Customer Loyalty

By Ed Marino

YEARS AGO, most in-plants were in the enviable position of having a captive customer base. That is rarely the case these days.

Like any other provider of services to the enterprise, today's in-plant must compete for business and demonstrate it can deliver value and price/performance as compared to its external competitors.

With that objective in mind, most in-plants have worked hard to stay current with technology; they carefully evaluate each investment against the end point vision of growing their value to the enterprise. Yet investing in and deploying digital technology for more efficient services is only part of the picture for future success.

As I was writing my book, "The Loyalty Payoff: Building Loyalty to Boost the Bottom Line," I was focused primarily on the loyalty environment for the small to mid-sized commercial and quick printer. But the book applies perhaps even more to the in-plant environment, where it can be a challenge to compete against the increasing array of external channels available for the production of printed materials.

Customer loyalty can be defined as the propensity of a customer to choose one business or product over another for a particular need. Do you know how loyal your customers are, how likely they are to choose your shop over alternatives, and what drives their decision process? If not, it would be well worth your time to dig into this topic. What you learn—and the actions you take as a result—may well define the future of your operation in 2006 and beyond.

Who's Number One?

When I joined Presstek as president and CEO, my first goal was to place a strong emphasis on transforming the company from its heritage as a technology company into a customer-focused, market-driven organization. Today at Presstek, the customer is clearly number one, and this has made a dramatic difference in almost everything we do. Where does the customer rank in order of importance in your organization?

The key to making the customer number one and to building an environment of loyalty among your customers is not a poster on the wall or a mission statement. It starts with a base of happy and dedicated employees whose every working minute is devoted to ensuring the delivery of a quality product that meets and exceeds the expectations of the customer.

It is also affected by the appearance of your facility: Is it welcoming or is it drab and dreary? How are customers greeted and treated when they venture into your shop? Does your team reflect a "can-do" attitude or do they feel put upon when a customer arrives with a rush job?

As you transform your in-plant into a customer-focused machine, you will gain an additional benefit: Happier employees are not only more productive, they tend to stay longer. By reducing your turnover rate, you will increase your profitability. Plus, long-term, happy employees are a cornerstone of solid and loyal relationships with your internal customers.

Rewarding Loyal Customers

For better or for worse, I spend a lot of time on planes and in hotels. The hospitality industry has a well-established system of rewarding customer loyalty. And while travel is not as much fun as it used to be, the benefits of being a frequent flyer or frequent stayer make a big difference in the experience that you have with that airline or hotel. The same is true for an in-plant.

People like to be recognized and remembered. Certainly, you are not in a position to award free travel or a weekend getaway to your loyal customers, but there are other things you can do to reward their loyalty and provide them with recognition. Put together a task force to look into how you can accomplish this within the operating context of your organization. Involve employees and customers in the process. Let their creative juices flow, and you will surely arrive at some unique and effective ways to reward your loyal customers and build new ones.

By the Numbers

Do you know who your most loyal customers are and why? Do you know who doesn't use your shop and why?

"A typical business hears from only 4 percent of its dissatisfied customers; the other 96 percent just quietly go away, and 91 percent will never come back," notes Dr. Michael LeBoeuf, a professor of management at the University of New Orleans and author of the classic book "How to Win Customers and Keep Them for Life."

He also points out that the average business spends six times more to attract new customers than to keep old ones, while in most cases, customer loyalty is worth 10 times the price of a single purchase.

Frederick Reichheld, in his book "Loyalty Rules!" states, "A 5 percent increase in customer retention yields a 75 percent increase in customer net present value."

Administering formal and informal customer surveys will help you assess your loyalty environment, develop a plan to reinforce positive behavior and change the mindset of those who are going elsewhere. While this assessment can be made based on conversations with customers and "gut feel," the real benefit comes from accumulation of data over a long period of time. This lets you see trends and establish a means by which you can quickly observe—and respond to—changes in those trends.

Reichheld teaches that companies can only build a sustainable competitive edge by creating enduring, mutually beneficial relationships built on trust with all partners in the enterprise. This includes both customers and employees. With a good grasp on the satisfaction and loyalty levels of employees and customers, and an understanding of reasons for dissatisfaction, you will be well on your way to building a loyalty environment. This can increase your value to the enterprise.

Along the way, you will be able to improve employee retention and increase customer utilization of your services. And the resulting dialogue with your employees and customers will uncover new products and services you can offer that will continue to increase your loyalty factor and the sustainability of your business.

Creating an environment of loyalty—with your customers and with your employees—could be the single most important strategy you employ to ensure your future success.

--By Ed Marino

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