How to Make Waterville the Friendliest Place to Shop

In This Issue:

How to Make Waterville the Friendliest Place to Shop by Keeping Loyal Customers

By DR. MARTIN BRESSLER, Professor of Marketing, Thomas College (July 6, 2000)

Editor's Note: When he wrote this article, Professor Bressler and John Massaua co-chaired REM's "Develop a Vibrant Economy" team of volunteers, which is focusing on REM's #1 program priority. He has since moved out of state. His advice applies to nonprofit organizations and government agencies as well as private, for profit companies.

Because I work in Waterville and want to support the local economy, I try to shop here as often as I can, although I confess, having previously lived in Augusta, it is easier to shop there. Not because I lived there, or because my sons went to school there, or because we go to church there. The reason is that we get treated better as customers. Don't get me wrong, there are places I like to shop in Waterville and will continue to do so, but there are others that I avoid. Worse yet, I hear that from many other people as well.

Like me, I'm sure you have had your good and bad customer experiences. But today, customers are more mobile. Some even say that there is no such thing as customer loyalty. We can even shop over the Internet. In fact, last summer I needed to purchase a new tire and wheel for my camper. I called around to several places but none had the wheel in stock. Being a large camper, the size is not common, so that did not surprise me. However, no one offered to order one for me, either. I found a company on the Internet, ordered the wheel, which was delivered by UPS in only a couple of days, and my camper was ready to roll. But I shouldn't have been forced to do this. I would rather spend my money here in town, or at least in central Maine.

Lately, my academic research in marketing has focused on customer service. Perhaps I can share some facts with you regarding why customer service is so important.

First, satisfied customers are not enough. A study by Toyota found that having "highly satisfied" customers is the key. As many as 44% of satisfied customers switched brands, but Toyota found that about 75% of "highly satisfied" customers also intended to purchase another Toyota.

Research also indicates that loyal customers:

Stay with the company and its products longer;
Buy more products as the company introduces new products;
Talk favorably about the company and its products;
Pay less attention to competing brands and advertising;
Are less sensitive to price;
Offer product and service ideas to the company; and
Cost less to serve than new customers because transactions are routinized.

Price is not necessarily the deciding factor!

You may also be surprised to know that customers are dissatisfied with one out of every four purchases, but only five percent complain. In other words, 95 percent of dissatisfied customers do not complain! Of those who do complain, 54-70 percent will do business with the company again if their complaints are resolved. As many as 95 percent will do business again if their complaint is resolved quickly!

Today, especially with the strong economy, price is less a factor for purchase decision than ever before. It is critical to keep your customers highly satisfied. Why? Because of the lifetime value of a customer. What is the lifetime value of a customer? Consider grocery shopping. We spend an average of $150 per week, 50 weeks per year. That equals $7500. Multiply that times 10 years and that is the average time a customer shops at a particular area supermarket. That now equals $75,000. The people who run supermarkets realize this and have turned their attention to customer satisfaction over pricing.

Rather than price, customers today look for value. Value may take the form of saving time, convenience, and even knowledgeable salespeople. Goods or services that provide value to the customer offer some benefit important to the customer. We can provide value to the customer all throughout the customer purchase process from the first time we answer the phone to service after the sale.

Some common pitfalls you can watch out for are:

Employees who are slow to greet customers, or even approaching them at all (this is the number one customer complaint!)
Indifferent to, or delaying a customer (don't let the fact that I want to buy something interfere with your personal life)
Not urging or upgrading sales
Poor personal appearance
Lacking knowledge about the store or products
Making many errors
Good employees leaving to work elsewhere

How can we ensure highly satisfied customers? Here are a few tips I can offer:

Customer complaint and suggestion systems that really work. Answer customer complaints immediately, apologize and try not to make lame excuses.
Use customer satisfaction surveys. Be sure to ask if they would buy from you again, and recommend your business to friends and relatives.
Secret shoppers can identify who is not providing good service. You may be surprised! Even long-term employees make mistakes.
Lost customer analysis. Find out why customers have left and gone somewhere else.
Employees are number one! Yes, that's right. How can you expect your employees to give outstanding customer service if they do not feel as though they are treated right? Empower them, train them, and support them.
Develop a customer investment philosophy. It costs five times as much to get a new customer than it does to keep the customers you already have. It costs less to offer them incentives to stay as customers than it does to advertise to get new customers.
Train, train, train. Most poor service complaints are the result of poor training. Something as simple as answering the phone improperly can lose you business. Be certain that your employees are knowledgeable of the products they sell and can get someone who does know if need be.

We all have a stake in the Waterville-area economy. Make it easy for me and others to spend our money here. Our jobs, our businesses, our very livelihoods depend on it!