Earning Customer Loyalty

Last month we discussed word of mouth economics, and how it relates to the Promoters, Passives, and Detractors within your customer base. Promoters are your most valuable customers regardless of their size. They are loyal and recommend you to other potential customers. Detractors reduce your profitability through their high service costs and eventual defection. Even then the damage is not done because they actively seek opportunities to discourage other customers and prospects from doing business with you. The financial reasons for increasing the percentage of Promoters within your business are clear.

Change, however, is hard, and most managers stumble when it comes to implementing the organizational changes that create Promoters and drive improvements in loyalty. That may sound harsh, but consider the situation in most ag dealerships today. Managers are overwhelmingly focused on operations rather than quantifying what customers really value. And typically there are no ongoing measurements in place to monitor how the company is delivering against these customer priorities. Improvements are consequently unfocused and uneven. In an age when my local video store has a program to determine my priorities and measure how well they are meeting my expectations, the general situation in ag retailing is unimpressive.

Improving Loyalty

Many managers, however, would like to make improvements in customer loyalty but lack a framework to drive change. The goal of my next few columns is to discuss ideas to help your company deliver a superior customer experience based on data and facts, not guesses and working harder.

Why is change hard? Front-line staff question the company’s commitment to improve customer loyalty when the program is just a speech from management rather than a fact-based, targeted effort. Talking about customer loyalty once or twice a year at a meeting is not strategic. Consider also employee goals and incentives. When they are not aligned with customer loyalty targets, little progress will be made. Many companies fall victim to the so-called fog of war, which states that no battle plan survives the first contact with the enemy. Others confuse a customer loyalty initiative with slogans, vision statements, or posters in the lunch room. It’s more complicated than that. Without data to update your focus, how can your targeting efforts remain locked on customer needs?

Finally, I want to comment on an ag retailing legend I have heard numerous times. This is the myth that loyalty has declined for everyone, and that today’s customers are different than the ones we started in business with. Like all legends, there is some truth here, but it misses the point that loyalty is earned, not inherited. Customers will reward you with more loyalty if your efforts are guided by quantitative knowledge.

Four management breakdowns. The well-known company Franklin Covey (“Seven Habits of Highly Effective People” by Stephen Covey) has identified four “management breakdowns” that undermine achieving customer loyalty. This is not to overemphasize management’s role in customer loyalty, but it is the place we need to start our examination.

It is difficult to achieve measurable improvements in customer loyalty if we don’t know what loyalty looks like. One metric that tracks closely to loyalty is market share. AgKnowlogy has measured the market share ag retailers have with thousands of growers. With very few exceptions, Promoters give their retailers higher market share vs. Passives or Detractors.

I encourage you to measure the potential value of your customers and then calculate the Share of Business you have with each high-value customer. I guarantee you will find surprises here. There will be some customers who are less loyal than you thought, i.e., they give you a relatively low share of their business. The graph shows an example from AgKnowlogy’s Customer Experience Monitor. Note how market share for all retailers is lower for Detractors vs. Promoters.

Being Clear

If employees aren’t clear about what actions and customer experiences drive loyalty, how can we expect to reliably repeat those actions? This is like traveling blindfolded. You might arrive where you want to be but don’t know how you got there. You can’t provide directions to someone else, and you likely can’t make the same journey yourself again.

From speaking with ag retailers throughout the country, I realize how time-strapped their sales staff are. Because customer loyalty and its corresponding high market share are so valuable, everyone in your company that impacts the customer experience must have a clear and quantifiable understanding of what actions create Promoters and produce loyalty. This is one of the most important initiatives a manager can focus on.

The third breakdown managers allow regarding customer loyalty is not creating self-directing mechanisms that guide the organization toward consistently delivering superior customer experiences. Unless you can readily identify these mechanisms, they likely don’t exist. Also, unless specific coaching is provided to all staff involved in creating the customer experience, progress will be limited.

There is no blame here. If managers need help to create the mechanisms and processes within their company to achieve increased loyalty, they should seek help themselves.

The fourth management breakdown in achieving customer loyalty is lack of accountability. I ask ag managers how frequently they meet with staff to fine-tune sales approaches, identify customer needs, evaluate barriers with customers, or create customer goals that establish accountability. Do your staff meetings include discussions that increase collaboration toward creating a predictable superior customer experience? Are actions created to identify and resolve barriers that create Passives and Detractors within your business?

Lack of accountability for the customer experience brings us back to some of the reasons why change is hard. In any organization big or small, progress is never made until management passionately cares about the outcome. If staff hear management talking about customer loyalty but there are no links to desired behaviors, no creation of self-guiding teams, and no accountability for improvements, what does that signal?

Ag retailing has excellent opportunities for improved customer loyalty. Progress takes more than good intentions, however. An action plan to uncover what is really important to your customers, ongoing measurement of your performance against these priorities, and collaboration among all staff to consistently deliver a superior customer experience is your best competitive advantage.

Leave a Reply

Management Stories

StewardshipMonsanto Invests $1.6 Million In System To Quantify Greenhouse Gas Reductions
September 23, 2016
The USDA – Natural Resources Conservation Service (USDA-NRCS) recently awarded the National Corn Growers Association (NCGA) and its Soil Health Read More
Pipe rack
LegislationCourt Sides With Ag Retailers On PSM
September 23, 2016
The D.C. Court of Appeals has ruled the Occupational Safety and Health Administration violated the Occupational Safety and Health Act when Read More
ManagementPacific Coast Fertilizer Announces Interest In Longview, WA Facility
September 22, 2016
Pacific Coast Fertilizer LP (PCF) announced at the Cowlitz Economic Development Council board of directors meeting its interest in developing Read More
BlendersNorth Dakota Coop Debuts Dry Fertilizer Plant
September 22, 2016
North Central Grain Cooperative has begun operations at a new dry fertilizer plant at its Rolla, ND, site. It is Read More
Trending Articles
Corn Field
Eric SfiligojFacing Ag Industry Challenges
September 26, 2016
At the 2016 annual Mid America CropLife Association (MACA) meeting in September, a pair of crop protection company representatives discussed Read More
Bayer Monsanto
Crop InputsBayer-Monsanto Mega-Merger: 6 Things You Need To Know
September 14, 2016
Mega mergers have become almost routine in the agricultural industry. Right on the heels of Monday’s news that fertilizer giants Potash Read More
Potash Corp Agrium
Crop InputsAgrium, Potash Corp To Merge To Create $36 Billion Company
September 12, 2016
Canada’s Agrium Inc. and Potash Corp of Saskatchewan Inc. have agreed to combine in a deal that would create a Read More
Osage Co-op Elevator Osage, IA Finished Building
OpinionAre We Crazy?
September 8, 2016
At some point in the first few months of my employment here at CropLife® magazine, I started getting curious about Read More
ManagementMAGIE 2016 Highlights and Deere Anti-Trust
September 1, 2016
CropLife Editor Eric Sfiligoj discusses the recent Midwest AG Industries Exposition and the Department of Justice’s objection to John Deere Read More
ASMARK 2016 Retailers Live! Tour - CPS
CropLife 100CPS Acquires Texas Retail Operation
August 23, 2016
Crop Production Services (CPS) has acquired the assets of Larry’s Chemical and Spray, Inc., for an undisclosed amount in an Read More
Latest News
Growmark FS Outlet
Industry NewsGROWMARK To Purchase Suncor’s Share Of UPI
September 26, 2016
GROWMARK and Suncor have reached an agreement in which GROWMARK will purchase Suncor’s 50% interest in UPI, Inc. in Ontario, Read More
Corn Field
Eric SfiligojFacing Ag Industry Challenges
September 26, 2016
At the 2016 annual Mid America CropLife Association (MACA) meeting in September, a pair of crop protection company representatives discussed Read More
Syngenta Seedcare Institute
Seed/BiotechSyngenta Opens New North America Seedcare Institute In …
September 23, 2016
Syngenta unveiled its new Seedcare Institute in Stanton, MN, during a recent grand opening celebration. More than 150 industry leaders, Read More
StewardshipMonsanto Invests $1.6 Million In System To Quantify Gre…
September 23, 2016
The USDA – Natural Resources Conservation Service (USDA-NRCS) recently awarded the National Corn Growers Association (NCGA) and its Soil Health Read More
Pipe rack
LegislationCourt Sides With Ag Retailers On PSM
September 23, 2016
The D.C. Court of Appeals has ruled the Occupational Safety and Health Administration violated the Occupational Safety and Health Act when Read More
ManagementPacific Coast Fertilizer Announces Interest In Longview…
September 22, 2016
Pacific Coast Fertilizer LP (PCF) announced at the Cowlitz Economic Development Council board of directors meeting its interest in developing Read More
Young corn plants in soil
UncategorizedCool Planet Raises Additional $9 Million To Commerciali…
September 22, 2016
Cool Planet has announced the first close of a new financing round to commercialize the company’s Cool Terra Engineered Biocarbon Read More
Crop InputsJim Loar Promoted To President And CEO Of Cool Planet
September 22, 2016
In a move that reflects and reinforces the company’s commitment to the agricultural market, the Cool Planet board of directors Read More
BlendersNorth Dakota Coop Debuts Dry Fertilizer Plant
September 22, 2016
North Central Grain Cooperative has begun operations at a new dry fertilizer plant at its Rolla, ND, site. It is Read More
Crop InputsMonsanto, Bayer Officials Defend Proposed $66 Billion M…
September 21, 2016
Top officials for Monsanto and Bayer defended their proposed $66 billion merger before skeptical senators on Tuesday, insisting that the Read More
ManagementUpcoming Shows & Recent Events
September 19, 2016
Editors Paul Schrimpf and Eric Sfiligoj talk about upcoming trade shows and events and review the Mid America CropLife Association Read More
Industry NewsVerdesian Life Sciences Appoints New CEO
September 19, 2016
Verdesian Life Sciences, a plant health and nutrition company, today announced that its board of directors has named Kenneth M. Avery Read More
Corn
Crop InputsEPA Settles With Syngenta For Alleged Multi-Regional Pe…
September 19, 2016
The U.S. EPA has announced a multi-region settlement with Syngenta Crop Protection, LLC (Syngenta) in Greensboro, NC, for alleged violations of Read More
ManagementMerger Mania
September 16, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss this week’s mega-ag mergers of Bayer and Monsanto and Potash and Agrium. Read More
Monsanto sign
Crop InputsMonsanto Ends Up Being A Bargain For Bayer
September 16, 2016
History will say Bayer got a bargain in its $66 billion purchase of Monsanto, writes David Nicklaus, St. Louis Post-Dispatch. The Read More
Greg Musson, Gar Tootelian
CropLife 100California Ag Retailer Steps Up To Feed Families Affect…
September 16, 2016
GAR Tootelian, Inc. (GAR) in Reedley, CA, is challenging the Central Valley to help raise enough money and provide 525,000 meals Read More
Crop InputsBayer, Monsanto CEOs Discuss Merger
September 15, 2016
Werner Baumann, Bayer CEO, and Hugh Grant, Monsanto CEO, discuss why they decided to merge their companies. Read More
Corn close up
Crop InputsNY Times: Bayer-Monsanto a Bad Deal for Farmers
September 15, 2016
Via NY Times: Don Halcomb, a 63-year-old farmer in Adairville, KY, is expecting his profit to vanish this year, largely Read More