How Is Your Customer Loyalty Hierarchy?

by Drago on November 18, 2012

in Uncategorized

We share some useful information from Andy Horner about what drives customer loyalty.

Rank the following in terms of what drives the highest level of customer loyalty:

Price
Product
Process
People

Most companies and people in sales behave as though Price comes first and People are last.

Here’s how they look at it:

1. Price: Customers care first and foremost about our price. Therefore marketing must center around sales and discounts. Likewise, selling depends on sacrificing margins, therefore we’ll adjust the sales plan.

2. Product: After price, customers want bells, whistles, quality, choice, and customization. Competitors are advancing their products through R&D and so must we!

3. Process: If price is low and our products are good, customers will put up with our crappy website, slow delivery, computerized phone system, and 10 page invoices. After all, we don’t have time or the money to improve how we do business right now.

4. People: We say it’s our people that make us great, but truthfully our turnover is high, our salaries are low, our expertise is lower, and our training is non-existent. We’re ultimately focused on a few people – our stakeholders – who exhaust us with their demands for higher productivity, longer hours, and lower prices.

Have you witnessed this kind of backwards thinking? How about in your own thinking?

I’m a self-marketer. I believe in the power of the individual to create a steel-braided bond of customer loyalty. Customers, whether they’re aware of it or not, seek out professionals they believe in and become loyal to. Empowered, honest, smart, likable salespeople are a sign of a great company. When a buyer finds their person, they trust that all the other “P’s” will eventually follow, fall in line, or fail to matter.

The true hierarchy of customer loyalty is:

1. People: Where I go, my customers follow because they know I’m committed to excellence. My dedication, expertise and our friendship will be the last things that fail them.

2. Process: Our products may not fit everyone, but they’re easy to evaluate, try, buy, and they’re delivered on time. High experience. Low frustration. Customers build their processes around ours.

3. Product: We may not have the widest features or selection, but we believe in our products and we’re fully trained to answer any question and offer custom ideas for everything we sell.

4. Price: We’re not the lowest, because our value is the highest. Our customers agree, we’ve earned our high margins and they don’t mind paying them. Not everyone can afford us, but they wish they could.

At the beginning, notice I didn’t say companies necessarily “believe” that people come last in building customer loyalty. They “behave” as though they do. Big difference. If you read their brochures, small, medium, and big companies all boast that their people are their strength. But by focusing on price and not the customer’s experience through their people and their processes, they prove they’re just like the rest – low value commodities. When your people are invaluable consultants and your processes become the industry standard that make life easy, customers find a way to afford you.

Final note: What about companies who say their industry has been commoditized and no matter what they do customers will always buy low price? There are 2 responses to this:

1. When a possibility has never been witnessed, impossibility is assumed. Just because you’ve never seen anyone in your “commodity” business rise above the price wars to command a margin and establish loyalty doesn’t mean it can’t be done. PC’s are considered a commodity, but Apple still leads PC sales with high margin laptops. Their prices are the highest, their products are great but don’t do everything, buying through their website and retail stores is the industry standard, and their top execs are household names. Zappos became one of the greatest success stories in the online “commodity” apparel world because of their easy return process and world class customer support. Stop blaming the impossible. Be the first in your industry.

2. If your industry is so locked up in regulation and limitation that the human side and relationship opportunity have all but been removed as factors, I challenge you that it may be time to consider changing industries. Price wars drain the joy of serving, the pride of being the best, and your natural need to be useful and make a difference. Sometimes, the grass IS greener on the other side.

How do you look at it?