Customer Loyalty and Apologies
Effective business apologies are becoming a cornerstone of customer
satisfaction, trust, customer loyalty and retention. We all hope to
maintain standards of excellence in regard to the products and services we
offer, however, no matter how close to perfect the business is running
mistakes will be made and some people will inevitably be disappointed about
something.
How employees, managers, and executives handle these situations has a
direct impact on how customers feel about the company's staff, product and
service. Extending a credible apology for the right reasons at an
appropriate time should become a standard component of any company's
customer care policy.
Business Fact No.1: It is far easier to sell something to an
existing customer than it is to acquire a new one.
Loyal customers bring with them a lifetime value—a value beyond
the individual sale. Conversely, the loss of a loyal client represents a significant accumulated
loss over time. As long as they remain satisfied they will continue to
buy current and new products and services. And each new product acquired by
a loyal customer brings with it the added benefit of credible referrals and
an expanding customer/sales base.
Business Fact No.2: Referrals reduce sales cycles and sales
expenses while building a quality base of satisfied customers who, in turn,
provide additional referrals.
Companies that generate this self-perpetuating
cycle typically succeed through excellent customer service—sales (as
opposed to customers) are never enough
to create and sustain this cycle.
Understanding the importance of customers and customer loyalty is crucial to
building and maintaining a successful business.
So how can we help ensure customer loyalty?
Some years back a senior
executive sent me a letter of recommendation for a person seeking a marketing job in the technology industry.
The letter stated that the candidate was "exceptional not only for their
ability to do their job when things were running smoothly but more importantly,
for how they
handled themselves when things got tough".
The reference letter went on to provide examples of difficult circumstances the company faced and
how the candidate successfully worked her
way through them. He cited these cases because he felt they would
provide a clearer, and in his words, "more telling" assessment of the
candidate's best and most relevant qualities.
He was in fact giving me a very strong recommendation based on how the
candidate handled crisis (negative) situations.
The point here is that when we evaluate a person's business savvy and
competence we are more inclined to assign a high value to the person's
ability to deal with problems and crises—how they handle routine is
somewhat less relevant. (Read more on this
topic in a Goolpacy article entitled Air Apology: Lessons in
Customer Advocacy.)
Customer loyalty stems not only from the quality of your products or service
but very often from how you handle situations in which customer
expectations have NOT been met.
The problem is that years of routine and successful business relations with customers
often raises their expectations and standards—which becomes increasingly difficult
to sustain over the long term. Very loyal customers are often the ones most likely
to be hurt when small mistakes are made.
Business Fact No.3: Mistakes and errors are essential to consider
when developing best business practices,
precisely because they are inevitable.
Failures represent ideal opportunities for
strengthening customer loyalty and satisfaction. Ironically, welcoming the occasional
failure may be a prudent business practice. Issues and problems are a part of doing
business.
It goes without saying that business today is more competitive than ever.
But it has never been more important to focus on customer loyalty and to
appreciate the added value of prioritizing 'customers' over individual
'sales'.
An effective business apology, when well crafted and handled correctly can solidify relationships, enhance
your company's reputation and build trust, satisfaction, and customer loyalty.
Can
you really afford to ignore failures and avoid apologizing?
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