Most companies I know spend a large portion their budgets on driving new business through the front door - marketing, advertising, and training and paying producers to attract new customers. Far fewer spend even a fraction as much in a directed effort to avoid having those precious customers walk out the back door. The prevailing assumption is that by providing pretty good service and having largely satisfied customers, the back door is covered as well as it can be, and everything else is controlled by external market forces.

In fact, retaining and developing profitable customers is the result of having a solid and aligned organizational culture focused on building relationships that generate loyalty. According to Fred Reichheld, researcher, consultant, and author of The Ultimate Question, a loyal customer always returns, brags about your organization and provides (free!) word of mouth advertising. They are willing to pay more to work with you and, when there is a mistake, they are more forgiving. The ability to cultivate loyal customers is a profitable and powerful competitive advantage.

Satisfaction vs. Loyalty

As a leader, there are 2 measurements that can help you understand and manage your customer relationships: customer satisfaction and customer loyalty. Satisfaction surveys are unable to predict customer behaviors because they are built on faulty foundations. Many organizations assume that high levels of satisfaction translate into customer loyalty when, in fact, customer satisfaction ratings are more closely linked to your customers' perception of your product and your service's attributes rather than to the value they gain by doing business with you.

Satisfaction is a measurement of, "I expected it and I got it; therefore, I'm satisfied." If this were translated into a grading system, satisfaction translates into a grade of "C" on a traditional report card. This is precisely why your "satisfied" customers routinely shop around the next time they need your services. The desired score is obviously an "A," and an "A" always equates to loyal customers. An "A" implies that customers got more than they expected and their expectations were exceeded in some way. Based on what is truly important to customers, they received more value from you and your organization than they could have from your competitors.

High perceived value, as defined by your customers, creates loyal customer relationships, and research has demonstrated that customer loyalty is the best predictor of your future strength and growth potential. Perceived value occurs at the intersection of what customers want and what they get from you versus what they could get from your competition. You can only sustain customer loyalty by continually meeting your customers' qualifications, specifications, and expectations.

For example, if your customers expect your services to be error free, to be delivered on time, to be supported by timely and personal interaction, and to be properly invoiced at a fair price, you must be doing well in all categories to get an "A;" you must be at least as good as your competitors. If you deliver a product that meets all of their needs, but you are unable to provide personal support, you failed in meeting an important criteria; therefore, the perceived value will decrease. For every mark you miss, the value as defined by your customers decreases and you slowly lose the ability to develop a loyal customer relationship.

In order to create and sustain loyal customers, it is necessary to consider every contact with each customer as an opportunity for you to provide value-every time. Every service point is critical and every service point has a level of expectation from the customer that must be understood and managed. We call these contact points Points of Connection (POC).

Points of Connection

Every POC gives your organization the opportunity to provide value and emotionally connect with your customers. Conversely, your customers judge your organization's value and their emotional tie at every POC - whether you know what they are or not! Developing and implementing a strategy of creating a consistent emotional connection with your customers creates value, which solidifies loyal customer relationships.

The importance of employee involvement in creating loyal customers is critical in any organization but especially so in a service organization. Employee impact starts from the way they treat and relate to each customer at a given POC and their treatment of customers stems from the employees' attitude. Attitude drives behavior, and behavior determines outcomes. If the employees' attitudes are positive, their behavior will be positive and supportive of the customer which will generate results consistent with the expectations of the customer. This is illustrated by the following relationship model:

Attitude + Behavior = POC Results
Loyal + Good Listening Skills = Perceived Value
Committed + Empathetic = Repeat Business / More Business
Passionate + Helpful = Referrals
Trusting + Friendly = Renewals

This model demonstrates how positive attitudes lead to positive behaviors, and drive positive results. If the employee's attitude is either negative or inappropriate, it will drive negative or inappropriate behaviors; therefore, the result at each POC for your customers will be severely diminished.

If you were to diagram every point of connection that a potential customer has with your organization from before the sale is made to after, you can visualize the total buying process. One mistake that many companies make is to think that once the sale is made, that is the end of the transaction. In fact, it is often only the beginning. To create loyal customers, you need to provide them with the level of service and emotional support that they expect at each POC.

Every POC provides your organization with an opportunity to connect emotionally with your customers. These individual experiences create an image of your organization in their minds and at every one you have the opportunity to displease, satisfy, or delight them. The interactions that occur during these POCs are the keystones to understanding and proactively managing customer expectations. It may start with the signage to your location, the appearance and attitude of the producer, the small talk that can be overheard from employees in your reception area, the number of times the phone rings before it is answered, how it is answered, how quickly a problem is resolved, how the employees are dressed, the attitude of those with whom you come in contact, etc.

To effectively manage POCs they first must be identified, and once they are identified, you must clearly understand what value your customers desire from each. If there is a disconnect between what your customers expect and what currently exists then it imperative to ensure that proper employee development and process improvements are put into place to correct it.

Making the strategic decision to create a loyal customer base is one of the most important commitments you can make to the success of your company. As Janelle Barlow and Paul Stewart say in their book, Branded Customer Service: The New Competitive Edge, "The customer service experience must be aligned with organizational promises." When your customer's experience is not reflective of what has been advertised, promised, or expected, their trust in your agency is undermined, which results in more traffic out the back door and lost revenue opportunities.

To build loyalty, your team must learn how to create strong relationships through frequent points of connection and deliver unique service experiences as expected and promised by your marketing and sales activities. The immediate impact of delivering an exceptional experience based on what you've promised is a winning combination and a powerful weapon against the competition. It will also help to ensure that the customers you work so hard to bring in the front door of your company never even consider looking for the rear exit.