Test your customer loyalty IQ and find out why you should care about these eight key areas of loyalty-building.

No matter what business you’re in, there’s always room to improve on customer loyalty. This test is an easy way to measure your current loyalty effectiveness by answering the following questions:


1. DO I PLACE AS MUCH EMPHASIS IN MY BUSINESS ON BUILDING STAFF LOYALTY AS I DO BUILDING CUSTOMER LOYALTY?

Why you should: It’s darn near impossible to build strong customer loyalty with a staff in constant turnover. Customers buy relationships and familiarity—they want to buy from people who know them and their preferences. The key rule of loyalty: Serve your employees first, so they, in turn, can serve your customers.


2. DO I ROUTINELY ASK MY CUSTOMERS ABOUT THEIR UNMET NEEDS AND UNVOICED COMPLAINTS?

Why you should: In most companies, customers articulate only 10% of their complaints. The other 90% remain unspoken, instead manifesting themselves in unpleasant ways: unpaid invoices, lack of courtesy to your front-line service reps and, above all, negative word-of-mouth. Thanks to the Internet, an unhappy customer can now reach thousands of your would-be customers in a few keystrokes. What to do? Follow these simple steps: Head off bad press before it happens. Make it easy for customers to complain—and treat their complaints seriously. Establish firm guidelines regarding customer response time, reporting and trend analysis. Make complaint-monitoring a key tool for executive decision-making.

3. AM I CONTINUALLY IMPROVING MY FIRM’S ABILITY TO MEET (AND WHENEVER POSSIBLE, EXCEED) MY CUSTOMER’S RISING CUSTOMER SERVICE EXPECTATIONS?

Why you should: Research shows that responsiveness is closely tied to a customer’s perception of good service. Since the advent of the Internet, customers have come to expect round-the-clock customer service. In addition, customers now arrive at Web sites starved for time and eager to locate answers. Technology tools such as customer self service, email management and live chat/Web callback are proving increasingly critical for companies as they strive to address customer needs.


4. DO I VIEW MY LOST OR INACTIVE CUSTOMERS (THOSE WHO HAVE BOUGHT FROM ME IN THE PAST, BUT NO LONGER DO) AS BETTER TARGETS FOR FUTURE SALES THAN NEW PROSPECTS (THOSE WHO HAVE NEVER BOUGHT FROM ME)?

Why you should: Research shows that a business is two times more likely to sell successfully to a lost customer than to a brand-new prospect. Yet winning back lost customers is frequently the most overlooked source for incremental revenue. Why? Because most firms consider a lost customer a lost cause. With the average company losing 20–40 percent of its customers every year, it’s imperative that firms create hard-working strategies—not only for acquisition and retention, but also for win-back. Since no customer retention program is 100 percent foolproof, it follows that every company needs a specialized process for recapturing those high-value customers who depart. Think of it as loyalty insurance.


5. AM I WORKING TO ENSURE MY FRONT-LINE EMPLOYEES ARE EQUIPPED TO COMMUNICATE
WITH CUSTOMERS IN VERBAL AND WRITTEN CORRESPONDENCE?

Why you should: Call-center agents will be the “loyalty warriors” of the future for many companies. Converged call centers that bring together multi-channel access points (phone, fax, email, Web) are on the rise. Agents must be as equipped to write an intelligent email reply and navigate the company Web site as they are to be helpful and friendly on a phone call.


6. IS ONE OF MY GOALS FOR THE FUTURE TO FIND EFFECTIVE WAYS TO TURN MY SINGLE
CHANNEL CUSTOMERS INTO WELL-SERVED MULTICHANNEL CUSTOMERS?

Why it should be: Research suggests that customers who engage with a firm through multiple channels exhibit deeper loyalty than single-channel customers. But take note: This finding assumes that customers get the same consistent service whether they come into the store, log on the Web site or call the service center. To accomplish this, firms must internally coordinate sales and service across multiple channels, so customer preferences are accessible no matter how the customer chooses to interact. Today’s customers expect to hop from channel to channel. And they expect good service to follow.


7. WHEN BUILDING CUSTOMER LOYALTY STRATEGIES AND PROGRAMS, DO I RECOGNIZE THAT ALL CUSTOMERS ARE NOT CREATED EQUAL?

Why you should: In building customer loyalty, the “80/20 Rule” is alive and well. Roughly speaking, 80 percent of your revenue is generated by 20 percent of your customers. The fact is, some customers represent more long-term value to your firm than others. Smart companies segment their customers by value and monitor activities closely to ensure high-value customers get the lion’s share of special offers and promotions. Unlike many firms who simply measure overall redemption, these savvy loyalty-builders pay close attention to who redeems.


8. IN GAUGING A CUSTOMER’S TRUE LOYALTY, DO I PLACE MORE IMPORTANCE ON MY
CUSTOMER’S ACTUAL BUYING BEHAVIOR THAN ANYTHING ELSE?

Why you should: A customer’s buying behavior, not attitude, is the truest reflection of loyalty. Generally speaking, customers become loyal to a company and its products and services one step at a time. By understanding the depth of a customer’s current loyalty, you can better determine the necessary actions to move that customer to the next level.
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JILL GRIFFIN leads Austin, Tex.–based Griffin Group (loyaltysolutions.com), which advises Fortune 500 companies on customer loyalty.