How to get your customers to Love your brand

Customer loyalty is of extreme importance to any firm.  Many firms find that their ‘loyal’ customers often defect to competition.  Yet we find that there are organizations and entities that have ‘customers’ who are loyal to the extent that they love them, will never leave them and will be willing to pay more money for the same product/service.   Usually we find these types of ‘customers’ in sports, music, and charities.  For example, when have we heard of fans giving up support for the Celtics or Manchester United, just because they didn’t win the trophy?  Or when have you heard of people flocking to the music stores to buy a particular music album just because it’s on sale.  People will only buy music they love, not because it offers more points, is cheaper, or just because it was conveniently available.  Similarly, most people who donate money to a charity usually do so because they feel emotionally attached to it.  Many people support Save the Children, or Greenpeace, because they feel strongly about what these organizations are doing.

The problem is that these entities don’t fall in the ‘normal’ category of business.  Can we get customers to love our normal companies, and how do we do it?  After spending nearly four and a half years doing research into this area, I’ve finally found some answers.  The good news is that yes indeed you can get your customers to love you.  These customers are loyal to an ‘extreme’ extent that they feel emotionally attached to your brand / company.  They will never search for alternatives (unless if you don’t offer what they’re after).  These customers will not only spread good word of mouth, but go out of their way to tell others.  Moreover, these guys will be willing to pay more to receive the same service / product that you have to offer them!  In fact, I’ve found that these customers are willing to spend up to 20% more money.  Overall, they are between 20 to 50 percent more profitable than other types of ‘loyal’ customers.

Hence, the million dollar question is, how to get customer to love you?  The following are some steps which may help in achieving this.

1. Focus on customer delight.  Nearly all the marketing texts you pick up, nearly all the marketing experts have one thing to say, marketing is about customer satisfaction.  However, customer loyalty is about delight, and not satisfaction.  Delight does not necessarily mean that you try to surprise the customer every time.  Instead, often customers will be delighted because you consistently deliver a high quality service!  One of the key differences between customers who just like, and those who love a firm is the level of satisfaction.  Customers that love the brand are extremely satisfied whereas others were only satisfied.
2. Appropriate service recovery.  To err is human.  However, the manner in which we handle a service failure will determine if our customers will hate, like or love us.  The recovery has to be timely, and appropriate to the level of mistake that you’ve committed.  Customers who said they like a company but not enough to love it, were of the view that service recovery was ‘too little, too late’.  Others who loved the company said that the recovery was very quick and much better than what was expected.
3. Don’t compromise on quality.  No matter what your target audience, make sure that you offer the best quality in your product category.  Customers who love their firm always have had a positive perception of the quality.  These customers are of the view that the level of quality at this brand is better than competition.  Even if you sell to the lowest segment in the market, you need to be better than the competition.
4. Never forget the customer.  Customer’s needs are constantly changing.  Companies that are good at winning customer loyalty, always keep in touch with their customers.  They know what their needs are, and how best to satisfy those needs.  These companies can sense the changes in the customer requirements and then quickly act upon them to fulfill the needs.
5. Focus on providing a unique service.  Even if you’re selling products, you need to differentiate yourself.  Best practice firms seem to focus on providing a unique service, instead of merely selling products.  This is a factor that usually gives brands an edge over competition, and also makes customers feel good about the brand as a whole.
6. Focus on the brand image.  Interestingly building a positive image about your brand helps customers not only to be attracted to your firm, but also to feel good about the brand.  A positive brand image is highly crucial in the initial stages of loyalty development.
7. Know which customers are likely to progress to the love phase of loyalty.  These customers need to be nurtured, and made a part of your company.  It is with the help of these customers, will you be able to build a wider base for loyal customers.

Finally, don’t expect results to happen overnight.  My research indicates that for customers to love a company there is usually a specific time frame involved.  This can vary between 30 to 50 transactions or visits.  You need to work hard to build a system in your organization that can cultivate love among the customers.  However, with time this hard work will pay off in terms of greater market share, improved levels of profits, increase in employee morale and a better brand image.

The Experience Revolution!

A number of key events in time have shaped history, and more specifically defined how we do business.   For example the advent of money changed the way how business was done.  Much later the industrial revolution again brought about many changes and brought prosperity to the ‘industrialized’ world.  After WWII the Quality Revolution allowed companies in Japan and Germany to prosper.  Not too long ago, the IT revolution has again changed the way business is done.  Companies like Amazon, Apple, EBay, Facebook, Google and Microsoft have achieved success in very short periods of time, which was unimaginable in the past.  Each new ‘revolution’ has allowed business to achieve greater success, earn more profits, grab bigger market shares, than was possible in the previous era.

With the economy in not too great of a condition companies are looking to find ways of surviving.  Moreover competition from the developing economies is making doing business difficult.  A popular question that I often discuss with my MBA students is how to tackle the challenges posed by developing economies like the BRIC or the N11 nations?  Keeping all of these factors in mind, I believe that the time is rife for a new revolution - an Experience Revolution.

Companies that have adopted Customer Experience Management philosophies, and are implementing it in an appropriate manner are already beginning to prosper.  Some of the best practice examples include companies like Apple, BMW, Disney, Harley Davidson, Ikea, Microsoft, Singapore Airlines, and Zara.  Despite the tough economic conditions these companies are outperforming their competitors.  However, as I work with numerous companies from all across the globe I find that apparently only the larger firms have started to adopt a CEM focus.  The 70 odd per cent of the economy, which is made up of small and medium firms have failed to look at CEM.  Overall this is having a negative impact on our economies.

The two major threats to businesses in the west are posed by the current global financial climate, as well as the threat posed by the low cost competitors from the developing countries.  Both of these problems are somewhat interlinked.  Companies try to survive through the troubled economic times by reducing their costs.  In terms of competing against the developing countries, we simply cannot compete on price.  The low wages, economies of scale, coupled with the availability of cheap raw materials makes it impossible for companies to try to compete on the basis of costs.  Customer Experience Management offers us that extra something which is hard to replicate, and hence will give our companies a competitive edge.

My blog, and my talks at various conferences have focused on CEM implementation by a firm.  However, as I see the number of participants and the number of CEM focused conferences increase, I want to focus on the economy as a whole.  Hence, I think we need not just a handful of companies to adopt CEM, but bring about a revolution where a huge percentage of the companies start to adopt this.

A CEM revolution, however, cannot be brought about without the help of the Government at all levels (State and Federal in the US and Individual country and EU in Europe).  The government needs to promote CEM to the masses.  While I’m not an expert on Public Policy, I would suggest the following steps.

First, the governments need to offer tax incentives for companies that spend money on implementing CEM policies.  This will encourage a larger number of companies to shirt towards CEM.  Moreover, this will also encourage, cash strapped, SMEs to adopt a CEM.

An official Government encouragement will also help the academia (which is usually very slow to react to changes in the business world) to focus on this sector.  It will encourage them to do more research, and consequently offer better training to companies.

Governments can also step in and either create or support CEM awards.  The Malcolm Baldrige National Quality Award (MBNQA) in the US has had a positive effect in encouraging businesses adopt Quality policies.  As a member of the Judging panel on the UK Customer Experience Awards, I’ve seen the number of companies apply grow over the years.  Moreover, the quality of the submissions seems to be improving, which shows that companies are adopting CEM.  However, a government backing will not only enhance the reputation of such awards, but will see a much larger number of companies adopting CEM principles.

Similarly, other measures need to be looked at by the Governments to encourage businesses to adopt CEM policies.  This needs to be done to ensure that we bring about a CEM revolution on a large scale, a scale large enough to have a positive impact on our economies.

For comments, please email me at: o.khan@uel.ac.uk I will try to post all of them on the blog.  (To prevent spammers, I’ve had to take this measure).

The Two Most important things in CEM management

After spending much time and thought into this, I believe I’ve come up with the two most important things that you need to keep in mind for developing and managing great CEM programs.

CEM is a company wide effort

One of the biggest causes of failure, or ineffective CEM programs is that it isn’t implemented throughout the company.  Usually most companies focus on the marketing, sales, customer care, etc departments.  However many of the other people and departments that come into contact with the customer don’t seem to exhibit the same level of CEM enthusiasm as their counterparts.  The result is a dissatisfied customer.  If we map out the exit points, usually it is these places where the customer is most likely to leave the organization.

To illustrate this point, let me discuss a few examples.  Virgin Media, one of the two cable TV operators in the UK seems to be doing a great job when it comes to many of their departments, such as account opening, customer retention, etc.  However the whole company is not in-sync with the philosophies of CEM.  Recently having moved house, I found it very difficult and frustrating to get the house moving team to get everything done properly.  When I wanted to leave the company, the retention team did a good job trying to sort out my problems.  However the technical support and the house moving team provided such a bad experience, and I finally decided to leave the company after 6 years of being with them!

Having worked with, provided training for, done consulting work and researched numerous companies in the last few years, I think this is probably the biggest problem facing companies today.  Some or a few of their departments are working hard to improve CEM, while others are no where near to providing a decent customer experience.  The consequence of this is a loss of customers.

You need to keep customer loyalty in mind

The second most important factor is thinking about customer loyalty.  CEM is one of the biggest tools / factors that lead to customer loyalty.  We all know about the benefits of loyalty, such as: higher profits, lower costs, improved shareholder value, bigger market share, etc.  However, many employees of firms don’t think of this as an important factor.  While the company missions, and the objectives may state that they want to build customer loyalty, their actual policies don’t necessarily correlate with this.

When thinking of customer loyalty, we must also think about the life-time-value of a customer.  Losing a customer means, having lost all the revenue that a customer could potentially provide with us.  To illustrate this point let me discuss another example.

While I can share examples of companies that I have helped I thought it would be best to discuss one where I was a customer.  Usually most people can relate to examples of being a customer.

My baby is nearly two years old now, which makes me a skilled toys assembler.  Anyone whose had kids, will know this, many toys require assembly, and after a couple of years you’ve probably bought enough to give you a new skill to add to your linkedin profile.

I recently purchased a toy at Smits toys.  Took it home and assembled it.  Before my kid had the opportunity to play with it, the thing started to fall apart.  Once he had played with it for 5 the whole things had come to pieces.  So I took it back to Gallions Reach Store in London.

Here is where the problems started.  Both the sales person, (no names Lynda) and the sloppily dressed manager (Raj) doubted my intentions.  They not only refused to refund or exchange a 19.99 toy, but also in the process insulted me and my kid!!!  Wow, I thought to myself.  In the middle of these hard economic times, these guys want to lose their customers, and that too for a mere 19.99 toy.  Now according to them, its not company policy to return toys that have been opened!?  If we analyze their business we see that the lifetime value of a customer would run into the thousands, if not tens of thousands.  These companies are not only selling toys, but also video games and consoles.  If the company policy is correct, then it does not make sense.  Go ahead, lost a customer for a mere 19.99, customer loyalty is not worth it?

While these two are small examples from my own life, there are numerous others that I’ve encountered working with dozens of firms of the last few years.  Companies need to not only to ensure that the whole company is working towards providing great CEM, but also thinking about customer loyalty.

Why loyalty is tricky for the finance sector

A number of months ago I was approached by someone working in the financial sector in Israel, seeking advise on developing a loyalty program.  For starters I was impressed that a financial institution is actually thinking about developing loyalty.  During our discussions a number of key things emerged, which I wanted to share with everyone.

Customer loyalty for traditional financial institutes, such as banks, mortgage lenders, etc. and customer satisfaction don’t always go together.  About a month ago statistics for customer complaints was published in the UK.  It seems that the biggest banks have the highest number of complaints!  Similarly, customer dissatisfaction rates for the biggest banks in Australia are the highest.  This is an interesting phenomenon, which we normally won’t find in any other industry.  If customers are dissatisfied, and unhappy with the product or service, they would simply leave.  However, in the financial sector this does not appear to be the case.

So why do customers still stick with a bank, despite the fact that they provide bad customer services?  And does it mean that these customers are ‘loyal’ to the financial institution?

Why customers take bad customer services

When we think of non-financial products and services, we need to look at what the customer is purchasing.  A customer buys perceived value that he/she would derive from using that product or service.  While each product and service has a price tag attached to it, the value can differ greatly.  For instance, you can buy a suit for $200, and a similar suit, in the same color and design; you could get for $2000.  So why do the customers pay more?  In this case the perceived value that a customer would get would be higher, even though the material may be the same.  It could be things such as self satisfaction for wearing a luxury brand, or the feeling that you belong to a particular group in society, etc.  Similarly we can look at it from another angle.  Two cars that cost the same, but appeal to different segments, because of the value that customers get from them.

In the financial sector, things are different.  First, the perceived value is much more quantifiable.  You know what rate of interest bank x is offering as compared to bank y.  The major portion of the perceived value is no longer perceived, it is factual.  So if you put £10,000 in a bank for a year, you will know exactly what rate of return you will get from two competing banks.  Hence, if banks make mistakes and don’t provide a good service with this, you still know that you are getting a good rate of return. 

There are cases, where two banks would be offering near identical rates, and customers would still stay with the one that is offering poor service quality.  One of the major reasons for this is the cost of switching can be high.  Most people have a bank account tied in to many different things.  Your salary would be going into the account, and perhaps you have set up direct payments to expenses such as rent/mortgage, utilities, gym membership, etc.  Calling up to change the bank details for each of these can be a big pain, and very time consuming.  Hence many customers would stick with a bank, just because switching to another bank is a big hassle.  These customers think that the perceived value of switching to another bank is lower than the value of the time it would take to switch.

Are these customers loyal to banks?

So does that mean these customers are loyal?  I would think not.  However, is it possible to win true loyalty of these customers?  The answer is yes.  Currently most banks are not thinking about true loyalty, and hence customers have no better option to switch to.  However, if a bank were to start working on true loyalty, it could start a revolution.

Are loyalty progams the way to go?

Can using a points based loyalty program win loyalty?  I’ve talked about this in my earlier blogs.  I don’t think points based loyalty programs are run correctly.  They focus on the wrong things.  They don’t seem to be creating true loyalty in other sectors, so the chances of them developing true loyalty in the financial sector would be low.

Why change?

Finally, one could argue, well if customers are not switching, and they don’t want to switch then why should we worry about loyalty?  At the present most financial institutions are not thinking about loyalty.   However, if we get more companies to start thinking like the Israeli financial company, we could see a change in the industry as a whole.  This would mean companies that are not adapting would see themselves being overtaken by those that do.

Share your views

I would love to hear what your experiences are with financial institutions.  Are there organizations that are providing great experiences, or mostly bad levels of service quality?  Are there other industries that seem to be in a similar state as the financial sector?

About the 12-step CEM Program

Hi Everyone,

Thanks for the numerous comments on the last blog.  Just a couple of clarifiying points to the last blog.

First, I was asked is this the right order.  Some of you have pointed that perhaps some items should be listed up top.  I think this list gives guidelines, and it needs to be modified according to the organization that you are working in.  For instance, in some organizations it may be easier to get the management to committ to CEM, while in others it may be a bigger challenge.  Hence, someone implementing these steps would modify the list according to their needs.

Second, I was asked about expereince mapping.  Basically an expereince map is a digramitical representation of the stages a customer goes through while interacting with your firm.  For some companies this starts with the advertisement that the customer sees.  Others start with the booking of the service, or the purchase process, etc.  Either way, we are looking for the interaction, and the experince that a customer may have.  More importantly we want to identify the expereince that the should have.  I’ve seen a number of tools which can be used for this purpose, so you don’t have to do it manually.

I hope this clarifies some of the issues raised.  If you would like to discuss these in more detail, you can always email me.

I have an interesting model for creating online customer expereinces, which I hope to share with you in the near future.