Customer loyalty: it ain’t rocket science

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Customers demand a high quality experience across all touch points, starting with their first service experience and continuing over the course of the customer's lifetime. [Thus] the only way to earn loyalty is through deeper customer engagement.” –Rebecca Prudhomme, vice president of product and solutions marketing, Amdocs

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The famous (and often infamous) architect Frank Lloyd Wright (at right) once uttered this simple three-word phrase when he received word that one of his students received a contract to design a building: “Hosanna! A client!”

An excellent documentary of Wright by Ken Burns and Lynn Novick explained why Wright uttered this expression: at its most basic level, architecture is nothing without clients, for nothing an architect constructs within his or her mind or designs on paper will ever be built without a client putting up the money and saying, “Yeah, build that for me.”

In large measure, the same holds true anywhere in the business world. Apple is as successful as it is because people buy its products and rave about the service they receive. Honda and Toyota upended and reordered the U.S. automotive market with them on top because they built better, more fuel efficient products and provided better service for them (and it’s taken almost three decades for U.S. automakers to catch back up).

Yet, apparently, the whole concept of “customer service” which thence leads to “customer loyalty” seems to be lacking in many corners of the global business community.

Take a look at the findings from a global survey conducted by Amdocs and the Informa Telecoms and Media analyst firm concerning the worldwide mobile phone and application market:

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• Some 66% of operators believe that customers are less loyal today than they were two years ago

• About 70% of service providers cite customer retention and loyalty as the critical factor for driving growth, with a strategic marketing prioritization shift from customer acquisition and market share to long-term customer engagement

• A whopping 82% of service providers said that customer loyalty programs would be "very important" or "important" over the next five years to their company's strategy.

• Yet over 65% of service providers only initiate a retention program when the customer has started the process of leaving, while 90% measure customer loyalty solely by “churn” rates (more on this term later).

• While nearly all providers believe service quality (97%) and customer care (86%) are two of the key drivers behind customer loyalty, survey of customers by Amdocs found those two metrics are regarded by consumers as “basic service requirements” and do not comprise competitive differentiators.

• Furthermore, two-thirds of consumers stated that it was personalized and tailored services, proactive care and rewards for being loyal customers that would win their loyalty.

Think those data points don’t have any relevance for trucking? Chew on this one then: Both Amdocs and Informa found that “organizational challenges” still block loyalty initiatives.

For example, while service and knowledge consistency across channels (94%), the ability to offer simple, transparent pricing (94%) and creating one integrated customer profile (89%) are regarded as vital in supporting customer retention and loyalty strategies over the next five years, only 21% of the 40 global service providers in the survey say they have the necessary collaboration today between their information technology (IT) and customer retention and loyalty departments to enable this.

Simply put: those companies are shooting themselves in the foot.

“Customer retention and loyalty, far from being a cost center, will become a new center of growth, provided that operators understand what their customers really want and devise their offers accordingly,” noted Julio Puschel, senior analyst and head of operator strategy for Informa.

“Importantly, customer retention and loyalty programs need to be initiated early in the customer life cycle and be present during the entire relationship between operators and clients, as opposed to relying on belated efforts to prevent ‘churn,’” Puschel added.

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Ah, there’s that word “churn” again – familiar across the trucking world as it relates to the long-time problem of drivers leaving one company for another in order to capture better pay, better home time, better equipment, etc. In the telecom market, “churn” relates to those customers that switch form one provider to another in order to gain lower rates and/or better service. Kinda two sides of the same coin, in a way.

Trucking, of course, is faced with some significant differences in the “customer service” category, as shippers for years have continually demanded for what some would call rock-bottom freight pricing. Indeed, precious little “loyalty” was on display during the economic crash of 2008-2009, when many shippers used that time of fiscal desperation to push pricing down further – actions many are paying for now as capacity has tightened considerably.

Yet I would argue that in many ways we’re returning to a more “normalized” market where the basics of customer service – and, in return, customer loyalty, will hold true. As a given, freight carriers need to be safe while consistently delivering cargoes undamaged and on time. Yet they are also seeking “partners” more frequently now, offering to lock up capacity at good rates in order to secure carriers who are more than simply average players.

That’s the thinking at least – something we hope will become reality sooner rather than later.

Discuss this Blog Entry 1

on Nov 4, 2013

Customer relationship is the key for success in business. You need to maintain a good relationship with customers. You should be able to meet the needs of customer. Thanks for sharing this with us and keep posting more updates in your blog.
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