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Earning customer loyalty

Dec 1, 2010 12:00 AM

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Do you know how loyal your customers are? Or, do you just feel in your gut that you're doing great and customers push as much your way as they can? Last year a printing company owner in Colorado shared that he almost lost a longtime customer. What surprised him most was that the two sat together each month at a local business meeting. The customer could not tell him face-to-face that he was blowing it; only when the owner reviewed a filled out survey did he uncover the issues.

We all have stories about our loyalty to a supplier or vendor slipping to the point where we've gone elsewhere, and we did not have the desire to spend time sharing our dissatisfaction. Many of us would rather just slip into the sunset than spend time where we no longer have skin in the game. We all do it, but it doesn't have to end that way.

How do we measure loyalty?

Loyalty is measured by asking one question: “How likely are you to recommend us to friends and colleagues?” Before diving into the printing industry, let's look at a couple competitive industries: life insurance and airlines. For life insurance companies, customer loyalty around 20%, and airlines are worse. But still State Farm (35%) and Southwest Airlines (52%) achieve higher than average customer loyalty and, not coincidentally, are more profitable than their peers. Don't take my word for it — read Fred Riecheld's bestseller, “The Ultimate Question,” on how businesses achieve success by measuring customer loyalty and taking action.

Study after study show that customers participating in a survey are more loyal or have the potential to be loyal if complaints are corrected. The entire feedback system reinforces itself both with customers and suppliers.

The ultimate question should be asked to customers in a safe environment, to drive candid feedback. If a customer is not “very likely” to recommend, then that customer is not loyal. It's that simple. The best-run printers achieve over 84% “very likely” to recommend them. These printers benefit in several ways. Customers become an extension of their sales force through positive word of mouth advertising and referrals. The printer is the first place these customers turn for additional service. These customers are quicker to adopt new services. The benefits go on and on. It takes long-term thinking understand the lifetime value of a customer and how it impacts growth.

How do you know where you fall in the pack?

Performance varies wildly, so let's try categorizing printers into three buckets. Putting printers in boxes is dangerous, but humor me.

Best of Breed (>84%) | These printers consistently achieve high scores, feel they still have room to improve, “good enough” never is, they are paranoid about losing any customer, and they strive to preserve their great reputation. They feel reputation is critical to their success and doing the right thing for all customers is in their DNA. The culture in these organizations is ripe for growth, continuous improvement and innovation. You would think they'd become complacent, but they just keep pushing ahead to preserve their hard earned reputation in the market, reinventing themselves when necessary and constantly investing in their team and infrastructure.

Middle of the Pack (74-84%) | Most printers are average. That is why there is a bell curve; everyone can't be on top. This group either strives to get to the next level, feel that being in the middle of the loyalty pack is fine because product quality is the reason customers buy, or they service their top accounts with white gloves and feel that not all customers deserve that same level. Be careful about thinking that quality drives loyalty. Quality is just a prerequisite to being in the printing industry. It is expected. The white-glove player might need to figure out how to say “no” to those customers or jobs that are not a fit, or continue to have mixed loyalty. Reputation is at stake with mixed loyalty, so be careful. Those looking at how to get to the next level are well on their way.

Bottom Feeders(74%) | Bottom feeders are either ignorant as to how to serve customers, have processes that are poorly defined for consistent performance, are in denial and feel negative feedback is what to expect, or have management that is just plain burnt out or checked out. This group must look in the mirror and, maybe, seek help. Typically a bad reputation is already out of the barn and tough to turn around. A few years ago, I worked with a person who bought a printing company as a career change and a challenge. It was a challenge, alright. The new owner was unaware the past owner had checked out long ago, and the company's customers were ticked off. A survey revealed it was a bottom feeder. It took six months of customer presentations and public relations to prove to the community and customer base that things were different. “Under New Management” blasted from the mountain top. They did a great job turning around the business, but it was painful.

Eighty-four percent of print buyers being “very likely to recommend” might seem low to you, but don't throw stones until you know where you sit. Go out and ask the question to really know how your customers feel and, more importantly, how you can earn and retain their loyalty.

Michael Casey is president and founder of Survey Advantage ( He is a strategic partner with NAPL supporting its consulting and research practices, he integrates project surveying with MIS systems and he is an approved supplier for several franchise networks.