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Management And Training

Part Three of Three: Customer loyalty

September 19, 2010
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Influencing customer expectations is perhaps the most powerful thing that can be done to build ultimate customer loyalty.

Left on their own, customer expectations are framed by the individual''s past experience, the requirements necessary to successfully do their job, the reliability of performance expected and the results expected.

While there is little that can be done to influence the individual''s past experience or job requirements, expectations for results and reliability can be influenced.

For example, while individuals from a health care environment may have high expectations based on their experience, these expectations can be adjusted in the face of budget shortages and layoffs.

These and other factors can have the effect of lowering or increasing occupant expectation.

Lower expectations can have the effect of increasing customer satisfaction, which in turn can have the effect of reducing complaints.

The key to changing these expectations is communication about results and reliability.

The more widespread the communication, the more likely expectations will be adjusted.

Where results and reliability are greater than expected, customers feel better about the product or service they receive.

This increases satisfaction because of lowered expectations.

And, as a further consequence of lowered expectations, customers feel quality is higher, which also leads to greater customer satisfaction.

Scripted, widespread communication to lower expectations can have a significant influence on satisfaction.

While occupants do not always understand the price of the product or service, they and other categories of customers form an opinion about perceived value by comparing price to expectations and perceived quality.

Beyond managing expectations, the price is the biggest factor influencing perceived value.

The same perceived quality at a lower price is likely to increase perceived value.

Customer complaints are driven by perceived quality, satisfaction and other factors not directly related by the product or service.

In general, given low expectations and acceptable quality, few complaints are likely to be found.

Yet, it is important to understand that none of these elements, in themselves, are directly controllable.

If company-wide layoffs ensue, satisfaction is likely to decrease and complaints are likely to increase.

Yet, there are some managers who create barriers to complaints "to make the numbers look good," or to keep the boss from knowing.

In addition, it is also important that some individuals are complaint-adverse; they are not comfortable complaining about anything.

Whatever the rational for believing that few complaints are a good thing, the opposite is true.

Complaints should be encouraged, whatever the short-term discomfort.

In the long view, complaints serve as a foundation for process improvement and as a pressure-relieving mechanism that can improve customer satisfaction and loyalty.

While the uninformed tend to create artificial barriers to discourage complaints, it is important to understand that the one thing that is controllable in the face of complaints is the quality of response given to the buyer.

Without a mechanism to encourage complaints, the manager loses the opportunity to influence ultimate customer loyalty through an effective response.

What to measure
Keep in mind that there are two fundamental kinds of customer metrics: Hard metrics and soft metrics.

Hard metrics describe what customers do and soft metrics describe how people feel.

And, as such, soft measures provide the opportunity to prevent hard measures.

And, equally as important, hard measures are valid predictors of customer loyalty.

The efficacy of the available metrics is not the same for each potential measurement.

Also, it is a mistaken strategy to "measure everything."

Customer satisfaction, customer complaints and perceived value — and all of the factors influencing them — are the determinants of customer loyalty.

So, what are the metrics that should be used to manage customer loyalty?

Reading from right to left, the interrelationship diagram describes the cause and effect relationship of the many factors that ultimately influence customer loyalty.

Soft Metrics:
(How people feel)
  • Customer expectations
  • Perceived quality
  • Perceived value
  • Customer satisfaction
Hard Metrics:
(What people do)
  • Complaints
  • Results
  • Reliability

At its most basic level, soft measures, like expectations, perceived quality, perceived value and customer satisfaction, are important metrics.

Yet, it''s the hard measures that are the more powerful influencers.

While there are many factors to consider, at the strategic level, soft measures are a predictor of hard measures and hard measures are a predictor of customer loyalty.

Vincent F. Elliott is the founder, president and CEO of Elliott Affiliates, Ltd. of Hunt Valley, MD, He is widely recognized as the leading authority in the design and utilization of best practice performance-driven techniques for janitorial outsourcing and ongoing management.

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