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University of Massachusetts Amherst

Family Business Center

Employee/Customer Skills are Key to Business Growth

by Shel Horowitz

When author and marketing consultant Alexander Hiam came to the Family Business Center February 26, he didn't talk about the usual marketing stuff.

His speech wasn't about getting media coverage, making good ad buys, or exploiting the marketing capabilities of the Internet and direct mail.

Hiam covers those topics in his many books, among them Marketing for Dummies, the Portable MBA in Marketing, and the Manager's Pocket Guide to Creativity.

But the speech looked closely at one key area of business success: how to attract and retain customers by providing a quality experience.

For Hiam, the most important aspect of customer retention is providing a high quality experience to the customer--and there are a few different components of that experience:

  • Substance over style: you can have the best marketing, the best packaging in the world, but if the product isn't worthy of the hype, you won't keep the customer.
  • Extreme emphasis on customer relationship—going well beyond the traditional, limited view of customer service, to the point where employees actually anticipate customers' needs, and are proposing accurate solutions to problems the customer may experience, but hasn't yet articulated.

But it has to be genuine.

The whole culture of customer satisfaction will only work, Hiam believes, if you run the business the way you want to live. Relationships among family members (in and out of the business), employees, and customers are interrelated. Thus, the way you treat employees or family members will reflect on the ways they treat your customers. Employees who are valued, who are asked to contribute to the thinking behind a business, will be more likely to make that extra push so that the client feels the specialness of his or her own relationship with the firm

In fact, Hiam cited a wildly successful company, Rosenbluth International--one of the leaders in the corporate travel market. This firm gets $3 million in new business every day, and is growing at 15% a year. They do almost no traditional marketing, with an advertising-to-sales ratio of 0.00004. But in an industry where a 75% retention rate is considered terrific, this company retains 96% of its 1500 corporate clients. They will go so far as to open a new branch office, just to serve a new account.

Says Hiam, "build relationships, never lose a customer. You grow with your customers," so that a company that spends $1000 on you in the early stages may spend $100,000 ten years later.

When there is a customer service issue, make sure the language your employees use is in harmony with the results you want to achieve. If the goal is to have a happy customer, it's not enough to simply address the customer's grievance. Use language that accepts responsibility and moves the customer's agenda forward. For instance, instead of responding in a sentence that begins, "We would...," take personal responsibility for the outcome by starting your answer, "I will..."

Also, avoid interruptions, qualifications ("I'm sorry, BUT..."), the Royal We, putting feelings in the customer's mouth, or focusing on what the company can't do for the customer, instead of what it can do.

Employees must be trained to listen appropriately, defuse conflict, and let the customer feel his or her victory. "The most empathic 'comment' is silence--spend a lot of time listening!"

But according to Hiam, far too many companies have a "false customer orientation." They blame the customer, explain the reasons, apologize insincerely, or even actively encourage the customer to defect to a competitor!

The skills of listening well and responding appropriately are not necessarily intuitive; they require training. Hiam noted that he himself is still grappling with accepting and incorporating less-than-positive feedback. "It takes me years to really listen and figure out they were right."

Hiam noted that employee retention is down 19%, and wondered out loud if that number was connected to the decline in customer satisfaction--currently hovering around 29%, meaning almost one in three customers are not satisfied. He called for companies to institute "commitment-based leadership: commitment comes first in developing the maturity model" of a goal, framed with employee independence and responsibility, an achievement motive, and two-way empathy.

An example of the maturity model: the president of Nintendo told an engineer, "Make something great that we can sell for Christmas"--no other direction. The engineer came back with the phenomenally profitable Game Boy.

Hiam is critical of some of the traditional touchy-feely consultants' tools: "Brainstorming without criticism is terrible advice. You must select and refine--but [the brilliant ideas] may come out of terrible ideas." And "Feedback is the breakfast of champions only if the giver is good at getting feedback."

However, Hiam is a strong believer in identifying your Unique Selling Proposition (USP), and pointing it out in your marketing. "What makes you special? translate that into a positioning statement: What's the benefit? To whom? Why are you better than the competition?" With the USP, bring in and retain customers by doing something better, faster, more innovatively, and/or less expensively than anyone else is doing it.

Still, customer retention may call for a lot of creativity. For instance, if you sell photocopiers with a five-year lifespan, don't wait until the customers start to complain in the fifth year about high repair costs. After four years, send a mailing to your customers, noting that their machines are aging--and you want them to know about your "borrow-a-photocopier" plan, in which they can sign up to use a brand-new loaner while their own machine is down for repairs.

Instead of an angry customer, frustrated that the equipment is down, you've created a loyalist who is aware that you'll go the extra mile, alerting your customers to an issue that hasn't even surfaced yet, and providing an easy solution. Better still, there's a good likelihood that they'll like the modern machines so much better, they'll purchase one.

Hard to come up with a more win-win scenario than that!

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