Business - Back to base

Most resellers work extremely hard to find fresh customers, especially in today's highly competitive market. But many are also content to sit back on their laurels, doing little to ensure they keep hold of existing clients. This is a dangerous option, as even the best customers can be very fickle and will switch to an alternative supplier if they feel they are being ignored or neglected. Recognising the value of a loyal customer base is one of the first things resellers must do. Claire Grove, marketing manager at Axial System, says: "Axial has been around for a decade but it would not have grown and developed were it not for word-of-mouth business." Grove says that, as a business, Axial recognises the need to find fresh customers in the market and is actively doing this. She adds: "If we do not look after our existing clients as well as our prospects, our business will become static." Despite the increased popularity of recent technologies such as customer relationship management (CRM) software, there are still some fundamental things a dealer can do to hold onto its customers and to develop long-term business relationships for the benefit of both parties. More importantly, it makes economic sense to try to keep hold of existing customers. Grove says: "It is well publicised that it costs between three and six times as much to bring in new business as it does to retain existing clients, but few companies seem to take notice of this fact. "Axial Systems has not gone into the realms of CRM packages. It relies on common sense and consideration of how it likes to be treated as a customer by suppliers. We do not take our customers for granted. Courtesy, good communication and excellent service has always been appreciated far more than gimmicks. If we do not offer the quality of service our customers expect, there are plenty of businesses eager to take our place," she adds. Special relationships According to Tracey Calcutt, marketing manager at Mayflex, the effectiveness of repeat business with existing customers should never be underestimated. "About 80 per cent of Mayflex's turnover comes from customers we have dealt with for two years or more," she explains. "It's about offering the right product at the right price and making sure that it's delivered on time. People buy from those who will always go out of their way to help. We have very good relationships with the majority of our customers and I believe this is built on mutual trust. "Repeat business is easy money and I would rather spend time cultivating an existing customer than trying, often unsuccessfully, to entice new prospects." The more effort that is put into retaining existing customers, the bigger the pay-off, adds Calcutt. For customers to remain loyal, they must feel they are in some way special. This is where customer knowledge comes into play. Betsy Wood, senior business consultant at Nortel Networks, says: "Identify your customers and understand which are the best ones and which cost you money. Take the customer's point of view. What do they expect of you? What will keep them coming back? Start a dialogue with them and keep it going." Wood's advice is to understand customers to help interaction. Technology can be used to make doing business more convenient as well as making it easier for problems to be solved, she says. "Roll out the red carpet for your most important customers. And never forget the personal touch. Understand exactly what information you need about each customer and keep it updated," says Wood. "Data should be transformed into knowledge and be used to create profitable intelligent customer interactions. The more you know about your customers' individual needs and their likes and dislikes, the more you can differentiate your products. Customers do not necessarily want choice, so make sure you are in a position to offer them what they want, when they want it." Alan McGibbon, managing director of Scalable Networks, agrees. He says that knowledge about customers is invaluable. "We have developed a customer tracking database in MS Exchange/Outlook that helps us maintain regular contact. Technical support engineers, for example, have to make regular customer-care calls and dial-ins to customer networks," he says. "Support agreements with our main customers usually involve a number of consultancy or 'health-check' days so our engineers are there on a regular basis, and not just when something goes wrong. This way, we are involved in providing input to the decision-making process." Wood says: "Gathering data and information is just the first step. You need to translate what you learn into customised products and services." Responding to problems The common ground is the need to communicate effectively with customers. The biggest customer complaint is that they are kept in the dark, and the obvious thing to improve is communications. Mailshots, newsletters, surveys, competitions and even sending Christmas cards can add to the process of keeping a high profile in the minds of customers. Maria Casu, marketing manager at Ultima Business Systems, believes communication is the key to customer loyalty. "It is Ultima's number-one priority. Ultima has a customer magazine, targeted direct-mail, workshops and seminars. All these messages are relayed via a mixture of printed collateral, email and Web site," she says. But another key element is dealing with problems. The first thing to do is to acknowledge a complaint. It is amazing how many dealers ignore problems in the hope they will go away. An effective response is the next step, and a response is not the same as resolution. Customers expect quick decisions, otherwise it irritates them. They need to be connected with the best person to handle the call the first time," says Wood. "Whoever answers the call has to have the right tools and the right information. Instant delivery of this knowledge depends on an intelligent infrastructure. Research shows that customers who have satisfactorily resolved an issue are more loyal than those who have never had a problem." 10 TIPS FOR KEEPING CUSTOMERS Establishing a loyal customer base is no mean feat, but these tips can help: - Keep in touch. Be prepared to use a variety of communication methods: phone, email, post and personal meetings. No one method will suit all customers, so it is important to use a format that suits the individual. - Make sure customer database is accurate and updated - getting names wrong only highlights incompetence. - Know your audience. Send the right message to the right contact. Financial directors do not want mailings about bug fixes in version X, but IT support staff do. - There is no substitute for personal communication. - Above all else, try to understand your customer's needs. - Be accountable. Do not pass the buck. Set expectations and ensure promises are delivered. - Helping a customer in a crisis always fosters loyalty. - Polish technical skills so that they are a cut above the rest. - Ensure all staff understand the importance of existing customers. Staff must be reliable, courteous and professional when dealing with customers. - Make customers feel special. They'll move away if they feel that you do not care about them. CUSTOMER LOYALTY AND HOW TO RETAIN IT A traditional device that helps retain customers is the loyalty scheme as practiced by many supermarkets. Depending on how well they are organised and operated, they can be very effective. Maritz has been involved in the field of sales incentives and loyalty schemes for more than 60 years. Perry Ellis, channel marketing specialist at Maritz UK, believes that loyalty schemes or frequency marketing is a long-term flexible strategy that can help identify, retain and increase the number of customers, by communicating, recognising and rewarding them based on their purchase activity. Ellis has first-hand experience of many loyalty schemes, some more successful than others. "The most important factor when considering a loyalty scheme is commitment," he says. "Make sure any scheme that is introduced runs for a reasonable period of time. It is no good just running a scheme for a couple of months, as this does not give the participants a decent time in which to accumulate potential rewards." The really successful loyalty schemes, such as Air Miles or Sainsbury's Reward points, have been running for years, he says. This is because they have hit on a successful formula and so they stick with it. "The type of reward is also important. The more original the idea, the better the reward. For example, most people own a TV or a VCR, so you need to offer them something unusual such as a tropical aquarium or the very latest consumer item such as a DVD player," says Ellis. "But do not be tempted into offering really high value items such as a car. While these might look very appealing at first sight, customers will feel they are completely unattainable and will become disenchanted with the scheme. "The ridiculous can be the most successful. When we were promoting IBM typewriters one of the most successful rewards was a teddy bear. The users, usually secretaries, absolutely loved the teddy bears we shipped with each typewriter, so much so that IBM became Chad Valley's biggest single customer for teddy bears for a while." Any dealer will benefit from having loyal customers, and the more satisfied customers are, the easier it is to do business with them. But remember, it is easier to retain an existing customer than to look for new ones. CONCLUSIONS "The loyal customer is good for business, generating income through repeat orders. "All customers can be fickle. Never take a customer for granted. Keep them satisfied or they will leave for some other dealer. "Knowledge is power. The more that is known about customers, the better they can be served. "Communication should be an integral part of the customer delivery service. "Customer loyalty schemes can be very effective if they are developed properly. Appearing in this article: Axial Systems (01628) 418 000 www.axial.co.uk Mayflex (0121) 326 7557 www.mayflex.com Nortel Networks (01628) 432 000 www.nortelnetworks.com Scalable Networks (01494) 811 300 www.scalablenetworks.co.uk Ultima Business Systems (0118) 902 7500 www.ultima-bs.co.uk TriCoStar (01992) 442 800 www.tricostar.com Maritz (01628) 486 011 www.maritz.com.