Personnel № 1 July 2018
A satisfied customer can bring new customers. A dissatisfied customer can take them away. Companies use different techniques to win customer loyalty, but the key ingredient is customer-focused staff.
It is almost mandatory for companies nowadays to declare: "Customers are our top priority". But what does this mean in practice? Privileges and bonuses, loyalty programmes, additional services, high-quality and sensitive response to customer needs. People buy, according to business coach Igor Mann, for two reasons – to solve a problem and to feel comfortable.
Yet for best results everyone in the company, customer-facing or not, has to be committed to creating this "comfort zone".
The customer from outside and inside
Failings of corporate culture can make the customer comfort zone almost impossible to achieve. Employees follow new standards and regulations, but the new behaviour does not come naturally to them.
Psychologists say that it takes a person at least 21 days to acquire a new habit and success is achieved in only 40% of cases. Here a breakthrough has to be made in a collective consciousness: the bigger the workforce, the more difficult it is to change. "The size of the company matters. The bigger the company is and the more divisions and departments it has, the harder it is to make it customer-focused," says Igor Mann.
A company basically has two options: either recruit new, more customer-focused employees, or retrain the employees it already has. Experts agree that both approaches can work. But questions of scale have to be taken into account: hiring an entirely new workforce is certainly not an option.
Customer issues are an occasion to review a company’s internal processes and their optimisation
This is why employees undertake courses and other training to learn and practise appropriate patterns of behaviour. Mann points to a useful calculation – “customer lifetime value". Work out how many years the average customer buys from you for and multiply by the expected number of orders per year and the value per order. "This way you train employees to see each customer not as a one-off transaction, a single till receipt, but as lifelong value", Mann says.
Teamwork is essential to the success of the process. Some companies purposely team together employees who have strong customer-focus skills with those who have not yet fully mastered the new behaviour model. This same technique is used in diving, where divers work in pairs, each keeping the other safe. Other companies use an internal currency or badges, which employees can use to support and thank colleagues for anything from a cup of coffee to help with work. Communication between employees is simplified, questions are resolved more quickly, the atmosphere in the workplace improves, and job satisfaction is enhanced.
A happy employee means a happy customer
Incentives are another key point. People need to understand that the new approach will help them to grow professionally, offer a unique service and obtain material benefits. Some companies link employee incentives to their Net Promoter Score (NPS) customer loyalty ratings.
NPS was invented in 2003 by Fred Reichheld, an American researcher and author of books on marketing loyalty. He suggested that customers should be asked just two things: first, to score out of ten how likely they are to recommend the company to friends and acquaintances and, second, to explain reasons for their score. If the NPS is positive (most respondents likely to recommend) the company can build its customer base without additional costs. No wonder they say that one satisfied customer can bring five new ones but one dissatisfied customer can take away ten. At Apple, for example, NPS was judged more important then revenue for evaluating the performance of sales staff.
Customer loyalty index
However, a salesperson can’t make the customer happy if the internal supplier is no good, so there must be incentives for all. Many companies reward employees for useful initiatives.
Last September, Metalloinvest launched a project entitled "Factory of Ideas". The aim is to involve workers in a process of continuous improvement and thereby increase the efficiency and competitiveness of the company. In just six months employees made about 2,000 suggestions to improve production processes, product quality and working conditions, and reduce costs. The suggestions were divided into three categories. Category A (the most numerous) consisted of suggestions to improve working conditions; Category B, interesting engineering and technical proposals offering an economic return which is either not estimated or below RUB 60,000 per year; and category C organisational or technical engineering ideas promising large economic returns. A quarterly bonus of up to RUB 300,000 is payable to a team submitting category C suggestions. "Factory of Ideas is encouraging employees to be active and to share company goals," says Igor Kryukov, the head of production development at Mikhailovsky GOK (part of Metalloinvest). "The project invites workers who have the potential to improve the production process and make it more efficient, to go ahead and do so."
Apple has probably created the most intimate relationship between a brand and its customers in history
"When employees know what they are supposed to be doing, understand their role and place in the company and are aware what their product is and who will use it, they feel involved," says Marina Klimenko, the head of consulting company Hill International in Russia. "Employees begin to perceive themselves as creators and take responsibility for the product they create. Then they go to colleagues to find out how to present data most conveniently for them to use, they call the next department to find out its plans and adjust their own, they go to the shop floor and study what goes on there, they ask questions and, once they have analysed the situation and specific individuals, they propose quality training. Customer focus really gets going when it permeates corporate culture and not just job descriptions."
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