). There is no single standard way of doing that. One of the things to do in this regard is to develop an environment that allows for more open conversations between the customers and the business (Pride, Hughes & Kapoor, 2014). Enhancing the engagement with customers would make it possible for them to air out any concerns that they may have. However, having open communication would mean that it would mean that customers would me more inclined to give hints on their service experiences, and that information would be useful in enhancing the way that the organization serves its customers.
Deepening the Relationship and Customer Rewards
The goal of any business is to enhance the relationship that it has with its customers. Therefore, that implies the need to continually work on the relationship, and that the undertaking is not just a one- off. One of the ways of deepening the relationship is to ensure that the business rewards customer loyalty (Pride, Hughes & Kapoor, 2014). For example, the business may award non- financial points to its customers that may be redeemed for financial rewards such as cash and merchandise.
Reducing Customer Defection
Churn is a concern for any business. The first step for a business that realizes that it is hemorrhaging customers would be to stop the exodus even before thinking about gaining more customers (Raynor, 2014). One of the things that keep customers away from the business is service mistakes that may occur in the course of the interaction with the business. Some of the possible mistakes include service staffs who do not understand what is expected of them (Pride, Hughes & Kapoor, 2014). Apart from that, a key source of dissatisfaction is billing mistakes. Incidences where customers are asked to pay erroneous amounts could lead to discontent as they would feel that they are not valued enough by the business.
Service Encounter Failures
Failures in service delivery can have devastating effects on the ability of the business to generate revenues and retain customers. One cause of the failures is unresponsiveness on the part of the business or its staff (Rai, 2013). When interacting with a firm, a customer expects that the business will be open and responsive to any issue raised in good time. Secondly, customers may have a less than pleasant service experience as a result of dealing with unknowledgeable staff, and that makes it necessary to properly train employees so that they can handle all the customer needs in the best way possible (Rai, 2013). Apart from that, how the company responds to service failures is also a crucial determinant of how well the business manages to keep its customers. For example, Toyota has faced car recalls over the years following various defects on some of its models (Cook, 2016). In most of the cases, the company has been criticized for its half- hearted approach in dealing with such issues.
Value Proposition
It is important for a business to identify its value proposition. It could be in the form of pricing, superior service offering, or exceptional customer service (Raynor, 2014). The entity should also look into ways of reducing customer complaints. One of the ways to do that is by training employees on the ways in which they are supposed to treat customers and deal with any issues that may arise (Weinstein, 2012). Secondly, the business should engage customers as much as possible to find out what they would want to get from the business and then implement it (Raynor, 2014). The business should also come up with a service recovery process which would allow it to redeem itself after service failures and to enable it to continue serving customers as it ought to be doing.
The success of a business is highly dependent on its ability to build relationships and building loyalty from its customers. An entity must carry out a raft of activities that are meant to attract and retain customers to its business. Apart from that, it must also offer value propositions to its customers and strive to ensure that customers are satisfied.
References
Cook, S. (2016). Leading the Customer Experience: Inspirational Service Leadership : New York: Routledge.
Frisk, R., & John, J. (2013). Services Marketing Interactive Approach Boston: Cengage Learning.
Hoffman, K. (2016). Services Marketing: Concepts, Strategies, & Cases . Boston: Cengage Learning.
Lamb, C., & Hair, J. (2012). Essentials of marketing Mason, Ohio: South-Western Cengage Learning.
Moahana Rao, K. (2011). Services marketing New Delhi: Pearson.
Peppers, D., & Kotler, P. (2017). Managing customer experience and relationships Hoboken: John Wiley & Sons.
Pride, W., Hughes, R., & Kapoor, J. (2014). Business Boston: South-Western Cengage Learning.
Rai, A. (2013). Customer relationship management New Delhi: PHI Learning.
Raynor, M. (2014). The three rules [Kennett Square, Pa.]: Sound view Executive Book Summaries.
Sucky, E. (2014). Mobility in a globalized world 2013 Bamberg: Univ. of Bamberg Press.
Verma, H. (2012). Services marketing New Delhi: Pearson Education.
Weinstein, A. (2012). Superior customer value Boca Raton, Fla.: CRC Press.
