Customer Loyalty is Not Guaranteed
Last month I cancelled my account with a highly reputable and well-known service provider with whom I had been doing business for over 20 years. Up to this point my loyalty to this provider was so strong that I would not consider changing companies, or even looking at a competitor's product. In addition to that, based upon my relationship over the years I used to reference this service provider in my customer service classes as an example of customer loyalty and never imagined I would ever leave: but I did. The sad part for this provider is that it will cost them at least five times as much to secure a new customer to replace my business as it would have had they been able to retain it.*
What, you may be asking yourself, could have ever caused me to do something I never thought I would? It's not a very long story, but it is one based upon the breakdown of the relationship with the provider.
Due to special circumstances, I needed to make some changes to my service requirements. Numerous attempts were made over a six-month period inquiring about these requirements. Each time, the provider's representatives were friendly and helpful. They promised to obtain the information and get back to me, however, I never received the information I was requesting.
The 'last straw' occurred when I spoke to my personal representative directly. Again, the conversation was cordial and the provider was helpful and promised to assist me with my issue but I needed to provide some additional information by the end of the month. I agreed to provide it by month-end and thought the issue was resolved. Imagine my surprise when, two weeks before the deadline, I received a letter from their headquarters office informing me they were happy to retain one part of my business but would not provide me with the additional service I requested because... now get this... they did not have all the required information -- which still had two weeks remaining before the deadline. Not a call from my personal representative... just a form letter from headquarters!
Is this the way to treat someone who has been a loyal customer for over 20 years? I don't think so. At that point, I decided to take the suggestions from friends and family members I had been ignoring for years about another service provider. One phone and I was a new customer of theirs. This company was able to provide the same services and for about half the price. Yes... I knew I was paying the other provider more, but I was doing so because of the quality of the relationship -- not the money.
What to Do
There were a few instances where the original service provider might have been able to salvage my business.
- Credibility: Do what you say you are going to do. Every time I spoke with a service representative of the first company I was promised a call back which never came. The first time I could overlook as an oversight, however, after the second, third, etc. experience of no contact the company has lost all credibility as far as I was concerned.
- Honesty: Tell it like it is: When I spoke with my personal representative I was told I had until the end of the month to submit the additional information and then after two weeks received a rejection letter. If the information was needed in two weeks -- tell me. If the timeframe was miscalculated; let me know. After being a good customer for over 20 years I never heard a word back from this person. I thought I might have received a phone call to inquire why I left after such a long period of time; but never did.
- It is personal: The old saying goes, "It's not personal... it's business." However, relationships are personal; that is why we have our favorite service providers; my hairstylist, my manicurist, my doctor, my lawyer, my financial advisor, my realtor, my insurance agent, my mechanic, my coach, etc. They are all based upon the relationship with the person and are rooted in trust. I enjoy talking to you. I trust and believe what you tell me. Once trust in a relationship is broken, that's the beginning of the end.
After all the years of being a good customer with this service provider I wondered why I stayed with them for such a long period of time. I realized I paid more money than I had to because of the quality of the relationship and I felt a sense of betrayal for all my years of loyalty.
Important Questions to Ask
The questions every business person needs to ask is, where in your company are you losing loyal customers because of a breakdown in relationships? How many phone calls are not being returned or customers' expectations left unmet? How many loyal customers are you losing because they became disillusioned and checked out a competitor's product they might not have even considered looking at had their expectations been met? How can you retain these loyal customers?
Savvy business people understand this and recognize that customers will pay more for quality in both relationships and service. When relationships are nurtured and valued, customer loyalty grows and they become fans of your business who will refer you to their friends, family and business associates as well as continue to return to you for more products and services; which in turn contributes to the bottom-line results of your business.
*Reichheld, Frederick F., 1996, Harvard Business School Press, Bain and Company, The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value