by Andy Brockett,

Unless you have been fortunate to miss the news headlines from the past months, you are all too aware of the economic crisis affecting the United States and the rest of the world.  With the uncertainty tough economic times bring, one group that we can always count on is our existing customers—in particular, loyal customers.

As the number of qualified leads continues to dwindle and the cost for each qualified lead rises, it is imperative you focus on retaining your loyal customers while increasing the breadth of products and services that they purchase from your organization.

I have been asked many times what constitutes a loyal customer.  Is it someone who purchases from you on a consistent basis?  I believe someone’s purchasing pat-tern is certainly an indicator of loyalty.  I do not believe it drives loyalty.

Three factors typically drive customer loyalty:  relationship strength, perceived alternatives and critical situations.  A customer will be loyal if he has shared an experience with your organization and views your organization as a trusted advisor.

Your organization has earned your customer’s trust and you are viewed as a business partner.  A customer may look to your organization as the one-stop shop, even if that is not your core capability.  Loyalty is a bond that is very tough to break and takes a significant amount of time to build.

Consider Your Own Experiences

To illustrate this, take a moment to think about a situation in your personal life when you had either a positive or negative experience.  Maybe it was when you were having dinner, shopping, or dealing with a utility company.  Did something happen that you were or were not expecting?  Maybe it was a negative situation.  You ordered dinner without nuts because you have a nut allergy.  When your dinner was served it was covered in nuts.

When you were experiencing that episode, what did you do?  Did you raise either positive or negative attention to the situation?  How did the organization’s employees or leaders respond?  Did they even know?  How did the organization’s response or lack of response influence your behavior?  Did you tell a friend or co-worker about your bad experience?  Did you feel valued during the episode?

The dinner example was an extreme situation, but even less dramatic experiences can influence whether or not you will do business with that organization in the future.

In any similar case, though, everything boils down to the relationship between the customer and the organization.  The customer is choosing to do business with that organization.  It may be the first time or the hundredth time your organization is providing the product or service.  Both parties have expectations that must be fulfilled; however, the customer’s willingness to share information and continue the relationship depends upon the relationship bond that has formed.  A customer builds that bond based on how the organization responded to a request.  A customer understands we are all human.  Mistakes happen.  The unanswered question is how your organization will react when the mistake is made.

Keep Focus on the Customer

A customer is able to form a bond with your organization when you admit the mistake, take action to solve the problem and prevent such a thing from happening again.  As the bond builds, the customer is able to see past these little mistakes and misunderstandings, if they are properly atoned for, and remain loyal.

Let’s look at that restaurant example again.  What if you were the waiter who took the order and failed to make note of the nut allergy?  How would you have handled the situation?  How would you handle a snafu of that magnitude in the business in which you currently work?  Would the same principals apply?  How else would you manage that customer experience?

As an organization delivering the product or service, there are reasonable steps you can take to build a bond with your customers.  First and foremost, always keep the customer’s interest in mind, whether you are hiring employees or examining how your employees conduct themselves in front of a customer.  Each time you have an interaction with a customer it should be positive.

Customers can sense when you are not focused on them.  By focusing on the customers, you can gain useful insight into their business and identify opportunities to help them.  In addition, you are more likely to deliver superior service if you are more actively engaged in the account.

Secondly, find a way to differentiate yourself from the competition.  Offer some-thing unique, whether it’s products or services and make sure you are able to show your value proposition.  There may be products or services you do not offer, and know someone who does offer the product or service.  Align yourself with that organization so you can be a one-stop shop.

Finally, building a bond may require you to admit when you are wrong.  Be honest with the customer.  You do not need to share the dirty laundry or issues that cannot be seen by the customer.  If you are wrong, admit it.  The key is the process you have in place to mitigate exposure and show the customer you care.  I have watched organizations admit they are wrong and then stumble when showing the customer they care.  By creating a culture which puts the customer first, it is easier to build bonds with customers and empower employees to do what is right.

Maintaining Good Customer Relations

Let’s assume you completed these steps and established a bond with a customer.  What do you do next?  It is important to keep a pulse on the relationship to make sure that the bond is growing, but that is not the only step.  How do you take the next step and make the most of that bond?

You commence a variety of activities when establishing customer relationships, but those may tend to disappear over time as your customer list grows.  Behaviors such as account planning, reviewing customer satisfaction scores and marketing based off need are all activities that an account manager may engage in at the start of the relationship.

I would argue you should still engage in these activities, to some degree, over time.  Many organizations tend to diversify, while in other cases you may have just cracked the surface of the relationship.  In fact, customer account planning meetings are great generators of new sales opportunities because you are discussing the customer’s business while showing how your business has changed.  View these meetings as business partner relationships.

A segmentation strategy also can help to ease the burden as the customer list grows.  By implementing a segmentation strategy, you can identify how you should spend your time to ensure operational effectiveness.

Let’s assume your business is so large you cannot conduct one-on-one meetings.  Marketing is a great channel for driving demand with your existing customers.  Ideas like newsletters or targeted messaging are keys to selling additional products or services, while educating.

Managing Customer Relationships

Once you have the relationship, it is imperative you manage and service that relationship.  Today you may have certain service standards your team adheres to.  It is easy to set the standard, but in many cases the standard is not met because of operational inefficiencies.

We are kidding ourselves if we believe service issues are not going to pop up.  In fact, making sure you have the appropriate processes and procedures in place is critical.  Make sure you lessen the risk of the situation popping up before it happens, or have an automatic response to a situation ready.  In the dinner example, what would happen if the waiter was empowered to provide a discount or gift certificate after the diner discovered the error?  Taking this a step further, in your organization does the service team have the appropriate information to manage the relationship?  Are they armed with tools that will help them immediately begin restoring the customer relation-ship?

In today’s environment, it is very easy to get inundated with information.  Performing the activities mentioned above will only increase the amount of data.  It is critical to any organization’s success to have a Customer Relationship Management (CRM) solution that plays an important role in managing all this information.

Within a fully integrated CRM solution, an organization can take advantage of sales, marketing and service functionality that supports the organization throughout the customer life cycle.  (This differs from the traditional contact management world, where an account manager may enter basic activity-related information, but does not have the full gambit of information available for reference.)

The automation in the CRM solution will allow the organization to manage the customer experience better through surveys and periodic feedback.  It also provides a framework for managing the customer experience.  Automation also will allow for delivery of key marketing as well as product and service information.  Automating these activities reduces the amount of face-to-face interaction, while increasing the number of touch points with the customer.  This allows the account manager to focus on driving additional sales growth in the organization, while also benefiting from organic growth within the existing customer base.  Targeting your loyal customers with customer-specific messaging and cross-selling additional products/services also will help to entrench them in your organization and make it more difficult for the relation-ship to end.

The last critical component most organizations leverage is the scorecard.  Today it may be referred to as the dashboard.  A centralized data repository such as a CRM solution provides the necessary data for the scorcard/dashboard and should also be the natural display point for the analytics.  Analytics will allow the organization and end-users to quickly assess and make decisions without requesting a report.  Typically, key performance indicators (KPI) should be identified around client loyalty and displayed in the dashboard during the implementation process.  Identifying and using KPIs will hold the organization accountable to high service standards as well as ensure the organization is agile enough to deal with markets such as those we’ve experienced recently.

So as we move forward, which we will do, make sure you spend time assessing your organization in terms of service and customer loyalty.  Make sure you have a business process in place to market, sell and service existing customers, but also make sure you have the systems to support the organization.  All of these actions will not only benefit you during tough economic times, but will be the core infrastructure you need when the economy rebounds.