You’re returning an item to a store who advertises their policy of taking back items that are accompanied with a purchase receipt. You’re slightly greeted at the “Customer Service” desk by a less-than-friendly person who takes your return and receipt. She fills out a form (taking several minutes because she is interrupted by two phone calls) stating the reason for the return, your personal information, the amount of the purpose, etc. You expect that the transaction is almost completed. Then she states that she must get the manager’s approval. After waiting several minutes, a manager finally appears, scribbles her initials on the form and walks away, without even looking at you or saying a word.
What was all that about? What about the company’s “No-Hassle Return Policy?” How can a supposedly customer friendly policy turn into such a time waster and emotional disconnect for the customer? Why doesn’t the company trust the employee enough to make the independent decision of approving the return?
Even though every organization is not a retail store, it does seem to be common in companies that the manager must approve the situation. Whether it’s lack of attention to customer complaints, poor signage, late product delivery, or lack of flexibility in meeting customer’s needs, it represents emotional disconnect with the customer and gives a reason for the customer to look for better value or a more pleasant experience elsewhere.
There is another option. The strategy of developing loyal customers versus satisfied customers is proving to have a hugely positive impact on business results. The current, most common strategy seems to be measuring and developing satisfied customers. The problem with this, however, is that satisfied customers are fickle, and they tend to see products and services as commodities because they have no emotional connection to doing business with a certain company. The result is that they buy based on price or a special promotion. They are constantly looking for a better deal.
Data suggests that real competitive strength is gained through growing a large base of loyal customers because those are the customers whose behavior is more predictable. Loyal customers keep coming back, and they bring new customers with them, providing future sales. The company saves advertising dollars for attracting new customers, thus increasing profits. This strategy suggests that profits are the effect, and the loyal customers are the cause. It seems like so many managers work on the effects (the increased profits), while ignoring the cause (the loyal customers). This behavior can hamper long-term profitability. Profits can be seen as the trailing indicators. They are actually measurements of past decisions. Loyal customers represent leading indicators and can be viewed as a gate to the future. This means that if an organization wants to make a transformational shift in how they do business in order to be more competitive and more profitable, they need a new strategy. They need a strategy to develop, manage, and measure loyal customers. With this approach, the experience of returning a purchased item would have been managed differently, and the customer would have reason to continue to return to shop at that store because of the level of emotional connection and positive experience they had.
Probably the most basic, yet most important, element in developing and implementing a successful new strategy is for senior management to own it. If they are totally committed to it, and are able to truly walk their talk, it will become a management philosophy, a part of the culture, and not just another “program of the month.” When it rises to this level of strategic awareness, it will in fact differentiate a company from its competitors.