Customer Loyalty and COVID-19
10 September 2020
COVID-19 has disrupted our lives in ways which are quite unprecedented in peacetime with attendant impacts that are yet to be fully appreciated and may shape our activity and decision making for years to come.
For individual businesses and the economy in general, the financial disruption has dwarfed what was seen in the oil crisis of the 1970’s, the global recession of the early 1980’s and the financial crisis of 2008. But what does this mean for the relationship between businesses and individual Customers? What is the impact on ‘Customer Loyalty’ and has that loyalty ever been more important?
To answer these questions, it may be useful to start by considering what ‘Customer Loyalty’ actually is! After a decade or more of pondering and tuning my working definition, I find myself fairly happy with this current version:
“A loyal customer is one who genuinely believes that their relationship with your business is in their continued best interest.”
This can of course be quite a tricky thing to determine, though there are methods which can both provide measurement and indication of the factors contributing to, and detracting from, this desired state (subjects for another day!).
“Loyalty” can be inferred from various customer behaviours such as renewal of an existing contract or an increase in the annual value of discrete orders being placed for products, solutions, or services. While these are indeed a small sub-set of the potential benefits of customer loyalty, they are most certainly not in themselves an adequate guarantee that the desired relationship status has been achieved.
Even quite dissatisfied customers, and most certainly “passive” ones, can continue to do business with you for a range of reasons that may include a not quite expired contract, inertia or the fact that you are currently the lowest cost option. None of these factors are robust or desirable and create huge vulnerability in your customer base!
So, in early 2020 along comes COVID-19 (SARS-Cov-2) and disrupts every aspect of our personal and business lives. For many commercial organizations, supply chains have collapsed, income evaporated, and the most urgent and extreme review of expenditure has had to be undertaken using the thickest “red pen” available!
And what happens when the pen is poised against the “line item” that represents your customer’s commercial relationship with you? I would suggest that the most desirable situation is where the value you have added has earned the “loyalty” status that was described earlier!
So, what can we do now? Well, while accepting that an earlier, structured approach would have been better, making a start today is the best available option. Techniques to use feedback to understand customer loyalty are well established and the best applied of these also create an ‘Agenda for Action’.
This agenda will include not only responses to problems in the relationship but also content to ensure that “positives” occur more widely and frequently.
Loyal customers stay longer, buy more, and tend to tell other potential customers about the benefits you bring to their business. Seems like a great approach even if not faced with COVID-19 fallout!
This blog article is authored by Mark Eydman - Lead Consultant and Founder of Six Pillars Consulting where Quality, Customer Loyalty and Employee Engagement are recognised and leveraged as drivers of accelerated growth.
-------------------------------------------------------------------------------------
* Disclaimer:
NQA does not provide consultancy in order to remain impartial from management systems implementation.
NQA shall not imply that certification would be simpler, easier, faster or less expensive if a consultancy listed on the ACR is used.
ACR Consultants shall not imply that NQA certification would be simpler, easier, faster or less expensive if their services are used.
NQA remains impartial from our partners on our Associate Consultant Register and does not endorse one partner over another.
‘Our consultants’ do not work for NQA, they work as independent bodies in partnership with us through our Associate Partner Programme. In accordance with the accreditation standard ISO 17021-1:2015 NQA does not provide consultancy in order to remain impartial from management systems implementation.
To answer these questions, it may be useful to start by considering what ‘Customer Loyalty’ actually is! After a decade or more of pondering and tuning my working definition, I find myself fairly happy with this current version:
“A loyal customer is one who genuinely believes that their relationship with your business is in their continued best interest.”
This can of course be quite a tricky thing to determine, though there are methods which can both provide measurement and indication of the factors contributing to, and detracting from, this desired state (subjects for another day!).
“Loyalty” can be inferred from various customer behaviours such as renewal of an existing contract or an increase in the annual value of discrete orders being placed for products, solutions, or services. While these are indeed a small sub-set of the potential benefits of customer loyalty, they are most certainly not in themselves an adequate guarantee that the desired relationship status has been achieved.
Even quite dissatisfied customers, and most certainly “passive” ones, can continue to do business with you for a range of reasons that may include a not quite expired contract, inertia or the fact that you are currently the lowest cost option. None of these factors are robust or desirable and create huge vulnerability in your customer base!
So, in early 2020 along comes COVID-19 (SARS-Cov-2) and disrupts every aspect of our personal and business lives. For many commercial organizations, supply chains have collapsed, income evaporated, and the most urgent and extreme review of expenditure has had to be undertaken using the thickest “red pen” available!
And what happens when the pen is poised against the “line item” that represents your customer’s commercial relationship with you? I would suggest that the most desirable situation is where the value you have added has earned the “loyalty” status that was described earlier!
So, what can we do now? Well, while accepting that an earlier, structured approach would have been better, making a start today is the best available option. Techniques to use feedback to understand customer loyalty are well established and the best applied of these also create an ‘Agenda for Action’.
This agenda will include not only responses to problems in the relationship but also content to ensure that “positives” occur more widely and frequently.
Loyal customers stay longer, buy more, and tend to tell other potential customers about the benefits you bring to their business. Seems like a great approach even if not faced with COVID-19 fallout!
This blog article is authored by Mark Eydman - Lead Consultant and Founder of Six Pillars Consulting where Quality, Customer Loyalty and Employee Engagement are recognised and leveraged as drivers of accelerated growth.
-------------------------------------------------------------------------------------
* Disclaimer:
NQA does not provide consultancy in order to remain impartial from management systems implementation.
NQA shall not imply that certification would be simpler, easier, faster or less expensive if a consultancy listed on the ACR is used.
ACR Consultants shall not imply that NQA certification would be simpler, easier, faster or less expensive if their services are used.
NQA remains impartial from our partners on our Associate Consultant Register and does not endorse one partner over another.
‘Our consultants’ do not work for NQA, they work as independent bodies in partnership with us through our Associate Partner Programme. In accordance with the accreditation standard ISO 17021-1:2015 NQA does not provide consultancy in order to remain impartial from management systems implementation.