Customer Loyalty Tied to Engagement

January 10, 2011 at 2:09 pm 1 comment

by Rob Wolfe – Connected Places Global

“2011 may well be called the year of customer loyalty,” says Mark Johnson, CEO of Loyalty 360 – The Loyalty Marketer’s Association.  “In today’s crowded marketplace, creating loyal, engaged customers is more important —- and more challenging — than ever.  That is why we are going to see a number of key trends unfold over the next year.”

Johnson predicts 11 key trends will dominate the Loyalty Marketing Industry in 2011 . I’ve highlighted three that focus specifically on customer engagement:

Companies will increasingly look at how customer engagement and employee engagement work together to drive bottom line results.  A 2009 Gallup quantified the impact of customer and employee engagement.  They found that those in the upper half on customer engagement and the lower half on employee engagement, or vice versa, get a 70% boost in bottom-line results; those in the upper half on both customer and employee engagement get a 240% boost.

Relevancy will be a key driving force of customer loyalty, engagement. Today’s customers want loyalty programs to be “about me” — individual, relevant, meaningful, etc. Personally relevant deals are the second most frequently chosen reason for spending more with a company, mentioned by 48% of people, according to new research by Ipsos Mori and The Logic Group. Data collection and usage is extremely important in building relevancy.  Brands need to use the information they collect strategically to show customers they’re listening and give them what they’re asking for.

Goal of customer loyalty initiatives will be to engage customers. Marketers now realize that although spend and number of transactions are important, customer engagement is the holy grail for loyalty initiatives. Because with engagement comes loyalty, advocacy, trust, passion —- the soft side of the customer relationships that directly impacts the bottom line.

Knowing why your audience cares is as important as knowing what they care about, feels Erica Friedman, President of Yurikon LLC in New York, creator of “Microniche Marketing” (TM), a process that harnesses social media by finding your audience – engaging your audience – rewarding your market , and author of SocialOptimized. “Be the resource for info and perspective in your field,” she says.

In another recent article, Mike Cholak, consulting practice executive at Convergys, provides his Top Ten Customer Engagement Tips for 2011.

“What we’ve learned about delivering a superior customer experience in the past year is well worth building upon in the coming year,” says Cholak.  “Here are ten tips gleaned from our proprietary research on the customer experience, and our customer management work with Fortune 500 companies in the communications, technology, banking and financial services, retail and e-commerce, and health care industries.”

#1:  Focus on the quality of your customer service and the quality of your product or offering.  Don’t let price be your key/only differentiator.
Despite recessionary financial constraints, consumer emphasis on price has decreased since 2008 and 2009. Consumers indicate an increased desire for value: they want the best possible combination of product and service at the “right” price.

#2:  Listen to the voice of the customer and amplify it throughout your organization. Your employees need to be as sensitive to the current state of service as are your customers.
77% of customers say that in the past year the quality of customer service provided by companies has stayed the same or gotten worse, while 50% of employees at those companies providing the experience think service has improved.

#3:  Communicate the ease and accessibility of reaching live agents in channels of the customer’s choosing, and prepare and empower your employees to provide first-contact resolution.
62% of customers who said it was “hard” to deal with a company said it was because their issue was not resolved the first time they contacted them for service. 43% also said they found it difficult to reach a service representative.

#4:   If great service is a focus don’t give in to temptations to cut, cut and cut costs. Service is an investment in your company and customers.
Customer service employees reported an 8% decline in their preparedness to deliver the right customer service experience. Most notably, employees were 11% less likely to say they had the necessary tools to solve customer’s issues, compared to results captured in 2009.

In response to the recession, most organizations have reduced their investment in their customer care operations, as reported both by executives and employees. Customers express a correlated sense of decline in service in the form of:  more bad experiences, fewer resolutions, and registering greater defection rates.  The adage of “penny wise, but pound foolish” is very relevant here – customers are placing significantly more emphasis on customer care.  If care erodes so too does a company’s customer base; the two are more linked now than ever before.  Companies looking to strategically cut costs should think twice before making across-the-board investment reductions in their customer care operations, along with their service representatives and the tools and systems that support them.

#5:  Make sure you are listening to all the contact channels you’ve deployed or “intended” to support.
Two-thirds (66%) of customers are taking the initiative to contact a company after a bad experience, effectively seeking a resolution before they decide whether or not to take their business elsewhere. Today’s consumer has become more vocal (58% reported their bad experience in 2009) as they feel greater empowerment and duress from the economy. The vast majority (71%) are contacting live agents on the phone or in-person, but a meaningful 23% are using email and text messaging to vent. And, customers using indirect channels expect a response as much as those who call, and are just as likely to defect if they don’t get a response and/or resolution of their issue. This is no small issue, as 20% of the customers who reported their bad experience said they did not even get a response from the company. Ultimately, 57% of them decided to take their business elsewhere.  Not responding, or slowly responding to these channels can be especially disruptive.  Every channel matters and needs tightly defined resolution processes; the customers who use these channels have high expectations on the offered channels being useful, effective, and closed looped.

#6:  Aggressively promote the fact that you want feedback. You want to know when you get it wrong. And, make it easy for customers to contact you and get immediate access to empowered and empathetic agents.
41% of customers who did not bother to report their bad experience (34% defected without saying a word) said they did not bother because there was no convenient way to report it to the offending company.

#7:  Listen to and engage customers on social media.
80% of customers who had a bad experience took their story to the court of public opinion, and 12% used social media to amplify their voice. On average, an individual using social media reached 45 people with their individual tweets or postings. And, for those customers who could recall reading about a friend or colleague’s bad experience, 62% said they avoided doing business with or stopped doing business with that company.  Social media will play a greater role in customer care as the Millennial generation and those who follow it increasingly gravitate to this communication medium to create communities, share their experiences, and express their opinions.

#8:  Avoid the temptation to put too many eggs in the self-service basket.
Self-service certainly has its time and place, but when issues are complex or frustrating, customers want (and demand) access to live agents. In fact, preference for live web chat has grown 33% in the last year, and preference for email by 50%.

#9:  Use proactive communication to get the conversation started with (transferred to) an agent.
100% of customers said it is appropriate for a company they do business with to proactively contact them. However, companies must be sensitive to the reasons and channels they employ, as the vast majority of customers are not open to anything and everything. Companies can manage both the customer experience and call volumes by controlling what types of messages go out to whom, and when, and prompting customers to call.

#10:  Invest in the experience and don’t lose customers, because you likely won’t ever get them back.
Only 16% of customers who left a company after a bad experience said they would be willing to do business with that company again if some effort were made to win them back. Don’t burn the bridge by not providing the best agent-based experiences, and don’t focus so much on diverting your customers from agents that you damage the relationship.  Millennials are the most forgiving (40% willing to reconsider), while Gen-Xers (16%) present some opportunity and offended Boomers (4%) and Seniors (2%) are nearly impossible to sway and incentivize.

In a recent LinkedIn discussion on the issue of engagement in 2011, I received some insightful responses. “I’m with Mike Cholak…on the need to communicate,” commented Sharon Bailly, Owner at TWP Marketing and Technical Communications in New Hampshire. “The methods–a printed brochure or a Facebook game, a cold call or a Tweet–will change with the times but the goal is always the same: to listen for and respond to the customer’s need. Communciation with customers is what I stress in my own blog about marketing and technical writing. Too many companies think they are communicating with the client when they are merely knee deep in a monologue about how wonderful their company is.” Margie Clayman, Director of Client Development at Clayman Advertising Inc.  in Akron, Ohio says, “I think a lot of companies are going to confuse being ‘present’ with being engaged and interactive, and that is going to be a potential nightmare. Having a Twitter account and saying “I hear you” is not the same as having a Twitter account and saying, “Let’s fix this now.” That’s what customers are going to be expecting more and more.”

Which of Mike’s customer engagement tips do you feel is the most relevant as we enter 2011?

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Entry filed under: BUSINESS BEST PRACTICES, CLIENT EXPERIENCE / LOYALTY, ENTREPRENEURSHIP, MARKETING STRATEGY, SOCIAL MEDIA. Tags: , , , , .

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