In the competitive market landscape, securing customer loyalty has become one of the primary objectives for entrepreneurs.
In my experience working with small and medium-sized businesses, I’ve observed two types of projects: 1) businesses that invest heavily in advertising to constantly attract new customers, and 2) businesses that focus on retaining customers and increasing their purchase frequency through both online and offline processes.
The ideal scenario involves a combination of these two approaches. But why? Let’s delve into it in this article.
A dissatisfied customer doesn’t simply leave for competitors; they share their negative experience with acquaintances or leave reviews on publicly accessible online platforms, rendering the budget spent on their acquisition useless. To enhance loyalty, business leaders must understand what customer orientation entails.
In simple terms, customer orientation is an approach to business where the most important metric is customer satisfaction. Entrepreneurs need to clearly identify what customers want, implement those desires, and leave pleasant memories of the collaboration. This is relevant not only in the consumer market but also for enterprises operating in the B2B and B2G sectors.
However, it’s important not to equate customer orientation with the well-known phrase “the customer is always right.” Consumer demands can be absurd and may not align with business logic.
The Benefits of Customer Orientation
The primary goal of any business is profit growth. Good relationships with customers help achieve this goal for the following reasons:
- Customer Retention: A customer satisfied with the service provided will return again and again. They are less likely to switch to competitors, even if they offer lower prices.
- Increased Average Order Value: Loyal customers are willing to make additional purchases. A typical example is a shopper who encounters a knowledgeable consultant in a cosmetics store; often, they will buy much more than initially planned.
- Referral Leads: A satisfied customer will recommend your business to their acquaintances. Nowadays, people share information even with strangers: they leave reviews on geoinformation systems, social networks, and specialized forums.
- Simplified Sales Process: A strong brand ensures higher conversion rates into buyers.
Prioritizing customer orientation over advertising not only fosters customer loyalty but also attracts new customers through positive word-of-mouth while enhancing the efficiency of sales processes.
Examples of Excellent Customer Service
Western corporations operating in highly competitive environments for decades have been the pioneers in understanding the importance of customer orientation. These enterprises prioritize customer care at every stage of interaction, from entering the store to after-sales service. They invest significant resources in research to understand consumer needs, necessary for continuously improving all processes. It is this approach that helps them achieve market leadership.
Apple
This American corporation is renowned for creating products that are ideal within their niche. Developers meticulously design scenarios for using their gadgets, aiming for excellent ergonomics. Consumers value this brand because they trust its simplicity, convenience, and durability. The company’s leadership also prioritizes customer service by exceeding customer expectations and overdelivering.
McDonald's
The most well-known fast-food restaurant has achieved its market position through a careful approach to its visitors’ needs. The corporation strictly adheres to standards, ensuring consistency across all its restaurants. Customers know what to expect at any McDonald’s location. McDonald’s dedicates considerable attention to refining all processes actively involving frontline employees. This enables them to notice and address even minor issues from a management perspective.
IKEA
Customers visit stores of the Swedish brand not only for products but also for the atmosphere. IKEA’s customer service is exemplary. Extended warranties are provided for all products, and if a customer considers a product unsatisfactory, they don’t need to prove it; they can simply return or exchange it in-store. Similar to McDonald’s, the Swedish company actively involves frontline employees in quality management, making them feel more responsible for the outcome.
Toyota
The Japanese automaker has developed its own management system called “kaizen.” This philosophy entails continuous improvement in all areas. Each worker cares about the people who might use the results of their work. Thus, even the manufacturers of individual components have assembly plants among their clients.
Five Principles of Customer Orientation
Customer service specialists highlight five fundamental principles of customer orientation upon which service thinking is based:
- Thinking in the Customer’s World: To implement this principle, deep exploratory work is necessary, along with empathy. Employees must understand customer problems and seek new ways to solve them. Developing this type of thinking requires developed empathy, love for people, inventiveness, and interest in their work.
- Sincere Desire to Help: More often than not, successful businesses are those created with a genuine interest in their work. If a leader is genuinely interested in their business and can skillfully select and motivate their team, customers will recognize it.
- High Degree of Employee Freedom: Excessive regulations deprive a company of flexibility, potentially leaving customers dissatisfied. Employees should have the right to make decisions within their area of responsibility. Thus, if sales consultants offer products that best meet consumer needs rather than focusing on the most marginally profitable items, customer churn will tend to minimize, and the company’s trust will begin to grow. The employee motivation system should be based on the desire to leave customers satisfied. Specialists should not be tempted to seek short-term gains, which often result in strategic communication mistakes.
- Individual Approach: In the 21st century, consumers value unique solutions. This is why tailor shops, where clothes are custom-made, still exist. Any company can apply a flexible approach: both small organizations and large enterprises. To do this, it is necessary to develop alternative solutions. For example, an automaker should allow customers to choose only the options they need in a car.
- Aim to Provide More Than Promised: Receiving slightly more from a company than promised in advertising will evoke positive emotions in the customer. They will remember the company and return to it, as well as share their positive shopping experience with acquaintances. However, this tactic should not be overused: if regular bonuses become expected, it leads to disappointment when they are suddenly absent, which may negatively affect the overall service experience.
By adhering to these principles, businesses can establish customer-oriented practices that not only enhance customer satisfaction, but also foster long-term loyalty and advocacy.
Metrics for Assessing Service Quality
In English-speaking management, the saying “can’t measure — can’t manage” is prevalent, meaning that without measurement, effective management becomes challenging. To progress, it’s crucial to understand which metrics to track. Managers often measure the following indicators:
- CSAT (Customer Satisfaction Score): This measures satisfaction by dividing the number of satisfied customers by the total number surveyed and multiplying the result by 100%. Generally, a score above 75% is considered good.
- CRR (Customer Retention Rate): This calculates retention by dividing the number of customers making repeat purchases by the total number of customers. The calculation period depends on the duration of the transaction cycle. For most companies, this rate should be maintained at no less than 60%.
- CR (Churn Rate): This indicates the percentage of customers who have left the company during the reporting period. To calculate it, subtract the CRR value from 100%.
- CLV (Customer Lifetime Value): This represents the total value of orders from a customer over their lifetime.
- NPS (Net Promoter Score): This measures loyalty by calculating the difference between satisfied and dissatisfied customers divided by the total number of respondents.
All these metrics should be tracked over time. Deterioration in one or more results indicates issues in customer service.
How to Enhance Customer Orientation
Implementing a service-oriented approach is a complex task that requires systematic process changes. Equal attention should be given to employee development and understanding customer needs.
Employee Customer Orientation (Internal)
It’s essential to encourage employees to care for customers. This applies not only to sales managers and frontline specialists but also to workers on the production line.
Building a customer-oriented team starts with personnel selection. It’s important to determine if a candidate aligns with the company’s values. Continuous development of employee skills is necessary. This involves deepening their market and product knowledge, effective work techniques, and empathetic communication.
Company Customer Orientation (External)
This direction involves studying public opinion. Even before product launch, it’s essential to identify the target audience, create their profile, and understand their pain points. After launch, regular customer interviews and surveys are needed for product improvement. Mass surveys are useful for monitoring satisfaction levels.
Mistakes to Avoid
Sometimes company leaders take actions to improve customer service but fail to see results or even notice a decline in metrics. They typically make several common mistakes:
- Implementing service-oriented principles nominally. Stating the importance of customers while ignoring their needs creates a counterproductive effect.
- Following the principle of “the customer is always right.” It’s impossible to please everyone. Focus on the core target audience.
- Misidentifying what’s important to the customer. Customer service is based on research, allowing you to identify customers’ true preferences.
Is Customer Needs Orientation Always Necessary?
Service quality isn’t always paramount. In some niches, the cost of goods or services matters more. For example, a shopper won’t reject a trip to a wholesale store if they don’t encounter friendly smiles or free bags at the checkout. They’ll scrutinize prices: if the cost of groceries is significantly lower than at the local supermarket, their needs will be satisfied. Another example is the policies of low-cost airlines. Despite disgruntled passengers leaving angry reviews on social media, they continue to purchase tickets because the business fulfills its stated goal: to deliver people to their destination on time and at the lowest cost possible.
How Can I Help Increase Customer Orientation in Your Business?
Service Audit and Mystery Shopping
My team and I will conduct a comprehensive analysis of the quality of your service, identifying its strengths and weaknesses. Through mystery shopping, we can provide an objective assessment of your staff’s performance and service quality.
Surveying Satisfied and Dissatisfied Customers
We will survey your customers to understand their needs, expectations, and satisfaction levels with your company’s services. This helps us identify areas for improvement and evaluate the effectiveness of your current practices.
Development of a Personalized Loyalty Enhancement Strategy
Based on the audit and surveys’ results, we will propose a personalized strategy aimed at increasing customer loyalty. We will develop specific steps and recommendations to make your business even more attractive to customers.
Training for Your Team on Customer Orientation in Business
We will offer training programs and workshops for your team to enhance their understanding of customer orientation and customer service skills. This will help your employees better understand customer needs and interact with them more effectively.
To create a customer-centric enterprise, a systematic approach to organizing work, tracking key metrics, and flexibly controlling all processes is necessary. Building such a system requires the involvement of top management.
I often assist companies in improving customer service. We develop tools for research, customer communication, and quality control. Our specialists will analyze your business and select the most appropriate tools. For consultation, please leave your contact number in the inquiry form.