Issue link: https://read.dmtmag.com/i/208245
xxx 30 • November 4, 2013 • Powersports Business SOLUTIONS www.PowersportsBusiness.com DOLLARS & SENSE You want loyal customers? Let your value speak volumes New in a small town, and I was giving the Fred found that loyalty must be created at town cleaners a try. It didn't look like much, three different levels for a business to be sucbut I knew they were local, and I thought cessful: First, loyalty from the customer to the I would support my neighbors. I hadn't business; second, from management to the expected what I found: The place was a dump! employees; and third, from the stockholders to I lasted about a year, and left for another shop management. I will focus here on only the custhat was clean, fast and fair. To this day that tomer, and return to the other two at a later date. clean shop has my business. After wading through all the obvious Just around the corner from the town answers and digging deep, Reichheld concleaners is a nice little bakery. The sign cluded that customer loyalty is depenin the window says "Gone Fishing." dent not on price, location, or personal And they fish a lot. Now I drive up friendship, but rather on true value the road to the Beau Brummel bakreceived. In biology classes years ago, I ery, where Chrystal and Elizabeth learned that all players act in their own know my name. They wear aprons self interest. In nature, as conditions covered with flour dust, and their change, plants, animals and people hair is a little out of place from must adapt, perish, or migrate. rolling out dough since 4 this It is no different in commerce. If morning. They smile, and value to the customer falls below totally enjoy their little bakery. the cost of the product or service, HAL ETHINGTON It takes an effort not to stop the customer is no longer "loyal." there too often. He walks ("migrates"). Value, Fred found, is So am I a loyal customer? Yes. But I am not measured as the ratio of either the utility of the loyal to a business. I am loyal to value. And if product, the quality of the goods, or the pleavalue is not there, I am gone. sure received, weighed against the cost of the It is time we rethink this "loyalty" thing. product or service. Fred Reichheld did just that years ago, when Customers vote with their feet. If they his partners Mitt Romney and others at Bain receive value for their money, they come back. Capital tasked him with understanding what If not, they're gone. Unfortunately, repeating loyalty really means. Fred tore into it and came purchases of a non-necessity like a motorcycle out with answers that stand to this day in his are not cyclical (no pun intended here), but book, "The Loyalty Effect." the return visits of riders to the parts counter P30x31-PSB14-Solutions.indd 30 are cyclical, and they are measurable as well. I worked the numbers on this, and the results are not good. Out of 100 customers that showed up new to a motorcycle store, a year later I saw only three of them returning to the parts counter. Only three. Ninety-seven others are simply gone. Fred would say that this is almost complete failure. WHY DO YOU GO WHERE YOU GO? Think of the places you frequent, whether it is a restaurant, a bank, or even a vacation spot. Think about why you go to that business or location. Here are a few that come to my mind, and the reasons that have surfaced over time that return me to that particular vendor: Delta Airlines: Frequent flyer miles, boarding priority, special service lines at security and gates, upgrades, fee waivers, club rooms, companion benefits, gifts and special promotions. Home Depot and Costco: Experienced floor help, easy returns, wide selection, helpful displays, kids project days, loading and tie down help and related product groupings. They always have what I need. John Deere dealerships: A 97-percent return rate for their customers. It's a long purchase cycle — seven years or more — but their dependable products and steady parts inventory levels, combined with their devotion to the business of farming, keeps generations of customers coming back. Each of these companies has learned how to add value to products they sell, and that keeps their customers coming back. Just a few thoughts on how we can apply these principles in our stores. By department: Parts — Wide counter, seating, clean merchandise, artful displays, knowledgeable and experienced salespersons, fill rate of 90 percent or better, wide selection of clothing items, never out of fast-moving items, suggestions from salesperson for related items and pleasant people to deal with. Service — Writers who can relate to people in a friendly efficient way, helpful suggestions for maintenance, appointment system, fast turnaround for small jobs, pickup and delivery, help loading, window on work area to watch techs working, promises kept, clean work area. Sales — Bike spacing allows easy access, knowledgeable salespersons who actually ride, quick grasp of model to fit riding intent, prompt greeting and respectful follow-up, clean surroundings and sitting areas, a sales process that is comfortable and non-threatening, fair prices, riding events See Ethington, Page 31 10/30/13 12:54 PM ww P On tot wo firs we sto be an res of He kn cu cu an mi fin me an pro ees un do E an we to