Many companies use loyalty programs to encourage customer retention. There is nothing wrong with this of course–it is the idea behind frequent flier mile programs, and frequent buyer discounts. However, there is something much less programmatic, and perhaps less costly: send PRINTED (not electronic) thank you notes.

According to the article “How Thank You Cards Build Customer Loyalty” on the American Express Open Forum website, these cards can serve several purposes:

• They show, in a tangible way, that you care
• The break through the digital clutter
• Help build relationships
• Are memorable

In a world where email and text have taken over printed communications and phone calls, an old-fashioned thank you card has become so unusual that it takes customers by surprise. There are other small tokens that a company could also undertake to thank a customer, such as gift cards to national stores.

The most important part of the thank you card is the thank you. Many companies forget to thank their customers for their business–there is no quicker way to feel like you have been taken for granted.

For instance, if you book a ticket on airline and then need to cancel, even for terrible reasons (death in the family, sudden illness, etc), the airlines will not refund you AND they will charge you a fee for cancellation. Ralph Nader recently took on USAirways about such a scenario, and won.

Policies that don’t show empathy and understanding for the real life situations most people face will cause customers to despise a company.  Last week, a majority of the country was broiling under excessive heat. Washington DC’s Metro, which often has failing air conditioning systems, lifted a policy about not allowing drinking water on the trains and buses, ONLY FOR TWO DAYS. Monday rolled around, the heat was still in place, and Metro stated that not drinking on Metro was the LAW, and that allowing it during heat waves would be a “slippery slope.”  This shows a basic lack of understanding about the fact that the Metro serves people–people who are hot and who might want to drink a bit of water to prevent dehydration. Also note, that there are no drinking fountains anywhere on Metro. By enforcing a law that clearly ONLY benefits the company without taking into consideration the needs of its passengers, the Metro is showing that it puts customers last, not first.

When company policies are entirely about protecting the company, and not about accommodating its customers, then customers will complain, be unhappy and even stop doing business with that company.

Last week, the online DVD/movie streaming service, Netflix, angered a good many of its customers. It announced, quite suddenly, that it was increasing its prices for its popular DVD plus streaming plan from $10 to $16 per month. All customers were forced to make a decision:  stick with the new, more expensive plan or switch to a streaming or DVD-only plan. The burden was fully placed on the customers with only about a six-week lag time before the price change would be imposed.

Netflix received a lot of flack. Many people cancelled their service, and in fact, Netflix KNEW it would be angering its customers and planned accordingly by hiring more customer service representatives.  Netflix could have, and should have, handled a price increase in a way to avoid making its customers unhappy. Entrepreneur.com analyzed the decision and drew several business lessons from it, which can be read here.

The San Francisco Chronicle had a comprehensive look a the fiasco and said this:

Even though financial analysts said the price increase can be justified, one marketing expert said Netflix did a poor job of explaining it and now risks causing greater damage to a brand that customers loved.

Netflix should start with an apology, said Howard Belk, co-president and CEO of the global branding firm Siegel+Gale of New York.

Businesses and organizations must work to avoid making their customers unhappy because there will be a backlash. Businesses that want to thrive should work actively to make customers happy. Christopher Elliot on Bnet.com offers “Simple Ways to Make Customers Happy.” One simple thing: exhibit a caring attitude.

Netflix made many customers unhappy in order to raise their prices.  Perhaps the company will make up for lost customers through increased revenue, but bad blood and bad publicity is a bit harder to quantify and harder to fix.

• Airlines
• Newspapers
• Subscription television service
• Wireless telephone service
• Motion pictures
• Fixed-line phone service
• Cellular telephones
• Hospitals
• Network cable TV news
• Computer software
• Limited service restaurants

The danger of automation is that customer service loses sight of the fact that the customer is a person. People have individual needs and requests. Try asking a kiosk to upgrade you to business class because you have a bum leg!

Perhaps this is an issue that is faced only by the bigger organizations, but many times customer service is about inputs and numbers and not about dealing with customers (individual people).

Rawn Shah wrote an interesting blog post (A Tale of Maintaining Congruency in Customer Service) on Forbes.com about how the experience of Comcast’s customer service was vastly different on Twitter versus traditional phone interaction. Apparently, the company saw the social media channel as a public relations move and not a person-to-person engagement, which it was. As Shah writes:

work with your customers as if they were real relationships, not an entry in some database. This means not just knowing who they are but talking and treating them as you would a good friend. It is possible in small and large scale. The hard part is making that happen within the processes of your organization.

Yes, dealing with each customer as if you were dealing with a friend is hard, but the value lies in building the relationship. Customers are only customers as long as they maintain a relationship with your organization.

Take for example the beleaguered airline industry. We have seen service dwindle to non-existent. You check yourself in at a kiosk, and if you want anything more than a lukewarm beverage, you have to pay for it. And pay some more if you want your bags to fly with you. Christopher Elliott, who writes about the travel industry, points out (sarcastically) the  “5 Customer Service Lessons from the Airlines” in Bnet.com. Basically, airlines have felt free to follow each other into treating the customer as an afterthought.

If you want to be leading on customer service, you should not be following poor examples of service. Just because the other guys are doing it, does not make it right. Instead, work on building your customer service.

Carol Tice gives some good tips on “How Your Business Can Build Customer Loyalty–and Profits” on Entrepreneur.com. She recommends the following:

• Answer customers as quickly as possible
• Be human
• Leave a good impression both on entering and exiting

To be a true leader is to cut the path, making tough choices in the interest of a greater good. Customer service deserves leadership.

Often, once a sale has been completed or an issue resolved, customers hear nothing more from the organization. Think of how many times you have stayed at a hotel and not heard a word after you signed the credit card receipt. Or if you do hear something, it is an offer to sell you more service or product.

To retain customers and encourage loyalty, organizations have to figure out ways to reward loyalty and appreciate their customers’ patronage. For small businesses, thank you notes and calls are feasible. For larger businesses, there could be loyalty programs, repeat business discounts and special treatment.

On the Small Business CEO blog, in the post “The 4 Biggest Customer Service Mistakes You Can Easily Avoid,” number three is “being inaccessible.” Many times businesses bend over backwards to seal a deal only to become silent once the sale has been made.  Many businesses spend thousands of dollars to sell a product/service and then, will not spend the cost of a first class stamp to thank a new customer for his/her business.  This does not encourage customer retention.

Basic customer service avoids losing customers, but “advanced” customer service will work to retain customers, increase loyalty and increase sales.

In it most simple form, customer loyalty means the customer will keep using your products or services. One step up is when the customer uses your products or services regardless of price or convenience simply because he/she likes your organization. And the most advanced form is when the customer actually becomes your ambassador–speaking well of you and referring business your way.

(A caveat to the above: this does not apply to utility companies and other monopolies where customers have no choice but to stay with you. This is not loyalty to your company but rather a need for your services.)

To measure customer loyalty, you could start by measuring repeat business by customer. Do you have it and from what percentage of your customer base? To measure more advanced forms of customer service, you could ask new customers if they have been referred, and by whom. You could also track your best customers and their spending over time, to see if price increases have made them drop off.

If you have low numbers of customer loyalty, it is time to audit your customer service to see if you are indeed inspiring company loyalty. How hard is it for customers to get customer service? How long do they have to wait or what information are you requiring? Are you processing complaints, and if so, what is the main source of complaints? Do you canvass your customer service representatives to see what customers are unhappy about, beside any issue they have contacted your company about?

Business Insider offers up “Ten Customer Service Tips for Customer Loyalty Month,” which include:

• Treat customers as if they are special
• Send thank you notes
• View your customers as a community and actively engage with them.
• Be personal

How will you mark customer loyalty month?

According to an article in the UK-based CallCentreHelper.com, “Customer service is key to ROI,” you should also be looking at harder to measure issues such as customer perception of your organization. These conclusions are based on a 12-month study conducted by The Institute of Customer Service.  Jo Causon, CEO of the Institute said the following:

“To position return on investment in the boardroom and establish customer service as a key strategic issue for all organisations, we must shift customer service away from just measuring simple customer satisfaction into much more complex areas, such as how customers perceive the value of their relationship with that organisation.”

Other areas to measure include how the customer service representative perceive the transactions.

Every organization should invest some time and effort in measuring the effectiveness of customer service.  What would make for an effective call for your organization? Problem-resolution? Speed of problem resolution? Happiness of customer?  Determine what benchmarks will be important to measure against over time.  You will also have to decide when and how often you will measure customer interactions. Is it a monthly, quarterly or yearly measure? Will it be done at the end of every customer interaction or via follow up phone call or mail questionnaire? These measure will yield quantitative results. To get more qualitative data, you may need to have focus groups or more in-depth interviews.

Measure effectiveness to determine if you are succeeding, and certainly, to see whether customers are satisfied.

Last week, the news came that Facebook is rated as one of the companies  with the worst customer service. The conundrum is that it is also one of the fastest growing companies with a very large customer base (500 million people worldwide). Although people keep using the social sharing website, they are not happy about it. Will this have repercussions?

The perceived decline (and complaining about) customer service is not relegated to the United States. Writing in the Sydney Morning Herald, an Australian blogger writes about her difficulties in getting any type of help while shopping for clothes.

And yet, as we have discussed previously on this blog, customer service is a differentiator for businesses and can help the bottom line.  Julia Clarke, writing in the Australian blog Dynamic Business, concurs.  She says:

Australia’s small businesses can use exceptional customer service to attract customers away from big businesses, a new survey has found.

People care about customer service, they rate companies based on customer service and they reward the companies that make customer service a priority.  It is that simple.