Twelve Laws of Loyalty - Proven Principles for Turning Non-Customers Into Loyal Advocates
by Jill Griffin

The following Twelve Laws of Loyalty are adapted from the recently revised second edition of Customer Loyalty: How to Earn It, How to Keep It, (2002, Jossey-Bass Publishers.)

  1. Build staff loyalty.

    It's a fact: Firms with high levels of customer loyalty have also earned high levels of staff loyalty. It's darn near impossible to build strong customer loyalty with a staff that is in constant turnover. Why? Because customers buy relationships and familiarity. They want to buy from people who know them and their preferences. Key rule of loyalty: Serve your employees first so they, in turn, can serve your customer.

  2. Practice the 80/20 Rule.

    In building customer loyalty, the 80/20 Rule is alive and well. Roughly speaking, 80% of your revenue is being generated by 20% of your customers. All customers are not created equal. Some represent more long-term value to your firm than others. A smart company segments customers by value and monitors activities closely to ensure high value customers get their fair share of special offers and promotions. Unlike many firms who simply measure overall redemption, these savvy loyalty builders pay close attention to who redeems.

  3. Know your loyalty stages and ensure your customers are moving through them.

    Customers become loyal to a company and its products and service one step at a time. By understanding the customer's current loyalty stage, you can better determine what's necessary to move that customer to the next level of loyalty.

    Our Profit Generator ™ Loyalty System comprises six stages: suspect, prospect, first time customer, repeat customer, client and advocate. If your customer relationship processes and programs aren't moving customers forward, rethink them.

  4. Serve first. Sell second.

    Today's customers are smarter, better informed and more intolerant of 'being sold' than ever before. They expect doing business with you to be as hassle-free and gratifying for them as possible. When they experience good service elsewhere, they bring an if-they-can-do-it-why-can't-you? attitude to their next transaction with you. They believe you earn their business with service that is pleasant, productive and personalized and if you don't deliver, they'll leave.

  5. Aggressively seek out customer complaints.

    For most companies, only 10% of complaints get articulated by customers. The other 90% are unarticulated and manifest themselves in many negative ways: unpaid invoices, lack of courtesy to your front line service reps, and, above all, negative word of mouth. With the Internet, an unhappy customer can now reach thousands of your would-be customers in a few keystrokes. Head off bad press before it happens. Make it easy for customers to complain, and treat complaints seriously. Establish firm guidelines regarding customer response time, reporting and trend analysis. Make employee complaint monitoring a key tool for executive decision making.

  6. Get and stay responsive.

    Research shows that responsiveness is closely tied to a customer's perception of good service. The advent of the Internet has changed the customer's perception of responsiveness. More and more, customers are coming to expect round-the-clock customer service. Moreover, customers now arrive at Web sites time-starved and eager to locate answers. Technology tools such as customer self service, email management and live chat/web call back are proving increasingly critical for companies as they address the demanding customer's responsiveness needs.

  7. Know your customer's definition of value.

    The loyalty password is "value". Knowing how your customers experience value and then delivering on those terms is critical to building strong customer loyalty. But knowing your customer's true definition of value is not easy because your customers' value definitions are constantly changing. Invest in customer loyalty research that enables you to understand, through the eyes of the customer, how well you deliver value.

  8. Win back lost customers.

    Research shows that a business is twice as likely to successfully sell to a lost customer as to a brand new prospect. Yet, winning back lost customers is frequently the most overlooked source for incremental revenue in many firms. Why? Because most firms consider a lost customer a lost cause. With the average company losing 20% to 40% of its customers every year, it's imperative that firms create hard-working strategies, not only for acquisition and retention but also for win-back. Since no customer retention program can be 100 percent foolproof, it follows that every company needs a process for recapturing those high value customers who depart. Think of it as loyalty insurance.

  9. Use multiple channels to serve the same customers well.

    Research suggests customers who engage with a firm through multiple channels exhibit deeper loyalty than single channel customers. But take note: This finding assumes customers get the same consistent service whether coming into the store, logging on the Website or calling the service center. To accomplish this, your firm must internally coordinate sales and service across multiple channels so that customer preferences are accessible no matter how the customer chooses to interact. Today's customers expect to hop from channel to channel and they expect good service to follow.

  10. Give your front line the skills to perform.

    Increasingly, for many companies, the employee 'front line' is a call center where agents interact with customers. These agents will be the "loyalty warriors" of the future.. Converged call centers that bring together multi-channel access points (phone, fax, email, web) are on the rise. Gartner Group estimates that 70% of North America's call centers will migrate to multi-channel contact centers by 2005. This means these agents need to be as equipped to write a well-written email reply and navigate the company Web site as they are in being helpful and friendly on a phone call.

  11. Collaborate with your channel partners.

    In today's complex marketplace, a firm is often dependent on many suppliers to help serve its customers. Embracing these supply chain relationships for the greater good of the ultimate customer creates customer value that is hard for competitors to match. For example, a European auto manufacturer converted its customer data base program into a system that could be shared by all channel partners. By refusing to hoard the information, the manufacturer helped create a blended- channel strategy that built greater customer loyalty through out the distribution chain.

  12. Store your data in one centralized data base.

    Most firms lack a 360 degree view of their customer because they have no centralized data base. Billing departments, sales divisions and customer service centers might all have their own data bases with no effective means for creating a complete customer information composite. To effectively implement a sound customer loyalty strategy, data from all customer touch points must be combined into a centralized customer database. Without it, the firm is greatly handicapped in its efforts to serve the customer.


Jill Griffin’s groundbreaking book, Customer Loyalty: How To Earn It, How To Keep It (Jossey-Bass 1997, Second Edition 2002), gained business best seller status in the late 90’s. She was among the first to point out that even customers who are satisfied will readily switch suppliers for greater convenience or lower costs and that companies must do more that merely satisfy customers – they must engender loyalty. In her early career, Ms. Griffin served as senior brand manager for RJR/Nabisco’s largest brand and distinguished herself as one of the youngest brand managers in the corporation’s history. From RJR/Nabisco, Ms. Griffin joined AmeriSuites Hotels where, as national director of sales and marketing, she was responsible for the chain’s nationwide launch. Today, Ms. Griffin is principal of the Griffin Group, Inc. in Austin Texas, specializing in customer loyalty training, research and consulting. Clients include Dell Computer, Wells Fargo, Cendant Hotel Group, Hewlett Packard, Sprint, Raytheon Aircraft, Ford and the U.S. Navy. Visit http://www.loyaltysolutions.com/ for additional information.

Many more articles in Customer Service in The CEO Refresher Archives

   


Copyright 2003 by Jill Griffin. All rights reserved.

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