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Achieving customer loyalty

Achieving customer loyalty

For too long resellers have put too much effort into sustaining relationships with their vendors and suppliers rather than focusing on the needs of their customers. As resellers make the transition to a services model, they are quickly finding that appeasing the customer is everything. Supplier relationships, while still important, have become secondary.

I was very interested then, in the keynote presentation at IDG's CIO conference last week by Dr Peter Wilton, an Australian from the Haas School of Business, University of California, which was about customer loyalty.

Wilton suggested that all customers have a minimum set of expectations - that is, they expect a quality product or service at a fair price. The customer will consider doing business with any company they believe will deliver on this minimum expectation. The business they choose to deal with, however, will be the one that delivers the most value-add, a term all too familiar to resellers. This value-add may be something like a cheaper price or better service and support.

To gain customer loyalty, a business needs to think not in terms of minimum expectations, but maximum expectations. Wilton gave the example of a bank. "What would be your maximum expectations of a bank?" he asked. It would be open 24 hours a day, seven days a week; it would be easier to do business with; it would have no fees; responses to loan applications and the like would be instantaneous; and it would have lower interest rates for loans and higher interest rates for savings accounts, he said. He then pointed out how Internet banks had made massive leaps in fulfilling these expectations.

Raising the bar

They never close, have lower operating costs and therefore can offer lower or no fees and better rates of interest. What's more, their automated nature means they typically process requests faster and customer enquiries like account balances and histories are instantaneous.

Of course, when a customer's maximum expectations are met, it raises the bar on what they expect from their perfect supplier. But it also raises the bar on where their minimum set of expectations are at, and they will no longer consider doing business with a company which does not meet that level of service.

At this point, the company that raised the bar has achieved customer loyalty.

Wilton points out that loyalty is important, because the most loyal customers are the most profitable, as they are generally prepared to pay more for the superior value-add.

Have you asked yourself these questions: what do I need to do to be my customer's perfect supplier? Exactly how much value-add do I bring to the table? How many of my customer's headaches do I solve?

Actually, I'm wrong in suggesting you need to ask yourself these questions. The only way you can really know is to quiz your customers. Ask them what their minimum set of requirements are. Ask them what they would expect of a "perfect" supplier.

Then ask yourself how you can go about meeting those requirements. And in particular, ask yourself, just as the Net banks have done, how you can use the Internet to raise that bar.


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