wasserteil customer loyalty seminar pp (july 28, 11)

Eight Keys to Earning Significantly Eight Keys to Earning Significantly Higher Revenues and Profits with a Higher Revenues and Profits with a

““Customer Loyalty-CentricCustomer Loyalty-Centric”” Corporate CultureCorporate Culture

By Howard WasserteilBy Howard WasserteilJuly 28, 2011July 28, 2011

Beaverton, ORBeaverton, OR

WELCOME! WELCOME!

• Why this topic? In this tough economy, who doesn’t want:• Customer loyalty? • More sales and higher margins?• A stronger, more stable financial business model?

• Fact: It is far less expensive to retain an existing customer than acquire a new one. A Customer Loyalty-driven culture helps companies do both - at no cost.

• Take notes for questions, not content (to be emailed)

• 50 minutes, followed by Q&A2Howard Wasserteil © 2011, All Rights Reserved

Customer Loyalty-Centric Culture AssessmentCustomer Loyalty-Centric Culture Assessment

• 10 Statements (True or False)

• 2 minutes to complete (10 seconds per)

• Purpose: to provide an insight to how you view Customer Loyalty before this seminar begins; we will re-visit it at the end (will reflect what you’ve learned; help with the “call to

action”)

3Howard Wasserteil © 2011, All Rights Reserved

Major Takeaways Major Takeaways

• Customer Loyalty vs. Customer Satisfaction

• Why Meeting Customer Expectations isn’t Enough

• The Financial Upside to Loyal Customers

• The #1 Essential Key to Implementing this Culture

• Just Two Key Metrics to Measure Success

• Call to Action: Implementation and ROI


Customer Loyalty-Centric CultureCustomer Loyalty-Centric Culture - - Financial Upside Financial Upside

• Assuming at Year 1 an average loyal customer spends $150/ mo,

*

• Over a 13 year period, the one loyal customer yields $228k in revenues,

• Adding 3 new loyal customers/ mo. yields $8.2M in revenues• If a company has 50 stores, adding 3 new loyal customers/ mo. =

$410M in revenues

• The above revenues are also the cost of not having this culture over time

* The model’s assumptions to be provided at end of seminar. Even if they are cut by 50% or more – the financial upside in driving this culture still yields significant additional revenues and profits


Defining Customer Defining Customer Loyalty vs. Customer SatisfactionLoyalty vs. Customer Satisfaction

• Customer Satisfaction:

• Minimally meets customer expectations (product/ service delivery)

• No memorable “WOW” experience

• Customer does not feel valued, important

• No assurance he/ she will return (assuming other competitors)


Triggers for a Repeat CustomerTriggers for a Repeat Customer

• If two companies:• Sell you a product or service that equally meets your

expectations in terms of quality, functionality and value• Sell it to you at the same price• Were not referred to you by someone you trust• Were unknown to you prior to your purchase• Are equally convenient to visit or access (driving distance;

online)

• What is the key factor for you to:• Choose one over the other?• Repeatedly patronize?

• Customers buy more on emotion, on how they feel, and less on facts!


The The Customer Customer Loyalty-Centric Loyalty-Centric Corporate CultureCorporate Culture

• So even if your products or services don’t beat your competitors, exceed expectations by delivering “memorable” customer experiences:

• How they “feel”:• when in your business• or buying online (Zappos.com)

• Feeling valued, special and important create memories that spur customers to come back, tell their friends!

• …..and become loyal to your business!


Defining Customer Defining Customer Loyalty vs. Customer SatisfactionLoyalty vs. Customer Satisfaction

• Customer Loyalty:

• Exceeds customer expectations, delivering:(1)superior products or services; and/ or (2) “WOW” customer

experiences

• Customer feels valued, important – special!

• Price becomes less important because of the added value

• Customer becomes a frequent repeat purchaser

• Customer proactively refers others they know, who also then become “loyal”

• A “Quality Customer Service Dependent” company: the quality of the customer experience can be as important as the product or service offered 9Howard Wasserteil © 2011, All Rights Reserved


• Examples of delivering memorable customer experiences:• Johnny the Bagger (Blanchard/ Glanz) - http://tinyurl.com/3cyvvr8

• “The Fish Market” at Seattle’s Pike Place (F.I.S.H.)• Choose Your Attitude

• Play (having fun at work)

• Make Their [Customer’s] Day Special!

• “Be Present” with each customer!

• Lose money on a sale but earn the “lifetime value” of a customer

• Empower staff to make decisions to knock customers’ socks off!• Jan Carlson’s “Moments of Truth”


http://tinyurl.com/3cyvvr8


• Zappos, an online shoe seller, bought by Amazon in 2009 for $1.2B

“Delivering Happiness – A Path to Profits, Passion and Purpose”, by Tony Hsieh, CEO:

• “[Our] culture is our brand…very best customer service….and customer experience”

• “ The ZAPPOS MISSION: to live and deliver WOW”

• “The #1 driver of our growth at Zappos has been repeat customers and word of mouth”

• “….deliver a better customer experience, which will make your customers happier and create more customer loyalty, leading to increased profits”



“Delivering Happiness – A Path to Profits, Passion and Purpose”, by Tony Hsieh, CEO (cont.):

• “make WOW a verb that is part of your company’s everyday vocabulary”

• “empower and trust your customer service reps…they want to provide great service”

• “give great service to everyone: customers, employees and vendors”

• “we...make short-term [revenue, profit] sacrifices if …the long-term benefits are worth it”

• Zappos offers $2k to new hires after one week of training to quit! (<1% do)



KEY #1 • Unwavering commitment by Owner/ CEO - the most

critical key• Get buy-in from your management team; they will do same

with remaining staff (the ones who don’t must leave).

KEY #2 • Hire people w/ an innate passion for delivering

memorable experiences• Making your customers’ day special will make yours too!


Impact of Employer-Employee Relationship to CultureImpact of Employer-Employee Relationship to Culture

KEY #3

• It’s not just about how employees make customers “feel” to implement this culture successfully:

• How any employee treats customers is a reflection of how he/ she perceives the company treats them:

Aren’t the following two (converse) statements intuitively true?• If a company disrespects and doesn’t value its employees, it will

negatively impact how they interact with its customers• If a company genuinely respects and appreciates its employees

(training, development, praise, etc.), they will treat its customers similarly


The Cost to Implement a The Cost to Implement a Customer Customer Loyalty-Centric Loyalty-Centric CultureCulture

KEY #4

Invest in Employee Training to:• Hire people who will deliver “memories” – not just products or

services

•Develop your “5-star Customer Experience movie” (best practices):

- “If I were a customer, what would WOW me”?

- Survey your customers regularly asking them the same question


The Cost to Implement a The Cost to Implement a Customer Customer Loyalty-Centric Loyalty-Centric CultureCulture

KEY #4

Invest in Employee Training (cont.)

•Ask yourself: • how did you feel when you’ve received exceptional service?

• how did it affect your shopping habits at that store?

• how many people did you share it with?

• don’t you want your customers to feel the same each time they come in?



KEY #5

• Don’t use “policy” when saying “no”; offer options and different words that feel more empathetic to the customer.

KEY #6

• Train staff to “mirror” angry customers to diffuse anger

• Then exceed their expectations (they are not very high when angry)

• Never apologize to a customer without offering a solution



KEY #7

• Ask for examples of “memorable experiences” and “exceeding customer expectations” at

every staff meeting; make it part of your company’s lexicon. Everything employees say

should be in terms of the customer, not the company.

KEY #8

• Don’t cut costs that negatively impact the quality of the customer experience for short term

financial gain ► Higher costs thru lost revenues and margins in long term!


The Key Metric to Track Customer LoyaltyThe Key Metric to Track Customer Loyalty

• Net Promoter Score (“The One Number You Need to Grow”, by Frederick Reichheld - published in the Harvard Business Review Dec, 2003)http://www.netpromoter.com/np/calculate.jsp

• Based on market research that has quantitatively concluded a direct correlation between corporate growth and increased customer referrals:

“In most industries, there is a strong correlation between a company’s growth rate

and the percentage of customers who are ‘promoters’ – that is …..they are extremely

likely to recommend the company to a friend or colleague……the size of companies has

no relationship to their net promoter score status.” 19Howard Wasserteil © 2011, All Rights Reserved

http://www.netpromoter.com/np/calculate.jsp

Measuring Measuring CustomerCustomer Loyalty Growth Loyalty Growth

• New customer referrals: Do periodic Net Promoter Score (NPR) surveys, asking “How likely is it that you will recommend us to a friend or colleague?” (at least every six months)

• Repeat business, measuring increases by current customers - frequency and avg. $ sale per customer (at least quarterly)

• New customers brought in from referrals, from people they trust (at least quarterly)


Recap -Recap - Keys to ImplementationKeys to Implementation

1. Unwavering commitment by Owner/ CEO - the most

critical key

2. Hire people with an innate passion for serving people well:• “Loving What You Do” (F.I.S.H.)• “Service from the Heart” (Johnny the Bagger)

3. Develop a “5 star Customer Experience Movie” (best practices):

4. Never use the word “policy” to say no: “It wouldn’t be fair to our other customers….but how about we offer ___________ instead?” 21Howard Wasserteil © 2011, All Rights Reserved

Recap - Keys to Implementation Recap - Keys to Implementation

5. Convert angry customers to very satisfied or even “customers for life” by using “mirroring” to diffuse anger; then “go the extra mile” to exceed expectations. Never apologize to a customer without offering a solution.

6. Ask for examples of “memorable experiences” and “exceeding customer expectations” at every staff meeting; make it part of your company’s lexicon. Everything staff say should be in terms of the customer, not the company.

7. Track key metrics (NPR; increased repeat business and referrals) to manage staff; give “purposeful recognition” (why the praise?) and reward those who do.

8. Don’t cut costs that negatively impact the quality of the customer experience for short term financial gain ► Higher cost thru lost revenues and margins in long term!

9. Treat and value your employees as you expect them to do for your customers.


Financial ModelFinancial Model’’s Assumptionss Assumptions

1. The company drives a Customer Loyalty-Centric Culture

2. Annual revenues per loyal customer = $1,800 ($150/ mo)

3. Annual increase in revenues per loyal customer = 3%

4. Loyal customers only stays five years

5. A loyal customer refers (just) one new customer in month one

of Years 2 - 5

6. Each of those four referred customers also become “loyal”, and refer one new customer in month one of Years 2 - 5 of their five year buying period (16 total)


Financial ModelFinancial Model’’s Results s Results

• Over a 13 year period, the initial loyal customer yields $228k in revenues - almost 24 times the $9,556 he/she purchases over five years!

• Adding 3 new loyal customers/ mo. yields $8.2M in revenues

• With 50 stores, adding 3 new loyal customers/ mo. = $410M in

revenues

• The above $ revenues are also the cost of not having this culture

over time

Even if one cut the model’s assumptions by 50% or more, the financial upside in driving this culture still yields significant additional revenues!


CALL TO ACTION for Business Owners and CEOCALL TO ACTION for Business Owners and CEO’’ss

1.Unwaveringly commit to this culture!

2.Get buy-in from your management team; they will do same with remaining staff (the ones who don’t must leave).

3. Establish new hiring criteria that prioritizes an innate passion for quality service excellence.

4. Develop the “5-star Customer Experience Movie”; expect staff to consistently deliver it!


CALL TO ACTION for Business Owners and CEOCALL TO ACTION for Business Owners and CEO’’ss

5.Don’t use “policy” when saying “no”; offer options and different words that feel more empathetic to the customer.

6.Train staff to “mirror” angry customers to diffuse anger; exceed their expectations

7.Discuss “memorable experiences” and “exceeding customer expectations” at all staff meetings.

8.Track these two metrics to measure success; develop performance-driven incentives for customer service excellence:

- higher sales from increased repeat business and new customer referrals

- the Net Promoter Score via customer surveys

9. Give “purposeful recognition” for service excellence26Howard Wasserteil © 2011, All Rights Reserved

THE THE CLOSECLOSE

• What memorable experiences are your customers having on a daily basis?

• And does it make them tell their friends?

If the answers to the above two questions are not “incredible”

and “absolutely”, your company does not have a corporate

culture dedicated to achieving customer loyalty.

Lead one, or help build one, using the keys presented in this

seminar, and you will achieve both your mission (whatever it

is), and financial results beyond your wildest dreams - you can

take that to the bank!


RE-VISITING THE SELF-ASSESSMENTRE-VISITING THE SELF-ASSESSMENT

• Re-visit the 10 statements and change any answers based on what you’ve learned today.

•Which are true?

•NONE


What You Will Receive What You Will Receive

• Today: HBR Article: “The One Number You Need to Grow” (Net Promoter Score)

• Within 24 Hours (via email):

1. Seminar Power Point

2. My Published Article: “How to Win in Any Economy With a Customer Loyalty-Centric Corporate Culture” (March 2010)

3. The Financial Model Referenced in My Article and this Seminar

4. A list of Recommended Books (Customer Loyalty)


The Presenter The Presenter Howard WasserteilOperations / General ManagementP.O. Box P-118, Lake Oswego, OR 97035503.320.1544

Service is the lifeblood of any organization. Everything flows from it, and is nourished by it. Customer Service Excellence is not a department, it is an attitude.

• Co-founder and President of two successful startups for 18 years, including Marsee Baking in Portland, which won the Oregon Entrepreneur’s Network’s Emerging Company of the Year in 1994.

• Was also a small business consultant in Portland from 2005-07.

• Seeking an operations/ management position in a company that values customer loyalty.


wasserteil customer loyalty seminar pp (july 28, 11)

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