Which strategy have you chosen to beat the mass merchandisers? Though you may lose some customers to them, you can retain a high percentage of your clients - and make them more loyal to you than the other consumers are to the big-box stores.
In the last installment of The Art of Retail Management, I reviewed the market discipline of building customer intimacy (as contrasted with operational excellence and product leadership). I cited the statistic that most "satisfied" customers will not return to buy from you again. Satisfied customers may still buy from your competitors. By contrast, "loyal" customers won't be enticed away by a colorful, shouting ad.
I'll now offer for consideration six methods you can adopt to intensify your influence. These are proven loyalty-builders.
First, teach your staff that customer-intimate companies don't deliver what the market wants, but what a specific customer wants. This culture embraces specific, rather than general, solutions. It thrives on deep and lasting client relationships. Therefore, your company representatives should treat every customer as precious and unique, with a highly individual collection of needs and wants. They must customerize their product and service to fit those individual needs.
Second, teach them that customer intimacy combines two strong bonds - a total solution of products/services and an emotional connection of human bonding. A "total solution" addresses and resolves every floor covering problem burdening your customer's mind. A great retailer relieves her of all her problems - from the buying experience and decision-making process, to hassle-free installation and leaving her home beautiful (down to the last detail).
The "emotional connection" occurs when the customer connects with your employees. She feels a harmonious connection from the moment she walks into your showroom, through the entire buying-decision process, extending to the installation in her home, and continuing for years afterwards by virtue of your incomparable customer service. Throughout these four stages, your employees emotionally connect with her. That connection subconsciously elicits her loyalty. A company that delivers value via customer intimacy builds bonds with customers like those that are formed between good neighbors.
Third, you should be obsessed with results - not just the results you value, but the results that customers enjoy as rewards for their investment. As the retailer, you manage this store-client relationship. You delegate solution authority to the employees who are closest to the customer, so they can serve her in real time (without seeking approval from management).
Fourth, you should carefully select your core customers and nurture them. The truth is customer-intimate companies don't pursue transactions. They pursue relationships. Customer-intimate companies consider each customer's lifetime value, not just the profit and loss on a few near-term transactions.
Fifth, teach your sales and customer service employees to purposely make the customer feel valued in the relationship. The Gallup organization has learned through extensive surveys that customers feel valued - and, therefore, become loyal - when your representatives treat them with accuracy (by delivering what you promise), are available when customers want to reach you, partner with customers (by listening to them and working on the same side of the transaction), and advise them with useful and wise information that helps them resolve their issues. Your people must strive to maintain customer contact and relationships. You never want to hear your customer say, "Once my job was paid for and complete, I never heard from the guy again."
I advise you to assess your reputation. How do your customers feel when they leave your store or have completed their project? Have you delivered the total solution and connected emotionally? In other words, have you satisfied their emotional needs as well as their project needs? Of course, you want the customer to feel that you executed her project to perfection. But more than this, you want customers to feel that your people sincerely value their business.
Sixth, enrich your relationships with all employees. Constantly remind yourself that a company's reputation is shaped by the customer's experience with its employees. It's much easier to engender customer loyalty toward your employees than to do so on the basis of your products, services or company. To the customer, your employees are your business. Research conducted by business trends expert Britt Beemer shows that the No. 1 standard by which the typical customer judges a store is: Does the employee look like he or she wants to be at work?
The Gallup organization further found that the sales force generates four times more customer loyalty than the product or service itself, and twice as much as advertising and marketing. Even more astounding was the fact that 90% of customer loyalty is generated by the top 25% of the sales force. So essentially, your average or below-average salespeople are adding little to customer loyalty.
So, we're back to your responsibility to put talented employees in touch with customers. Therefore, hiring may be your most critical decision. Southwest Airlines has found that its people constitute the company's best competitive advantage. So, Southwest has developed a careful hiring process that eliminates the selfish and un-fun applicants. Customer-intimate companies hire slow and fire fast.
Once you've hired people who can relate to all kinds of customers, you will want to keep those employees satisfied. A piece in Fortune magazine said, "Every company claims that its people are its most important asset. The most admired companies show they really mean it."
When your employees feel that you respect them, sincerely care about them as individuals (not just work-horses), and compensate them fairly for their contributions, they will gladly jump through hoops when the customer needs them to respond. Employee satisfaction results in gains for everyone, not just customers. Harvard Business Review wrote that for "every 5% increase in employee satisfaction, there is a resultant 2% increase in customer satisfaction, returning up to 1.8% in net profit."
In summary, customer loyalty is your goal. It's about relationships - yours with employees, and your employees' with your customers, and how those customers feel about those you have chosen to represent you. Customer intimacy is your opportunity! This is where you can compete with the big boys.
Can you and your team deliver these six elements of customer intimacy? Find out from your customers how they feel about your company. Which of them feel loyal (meaning they will return to buy again) and which feel merely satisfied (meaning they can be easily seduced to shop elsewhere if they see a tempting ad)? Which of your employees drive customers away, and which build loyalty? How many of your customers do you satisfy, but sell only once? You'd better find out!