How to Keep Your Customers

Customer: “May I have a glass of water, please?”

Waiter: “Sorry, that’s not my table.”

Citizen: “Am I in the right lane to get a license plate?”

Government Employee: “I’m at lunch.”

Passenger: “Where is Gate 23B?”

Flight Attendant: “Ask someone else. I’m off duty.”

Patient: “Why doesn’t someone answer the telephone?”

Clinic Employee: “It ain’t my phone.”

Ignored Customer: “Does anybody work here?”

Auto dealership mechanic: “What’s wrong with you?”

You don’t have to be a customer very long to find out that such incidents are much too common. All five of the above happened to me within the past year. While no business is ever totally immune to such embarrassments, when they occur with regularity, you can be sure that the business at best isn’t customer driven and at worst may be a ready candidate for bankruptcy.

A number of research studies in recent years are coming to one inescapable conclusion. The single greatest key to long term profitability and success in today’s economy is to take very special care of your customers. Here are some findings from various studies that I believe you will find most interesting.

A typical business hears from only 4 percent of its dissatisfied customers. The other 96 percent just quietly go away and 91 percetn of them will never come back. That represents a serious financial loss for companies whose people don’t know how to treat customers, and a tremendous gain for those that do.

A survey on “Why customers quit” found the following:

3 percent move away

5 percent develop other friendships

9 percent leave for competitive reasons

14 percent are dissatisfied with the product

68 percent quit because of an attitude of indifference toward the customer by the owner, manager or some employee.

On average, a typical dissatisfied customer will tell 8 to 10 people about his problem. One in five will tell 20. It takes 12 positive service incidents to make up for one negative incident.

Seven out of 10 complaining customers will do business with you again if you resolve the complaint in their favor. If you resolve it on the spot, 95 percent will do business with you again. On average, a satisfied customer will tell five people about the problem and how it was satisfactorily resolved.

The average business spends six times more to attract new customers than it does to keep old ones. Yet, customer loyalty is in most cases worth 10 times the price of a single purchase.

Businesses having low service quality average only a 1 percent return on sales and lose market share at the rate of 2 percent per year. Businesses with high service quality average a 12 percent return on sales, gain market share at the rate of 6 percent per year and charge significantly higher prices.

Simply put, as our economy becomes more service-driven, the key to success is to become customer-driven. Yet, while the rewards of providing great service are at an all time high, so are the number of customer complaints. Relatively few businesses are adept at providing high quality service and thus all of us are frustrated fed-up customers.

Like all problems in life, the problem of providing high quality service is a disguised opportunity with huge payoffs for those companies, managers and salespersons willing to invest the time, money and effort to deliver it on an ongoing basis. For the past several years, I have been researching, writing, consulting and conducting seminars on what it takes to build and sustain a great reputation for customer service.

What I found is this: companies, managers and salespersons with great service reputations focus their efforts on making the customer feel rewarded because it’s the rewarded customer who buys, tells others and comes back to buy again and again. they are smart enough to realize that a rewarded customer is their greatest asset because without him they’re out of business.

The more your customers feel rewarded, the fewer of them will leave for greener pastures. So if you want to improve the quality of service where you work, here are several key strategies:

1. Treat your customers like lifetime partners.

How would you treat a customer if you knew that:

You would see him every workday for the rest of your life.

He would visit you at work every day.

At the end of each visit, he would decide to buy something from you or one of your competitors.

Chances are you would treat this customer extremely well because he has the potential to be a real gold mine or a tremendous waste of time. For example, you would make an extra effort to listen to him carefully and find out what his wants and needs are. You would focus on helping him buy what’s right for him rather than fast-talking him into buying what you have in stock. You would do whatever was possible to make sure you didn’t disappoint him or make him angry. And you would want to regularly ask him what I call the platinum questions: “How are we doing?” and “How can we get better?” Well, that’s precisely how you should strive to treat every customer. Even if your product or service is one that people buy only once in a lifetime, your efforts will be rewarded.

Great service makes for great word-of-mouth advertising. No, you’re never going to make every customer, or maybe any customer, a lifetime partner. But that’s not the point. The point is that by striving to treat them this way, you’ll have them buying, multiplying and coming back in large numbers simply because your service is so great.

2. Look at your business through your customer’s eyes.

Just as beauty lies in the eye of the beholder, service quality lies in the eye of the customer. The final judge of service quality is the customer’s perception – no more, no less. Smart salespersons and executives make it a regular practice to see, hear, smell, taste and feel what their customers experience whenever they have contact with the business. At T.G.I. Friday’s restaurants, each manager must periodically sit in every chair of his or her restaurant and view it through the customer’s eyes. Other companies, such as The Southland Corporation, employ mystery shoppers to check for store image, merchandise and service. Still other companies regularly ask customers to rate them on factors such as reliability, responsiveness and cordiality. And they use this information as a basis for setting goals to improve service quality. When it comes to service quality, the customer’s perception is everything. Find out what it is, learn how to measure it and use it as a basis for improvement.

3. Deliver more than you promise.

Here’s a very important principle to remember. Perceived service quality is the difference between what the customer expects and what he gets. Every customer or prospect you encounter has certain expectations about the quality of the goods, services and the total experience of dealing with your business. When you exceed his expectations he perceives the quality as relatively high. When you fail to meet his expectations he perceives the quality as relatively low. In the back of every customer’s brain is a scale that compares what he expects with what he gets. And the more it comes up on the plus side, the greater will be your perceived quality of customer service.

The surest way to make customers fall in love with your business, come back for more and tell others how wonderful you are is to practice the “and then some” principle. Your products do all that you said they would do and then some. Your service is as prompt, reliable and courteous as you promised it would be – and then some. If the customer needs help after the sale, you provide that help – and then some. It’s the willingness to go that extra mile that separates the true champions from the also-rans. As former IBM vice-president, Buck Rodgers put it, “It’s what you offer over and above the basic product and how you perform that builds a solid business.”

Similarly, beware of overpromising and building unrealistic expectations. The higher you build customer expectations, the harder it becomes to meet and exceed them. You run the high risk of customers feeling shortchanged, not coming back, and telling others. If you think you can finish the job in three days, promise it in five. If you have to give the customer an estimated cost, it’s better to err on the high side and pleasantly surprise him later. Richard Thalheimer, president of the Sharper Image, said it best: “People expect a certain reaction from a business and when you pleasantly exceed those expectations, you’ve somehow passed an important psychological threshold.

4. Focus everyone’s efforts on rewarding the customer.

Begin by asking everyone where you work to briefly answer the following question: “What results do I (we) produce and how do they benefit the customer?” Everyone from the CEO, to the salesperson, to the janitor needs to answer this question. Then, ask each person or group to set specific, measurable service quality goals, complete with deadlines.

Another good exercise for noncustomer contact employees is to have them answer this question: “Who are my internal customers?” Or to phrase it another way, “How do I serve those who serve the customer?” For example, in a restaurant, the cook’s internal customer is the waiter. A sales manager’s internal customers are his/her sales force. Answering this question bring home a crucial message to everyone: If you aren’t taking direct care of the customer, your job is to take care of someone who is.

5. Carefully select and heavily train your customer contact employees in the art of delivering quality customer service.

Companies that believe they can improve service by sending their front-line people to shallow, one-shop training programs that tell employees to smile and be nice to the customer are sadly mistaken. If your people don’t have the social skills to be nice, they shouldn’t be in a front-line job in the first place. Carefully screen potential front-line employees for social skills. To the customer, front-line employees are the company.

As for training, one of my favorite proverbs is, “If you think education is expensive, try ignorance.” We can only speculate how many billions of dollars change hands every day simply because front-line sales and service people haven’t been trained in how to help customers solve their problems and make them feel appreciated and wanted. While it’s important to stress being nice to customers, good training gives front-line employees a whole lot more than that. A good, initial program will give new or untrained employees:

1. Specific information on your company’s service goals.

2. Information that they need to know about your company’s products and service and how they benefit the customer.

3. A basic understanding of what it takes to win and keep customers.

4. Problem-solving ideas and techniques for identifying and managing the moments of truth (incidents of customer contact) in their jobs.

Furthermore, for training to be effective, it has to be followed up with spaced repetition and on-the-job applications. Books, workbooks, newsletters, payroll inserts, guest speakers, audio and video cassettes are all valuable aids for hammering home the quality service message. Companies that provide excellent service make customer service training an integral and on-going part of every employee’s job.

6. Reward everyone for rewarding the customer.

It’s great to talk about how important customers are and how it’s everybody’s job to do whatever it takes to win and keep them. But unless management creates a reward system that rewards employees for providing great service, you may as well forget it. Employees, like customers, do what gets rewarded.

For example, in 1985, Bud Mixon improved the service quality of his tire stores by making each store’s employees the following offer: “For every week that I get no customer complaints, everyone gets a dollar an hour more for the week.” Complaints dropped drastically. Similarly, The Sheraton St. Louis Hotel has improved its service quality through the use of praising coupons. Every new guest receives a booklet of praising coupons with the following instructions: “When you see any of our hotel staff doing something right or treating you well, would you get their name and present them with a praising coupon or turn it in to the front desk?” Employees redeem coupons for points that can be turned in to cash prizes, sports tickets, clock radios and other symbols of recognition for outstanding service. The system has worked so well that the hotel has started using “back-of-the-house” praising coupons. Whenever a front-line employee such as a waiter, gets outstanding help from a nonfront line employee, such as a cook, the waiter gives the cook a coupon for helping him serve the customer.

Perhaps the best way to sum it all up is this: Rewarding the customer is everyone’s job. Rewarding those who reward the customer is management’s job. I call such a plan the triple-win reward system because when it’s properly carried out, the customer, the company and the employees all win. And isn’t that what good business is all about.