Article:

Maximising customer relationships to improve business

03 July 2020

The success of a business is largely determined by your customers, so it is important to keep them happy and coming back.  Understanding and most importantly monitoring the impact a business has on their customers can have an overwhelming effect on the success of a business and how fast it grows.  

Customer Loyalty is one of the main contributing factors when it comes to success, and businesses that put there customers at the core of their business tend to fair well and achieve better results. It is important to have an understanding of who your customers are and why they behave the way they do. Communications can then be adjusted accordingly depending on the type of customer you are dealing with.  

A popular model providing views of customer loyalty and satisfaction is the Apostle model developed at Harvard Business School, were customers are segmented into four quadrants based on their satisfaction and loyalty.   

Image result for apostles model understanding customers

The Four segments defined.  

  • Loyalists/Apostle: Customers that continue to come back, even though they may have tried other products/ brands. High satisfaction and high loyalty.  
  • Mercenaries: Customers although they may be satisfied, are still on the look out for the next best deal. High satisfaction but low loyalty.  
  • Defectors/Terrorists: Customers with high expectations that are generally not happy, they tend to constantly change product/brand. Low satisfaction and low loyalty.  
  • Hostages: Customers that tolerate the best of a bad bunch, or stay due to high costs of changing providers. Low satisfaction, but still report high loyalty.  

 

Once a business has analysed were their customers sit the key is to use the information to actively make changes that will maximise the client relationship and effectively improve business. When it comes to customer keeping - your current ones can be a lot more cost effective than acquiring new ones. Put strategies in place on how to address and prioritise the different segments.  

Be sure to prioritise the defectors - don’t let them keep defecting. It could be about figuring out what the issue is and how you go about fixing it. It may involve figuring out how to fire them without them spreading anymore ill will which can be difficult in this day and age thanks to social media. Defectors complain more frequently than other customers and drain time and resources so it is important to act quickly and put a plan in place on how to deal with this lot.  

Focus on your Loyalists, this is the segment you will want to continue to grow they are advocates for your business so be sure to thank them regularly. They also introduce “like” people to your business which is valuable.  

While you may not have much control over the mercenaries the best way to ensure they stay customers is to stay in touch, communicate regularly and remind them of the benefits of doing business with you. 

When it comes to the hostages you need to understand their needs as they could be easily taken by the competition, again be sure to communicate regularly (as mentioned before) as it is generally cheaper to retain a customer than it is to acquire a new one.  

Most importantly remember to look at your business from the customer’s perspective as after all without them you wouldn’t be in business. It’s really important that all your team understand this too, not just the owners of a business.  

 

About Author 

Michelle Hill is Director and Partner at BDO Rotorua, Chartered Accountants and Advisers. To find out more visit www.bdo.nz/rotorua or email rotorua@bdo.co.nz