A New Definition of Loyalty

Today’s customer is changing, and what makes them loyal also is changing, said David Peters, Jewelers of America’s director of education, in a presentation on “Customer Loyalty” Thursday.

He noted that consumers enjoy shopping less and spend less time doing it, because they’re protective of their time. “The total time spent shopping has decreased almost 80 percent since 1980,” he said. “That means these customers’ time cannot be wasted.”

Consumers also have a multitude of choices and options and thus have high standards. “Customers today are quick to complain,” Peters stressed. “The smallest thing they will seize on to, and make it a big issue. And then when you fix it, they are slow to forgive.”

He noted that the overwhelming reason why customers don’t come back to retailers is a poor shopping experience. “It wasn’t what you sold, it was how you sold it,” he said.

Peters noted that building loyalty is important because it is easier to sell to existing customers than to create new ones. “Building loyalty leads to larger and more frequent purchases and enthusiastic referrals,” he added. “Loyal customers are more profitable, trusting, and less likely to defect.”

The stages of customer loyalty include “prospect,” “first-time buyer,” “repeat customer,” “loyal customer,” and “advocate.” Peters said the advocate is “not just a customer who tells all their friends about you; they drag all their friends in to see you.”

He noted that building loyalty requires an “all-inclusive approach aligned with your overall business strategy.” He said each salesperson should list their top 15 customers and focus on giving them the best service possible.

In addition, every store needs to establish written policies and procedures that outline expectations related to customer interactions. “It is so unfair for store owners to hold employees to certain levels of accountability unless those levels are documented,” he said. “Let them know: At Joe Smith Fine Jewelers, this is how we answer the phone. And when we have to transfer a call this is how we do it.”

He also advised retailers to have sales staff research when and how their best customers buy and use the information to target their needs.

The key is for retailers to create their own brand. “You have to figure out who you are,” he said. “You can’t be all things to all people. So, find your niche, whatever it is. Do you specialize in colored stones? Do you have the biggest pearl department in town?”

He added that owners have to find out how the staff and customers perceive their store. “It is probably not the same as you perceive it,” Peters noted, recommending things like customer focus groups.

Once you do define your brand, incorporate that branding message in all forms of marketing and advertising, Peters advised. The most important thing, he noted, is treating the customer in a nice, friendly, compassionate way. “A fancy store, beautiful merchandise, a top-notch jeweler—all that is worthless if you are not nice to the customers when they come in,” he said.

Employees need to be trained to deliver outstanding customer service, Peters stressed. “The simplest mistake can undermine the best efforts,” he noted, adding that employees have to work on verbal and written communication skills.

In addition, jewelers should make sure their employees are constantly learning new job-specific skills, including listening skills. “We in this industry are so focused on product knowledge,” he said. “Being a G.G. doesn’t mean that people have people skills. It doesn’t mean they know how to talk to customers in the right way.”

He also advised jewelers to find ways “to make things easier for customers” and “minimize customer inconvenience.” Figure out what annoys customers the most, and fix them. If people are frustrated with deliveries, make sure they’re done on time.

Retailers also need to keep their promises and exceed expectations. “By exceeding expectations, you are separating yourself out from the competition,” he said. “For example, promise a repair in four days and have it ready in three.”

If there is a pending transaction, “keep the customer informed,” Peters advised.

He also said appropriate technology is critical to success. “If you don’t have a database that allows you to record, organize, and customize all reliable data, go buy one,” he said.

A store’s Web site should collect customer data and give customers opportunities to contact you, Peters noted. He also recommended providing each employee with a personalized e-mail address for customer communications.

Yet, never forget the human touch, he advised. When you get a new customer, assign them to a particular salesperson, “so that the contacts between that person and your store are always human being to human being.” Personalize all communications and interactions with a staff member’s name, not just the company name.

In addition, create opportunities for feedback. “Ask new customers why they selected you over the competition,” Peters advised. “Find out why they picked you. They may give you an easy answer, like you were cheaper. But probe for more.”

If a customer has bought from you before, find out why she came back.

The answers to those questions, Peters said, are “loyalty drivers” that “need to be institutionalized.”
“Put a customer feedback form on your countertops and your Web site,” Peters suggested. “We have to know if customers are happy, and why they are happy.”

Stores need to create a culture and attitude that encourages complaints. “Complaints are important,” Peters said. “They are a blessing. They are so critical to your growth and success. Seek out customer complains. Do it proactively. Do it aggressively.”

In addition, contact former customers and discover why they are no longer buying. “Once they open up to you, the information they give you will be invaluable,” Peters said. “You will see trends.” These lapsed customers should then be “bribed” to come back.

Finally, Peters addressed how stores should communicate, including:
* Contact customers no more than two days after every purchase, and always send a thank-you note.
* Send good wishes prior to major occasions like Christmas, birthdays, and anniversaries.
* Send out “thank you for being a good customer” notes. “A simple heartfelt note can work wonders,” Peters said.

Jewelers also need to show loyalty to their employees. “How dare you ask your employees to be nice to customers, if you are not nice to your employees,” Peters said. “There are times when you need to be a boss. Most people err on the side of being a boss too much, and not being a mentor. If you put your employees’ needs above yours, your employees will put your customers’ needs above theirs.”

He said jewelers need to liberate their people to rise to the highest level that they can rise to. “To be a good boss, you don’t have to be separate and above,” he said. “You can be liked and respected at the same time. To be a good partner, you need to support employees. You also have to be committed to your employees, to their growth and their happiness.”

Jewelers have to lead with authenticity “If you are not real, your employees will know it, your customers will know it,” Peters said.

As a leader, you have to align the store with its promises. “Customer trust and loyalty is built by consistently delivering on promises,” Peters said.

He also said jewelers must empower their associates. “Let them make the decisions,” he said. “When a customer sees an employee working hard to solve a problem, they will have more respect for that employee, and for you, because you created the environment to make that happen.”

Finally, a loyalty leader needs to be ethical in all things.

Peters closed by looking at how salespeople sell. “If you sell on price, customers are going to buy on price,” he said. “You are going to start that spiral downward, and it ends in one place, and that’s called bankruptcy.”

Instead, jewelers should stress value. “That’s what they crave, but they don’t have the words to express it,” he said. “It is not about price. It is about promise.”

Peters noted that his “value equation” transcends a fair price for a good product. It involves not only the services and support a store offers but also the “story of your store—its commitment to ethics, professionalism, and the community it serves.”

In addition, “the salespeople need to tell their own story, and that needs to be passed along,” he said. “Their education, their service, their professionalism.”

“People are much more loyal to a person than to a store,” Peters said. “It’s that human connection.”

Finally, he noted, “Loyalty is not about products. It’s not about price, either. There is always someone out there able to sell it cheaper than you. Loyalty is about relationships. It is about managing the customer experience. If you create in your store passionate, customer-focused professionals, you know that passion will translate into loyalty.”