27/09/10

By John Rosling, UK CEO of Shirlaws

"Here is a simple but powerful rule - always give people more than they expect to get." Nelson Boswell

"There's a place in the world for any business that takes care of its customers--after the sale." Harvey MacKay

Business is about establishing relationships with customers, staff and channel partners. Do this well and you can grow your business effortlessly.

I’ve already talked a lot in these articles about relationships in business; with your key team and staff, your customers and your distribution partners. In this article I want to look specifically at driving energy into these relationships — and I’ll focus on customer relationships primarily.

Business is, after all, about establishing relationships and managing those so they are mutually beneficial to both you and your customers. For a start, every company should be monitoring customer satisfaction as an on-going business function. If your surveys show there is dissatisfaction or if you are losing business to your competitors then look first at the type of service you are providing.

Managing the “expectations” of your client base is key to developing robust enduring relationships. One way of explaining this is to look at your current contact with customers in one of three categories: ‘up’, where you are exceeding customer expectations; ‘neutral’, where you are meeting expectations; or ‘down’, where you are failing to meet expectations. In the diagram below the red arrows indicate the likely outcomes when you meet, exceed or fail to meet your clients expectations.

We find the majority of customer relationships in companies are either operating in the down or neutral position. But by fully implementing a customer service strategy that is focused on putting client relationships in the up position - that is continually exceeding expectations - you will increase sales and create a positive differentiator between yourselves and the competition.

Creating a “client for life”

In developing such a strategy it helps to understand a bit about how a customer buys. Our research shows that if you can get a new customer to buy from you once, then the probability of them buying from you again increases with each purchase. After the first successful purchase, there is a 50 % chance of them buying again from you rather than choosing someone else. This increases to 70% with the second purchase, 85% with the third and if you can supply four separate services you have a “client for life” with a 95% chance they’ll keep buying from you.

So, we say that you should be aiming for four satisfactory ‘touches’ with each customer, or four opportunities to develop an ongoing relationship.

Controlling that relationship requires understanding and managing the customer’s expectation (standard service) and then looking at ways in which you can exceed that expectation (extra service).

Your first step is to plan a strategy where you agree exactly what you are prepared to offer as the standard service and then develop an ongoing programme of ‘extras’ to make your customers appreciate you and build loyalty. Extras don’t have to be expensive but should be something personal and that your customer will value. Indeed they can be free — actively looking for business to introduce to your clients from your own network can create huge loyalty (see previous Article). Or simply asking your clients about their business and listening to them with no expectation of making a sale.

As we covered in the previous Article, for most businesses, you should segment your customer base to recognize and put resources into the highest value or highest potential category of clients. Most importantly, you then have to ensure that your customer understands when you are giving him something over and above your standard service level.

The “Extras Trap”

The trap many businesses fall into is to over-service clients, so that eventually their expectation of standard service includes that added level of service. Once an activity becomes an expectation, it is perceived as part of your standard service. If, for example you, tell your customer that because of their loyalty you are giving them a three day delivery time instead of five, then eventually the three day service becomes standard rather than extra. Then you have to give them something else to maintain that loyalty building effect and make them feel special. This obviously has implications for your costs.

If you are giving your customer something over and above your standard offering, whether that is additional time, if you are a consultant; a value-add gift; a discount; or a quicker delivery time, you need to let your client know that is what he is getting — a special recognition of his loyalty to you.

For example, if for the past three years you have been taking your key clients to an important rugby match, then they will be expecting to go in year four. Your expensive extra has become a standard. And what is worse, if you then stop inviting them you’ve created down energy!

By creating an element of excitement about the extra activity you create more energy in the relationship and make every promotion really work in the process of building customer loyalty. This means you have to be more creative in thinking about ways to make your customers feel special and ensure your customer service strategy accommodates the need to continually update your offering. It also means you need to consider how to build the cost of developing new value-added offers on an on-going basis into your budgets.

Show you care

Exactly the same principles apply in staff relationships. A strategy of extras should be part of the culture you build in your business. As part of culture it requires effort and above all consistency but it will reward you with a loyal and productive team — and a more fun place to work.

Again, extras don’t have to be expensive but you do need to think the implications through; a client of ours baked a cake for each staff member on their birthday which was a lovely thought when she had a staff of 12 but became a nightmare as the business quickly grew.

Your extras should be creative and surprising. We work with a successful business that had a problem when the directors’ Bonuses became a standard. It was costing the business a lot of money but creating little up energy. The solution was, one year, to pay the Bonus to the directors spouse or partner by cheque with a letter singing the praises of the director and requiring the cheque to be spent within 3 months on something the director would really appreciate. It created a lot of energy and fun!

TOP TIPS

- Develop a customer service strategy that is focused on putting client relationships in the up position

- Aim for four satisfactory ‘touches’ with each customer

- Ensure that your customer really understands when you are giving him an “extra”. Beware! Once an extra becomes an expectation, it is perceived as part of your standard service

- Have an extra strategy for your staff as part of your culture.

Shirlaws is an international business coaching firm that specialises in helping businesses to grow, no matter what stage of development they are at. Founded in Australia in 1999, it has since grown to have bases in Europe, North America, New Zealand and the UAE servicing approximately 600 clients.

We work alongside entrepreneurs and business owners to drive both commercial and cultural change, enabling our clients to experience:

• increased revenues and profits;

• improved business culture and personal lifestyle; and

• a sustainable business that is less reliant on key stakeholders.

www.shirlawsonline.com

shirlawsuk@shirlawscoaching.com

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