Improving Customer Relationships - Making the Case

Finding new customers costs five times as much as keeping old ones (Frederick Reichheld, The Loyalty Effect). Yet the quality of customer service in the United States continues to slide as too many companies fail to understand the power of building customer relationships and loyalty. Why are we so stubborn? Read on as we'll debunk the most common excuses...

By Chris Alfe, Thingamajob Staff Writer

Excuse:

"We can't directly determine whether it does any good or not, and our focus with any new campaign right now is ROI."

Response:

Customer satisfaction and loyalty aren't that difficult to measure, and tying these figures into actual dollars and seeing the impact on the bottom line is far from impossible. (For smaller organizations, it's surprisingly simple.)

• You can measure the effect of new customer service quality initiatives via simple data collection plus metrics and figures already known.

• Gather customer satisfaction data and compare it against buying frequency or volume. Are happier customers buying more? Or, test a new servicing program by implementing it only to a segment of your business and gauge its effectiveness by isolating other variables and comparing the segments over time.

Excuse:

"Improving our customer relations would cost too much money at a time when we're trying to cut these types of expenses, not increase them. We're more focusing on sales right now."

Response:

Your customers are your sales! Customer Relationship Management (CRM) is a hot concept at the moment; it involves the installation of procedures and systems to gather and use customer data. Converting knowledge about your customers (the backbone of CRM) into better service is the first step. Measuring the effect of this improved and customized service follows.

The information gathered into CRM databases, through questionnaires, in-call surveys and other means, is golden! It can be used by the sales department to better create new products or services that meet the needs of your customers. It can be used by the marketing department to pitch these products or services, and even by the IT department, in many cases, to support them.

The idea that customer relationship building is a feel good concept without real ramifications is outdated. Customer relationships are the primary focus of many acclaimed, successful companies. Thomas H. Davenport, Boston University Professor, says "companies have begun moving from a product-centric view of the world to a customer-centric one." (Bronwyn Fryer, So Happy Together, CFO Magazine)

Excuse:

"Building customer relationships takes time. Our call center is at capacity as it is. We can't take on more volume. We'll be blabbing on the phone all day."

Response:

Building customer relationships does take time, but it doesn't create more volume over time. Customers who have their expectations met (in part thanks to your understanding of those customers and their needs) do not have to contact you time after time to correct problems! Per-customer call center volume may actually decrease over time, as will the time of each call since new CRM systems will allow better access to customer information in real-time. Plus, think of the cost-savings realized by the sales, marketing and other departments every time they use this data to hone their projects!