What Is Customer Loyalty
Worth to Your Telco?
By David
Saxby
When a rural telephone
company loses a customer, it does not lose one sale but a lifetime opportunity
of profitability with that individual.
What could that customer have
been worth? To determine the average lifetime value of customers, estimate
how much they will spend with your company on an annual basis and multiply it
by the number of years they could potentially use your products and services.
For example, if an average customer spends $100 a month, 12 months a year for
10 years, their average lifetime value is $12,000.
Don’t stop there. Next,
factor in how much your customers could potentially increase their spending
each year because they’re thrilled with your great customer service and
expansion of products you make available. Keep going! Now add on the value
of all the new customers that your loyal customers will refer to your telco.
I hope by now you see just
how valuable each and every customer is. And here’s one more thing to think
about. Increasing customer retention as little as five percent can translate
into as much as a 100 percent increase in profitability. It’s important for
all employees in your telco to understand the lifetime value of their
customers. Then they will see the sense in building relationships with the
very people who keep the company in business.
But let’s say your telco
takes the easy way out and simply replaces departing customers with new ones.
That is actually the more difficult path to choose. It costs more to attract
new customers that it does to keep the old ones. It costs even more to get
new customers to the same level of profitability as the ones that fled to the
competition.
According to Richard F.
Gerson, author of “Beyond Customer Service: Keeping Customers for Life,”
customer service is governed by the rule of 10s: if it costs $10,000 to get a
new customer, it takes only 10 seconds to lose him or her and 10 years for the
customer to get over it.
Here are some tips on
creating a loyalty-focused culture within your rural telco.
- Establish a set of core
customer service values that are expected of every employee in the company,
regardless of their job description.
- Customer loyalty begins in
the human resources department. HR personnel are front-line employees who
create powerful impressions on recruits and new staff members. They must
focus on building loyalty with these individuals during every step of the
application and interview process.
- Measure customer service
as the most important aspect of an employee’s job performance. Employees at
all levels of the organization need to know that their customer service
skills will be evaluated and that great service will be rewarded. If
employee evaluations place more emphasis on productivity than customer
service, the quality of service will diminish.
Keeping accurate, up-to-date
records on your customers is vital to building customer loyalty. Employees
need to have easy access to this information so they can find out if they’re
speaking with a new or existing customer. If they’re dealing with an existing
customer, they can quickly review the files to determine whether this customer
should receive preferential treatment.
Try these suggestions to
keep track of your customers:
- Find out as much as you
can about every new customer and record this information in your customer
data files. Be sure it’s updated with every contact.
- Check your sales records
so see how many regular customers you have. If customers are not coming
back, then you probably have a serious service problem.
- Review your customer
complaint records. Is there a pattern? Were complaints resolved quickly
and was there follow-up with your most valued customers? Were the customers
satisfied with the results?
There’s another reason to
have loyal customers. They often act as a sales team for your company.
Customers unhappy with your service often won’t purchase from you again.
They’ll tell others to stop doing business with you and that group can wreak
havoc unbeknownst to you. However, if you have reasonably priced products and
good service, customers will do repeat business with you. Plus, they will
tell others how great you are.
Positive word-of-mouth
advertising is a powerful marketing tool. Customers who spread good news
about your company and your products and services are the best sales reps you
can have. They are not employees and there is nothing in it for them to sell
your products. They’re perceived as having higher credibility than paid sales
reps.
So how do you turn your
customers into sales reps for your company? That’s easy – do the unexpected.
Look for ways to surprise and delight each customer. Here are five ways to
exceed customer expectations.
- If you have an automated
phone system, be sure it’s easy for customers to navigate and always have an
option to talk to a live person. Call in as if you were a customer who knew
nothing about your company. Experience your automated phone system first
hand.
- Don’t end a call until you
have asked the customer, “Is there anything else I can do for you today?”
This demonstrates to both you and the customer that all their needs have
been met. This confirming question also gives you an additional opportunity
to satisfy your caller.
- Thank your customers any
time they compliment you or your company. Ask new customers how they
learned about your telco and, if possible, send a hand-written thank-you
note to the person who referred them.
- Reward customers for their
referrals. Send a small gift to the customer who sings your praises or
refers you new business. The gift need not be expensive. It’s the thought
that counts.
- Follow up with your
customers when they least expect it. Call them just to say thank you and
tell them how much you appreciate their business. You can also use these
conversations to ask them for suggestions on how you or the company can do a
better job of providing service. Be sure to listen carefully. They’ll give
you great ideas.
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David Saxby is president of Measure-X, a Phoenix,
Ariz.-based measurement, training and recognition company that specializes in
customer service and sales skill training for utility companies. He can be
reached at 888-644-5499 or via e-mail at
david@measure-x.com. Visit the Measure-X Web site at
www.measure-x.com.
