Loyalty – I Spell it With 3 R’s

Company Loyalty – I spell it with an R “The most widely requested trade mark tattoo is the Harley- Davidson.. Tattooed trademarks are more than symbols of extreme brand loyalty….. This could be why we do not see more TIDE, DELL or VERIZON tattoos.” From International Trademark Association website With the possible exception of Harley-Davidson, developing strong (or stronger) loyalty finds its way into the hearts and minds of company leaders throughout all sectors of business. Increasingly experts are telling us loyalty in today’s business environment goes beyond product and zooms by massive customer satisfaction surveys. Marketing experts talk about brands and dream of building powerful images in the minds of customers. Despite dozens of books touting the power of Harley-Davidson, Coca Cola and Google in the market, for most businesses loyalty is spelled with an R: Retention, Retraining, and Research.

RetentionIn their book, First Break all the Rules, Marcus Buckingham and Curt Coffman state the secret to good business is retention. Herb Kellher, Southwest Airline Chairman says, “You have to treat your employees like customers. When you treat them right, then they will treat your outside customers right.” I grew up in a family business. I spent my summers working with my father. On the way to work each day, he made sure I was well indoctrinated to his way of doing business. His customers were his sense of purpose. And, he was there to make certain the customer was always treated right. The unfortunate part was he couldn’t be there 100% of the time. Most of the time customers were treated “right” but sometimes they were not. And, typically it was an inexperienced mechanic or a new part time night guy whose misguided actions lead to trouble. I came to believe:

• A single inexperienced or misguided employee action can lead to customer issues that took my dad months to fix – assuming he could ever get to the root of the problem.
• The best workers were happy and energized. They viewed my dad’s customers as their customers. They rarely had negative experiences with customers. If a negative issue came up, they had the experience and know how to bend rules, fix problems, and smooth over misunderstandings before they really became permanent.

In research leading to First Break all the Rules, Buckingham and Coffman interviewed 105,000 employees of 2,500 separate business units using the following twelve questions:

1. Do I know what is expected of me at work?
2. Do I have the materials and equipment I need to do my work right?
3. At work, do I have the opportunity to do what I do best everyday?
4. In the last seven days, have I received recognition or praise for doing good work?
5. Does my supervisor or someone at work seem to care about me as a person?
6. Is there someone at work who encourages my development?
7. At work, do my opinions seem to count?
8. Does the mission/purpose of my company make me feel my job is important?
9. Are my co-workers committed to doing quality work?
10. Do I have a best friend at work?
11. In the last six months, has someone at work talked to me about my progress?
12. This last year, have I had the opportunity at work to learn and grow?

After developing a random score based on the answers to the questions, they cross compiled the data with the specific business unit performance. Employees with the highest affirmative scores on the 12 questions worked for the best performing and most profitable business units.

These employees also had the longest tenure with the organizations. Retention, loyalty and profits come together under a single roof. Loss of employees with valuable relationships to customers leads to loss of customers.

Retraining I believe a corollary to retention is retraining. Retrain employees to build better relationships and your customers will be further (and faster) attracted to your organization.

Far too often organizations spend all of their efforts training employees on the “hard skills” of their business. Receptionists are taught to manage a 14 line phone system. Customer Service Reps are taught to better use Excel and other Microsoft applications, but very few companies are taking time to teach the soft skills that build relationships.

Some very successful companies are training for soft skills. Founded in rural Iowa in 1930 as a small neighborhood grocery store, Hy-Vee has grown to a $4.6 Billion and 49,000 employees. With a unique employee owner approach to business, Consumer Reports ranked Hy-Vee among the top five supermarket chains in the nation in terms of service and customer satisfaction. Hy-Vee provides soft skills training to every employee in their organization. Their jingle “A helpful smile in every isle” is backed up with intensive training. New employees (often teenagers) are taught to make eye contact, and smile whenever they encounter customers. Even the small things are covered in the employee’s training. For instance, when a customer asks where to find a specific product, the answer could easily be, “In the middle of isle two.” Hy-Vee employees are trained to stop their current activity and personally lead the customer to the specific location of the desired product.

This training pays a big dividend when customers comment, “The kids who work at Hy-Vee all seem to be so clean-cut and personable.” The great kids who work at Hy-Vee are a slice of teenage America. But, they differentiate themselves because they have been taught and rehearsed in the soft skills required to develop relationships with Hy-Vee’s customer base.

Other soft skills training being embraced by progressive companies are conflict resolution, team building, management / leadership skills, and “SMART” goal setting. With increasing frequency, organizations are employing Executive Coaches to provide soft skill training for top performing employees in leadership positions.

Research In their new book, Competing on Analytics: The New Science of Winning, Thomas Davenport and Jeanne Harris build a case for companies who use the power of complete data analysis to drive every portion of their business. Harrah’s Casino and Hotels is singled out for their very successful use of analytics to drive customer loyalty.

Harrah’s gathers extensive details on their customer base using the latest in information technology. The gaming industry has used recognition cards to boost customer loyalty for some time. Harrah’s IT based strategy called Total Rewards pushes the envelope further. Harrah’s gathers information to identify its best and most loyal customers and uses that information to capture a larger share of their gaming dollars. The results speak for themselves. Harrah’s continues to increase “same store revenue” by applying the results of the data gathered. Harrah’s hotel occupancy rate exceeds 90 percent versus an industry average of 60 percent.

According to the Wall Street Journal, Harrah’s experiments with the 6+ Million people on whom they have gathered data. They test and tweak new promotions by sending out slightly different promotions to two similar groups of people then monitoring the near and long term results. Is this loyalty or trickery? The results are the same. Harrah’s estimates that their share of “loyal” customer gaming dollars rose from 30% to over 50% since they implemented the program in the late 1990’s.

Another company that uses Analytics to drive loyalty is Amazon.com. If you are a frequent shopper at Amazon, you will receive recommendations that match and project topics of potential interest. Further, the web-retailer has built a plan called “Amazon Prime” which locks in high volume buyers through a club like “free shipping plan”. For $79 per year, members will receive an unlimited quantity of free 2 day shipping. The plan was originally panned by the financial community as a bottom line eating fiasco has been singled out as the largest driver of increased revenue through first quarter 2007. Detailed testing and predictive estimates allowed Amazon to better estimate the positive effects of the program long before it was fully implemented.

Conclusions

Company loyalty must be a conscious effort, a long term goal, and a continuing process. In today’s business environment, I would doubt that any organization can build long term success on any (single) one of these factors. But if a process is developed that retains the best of employees, retains them with increasing powerful skills and then provides them with the research needed to fine tune the attack – your company will be unstoppable!