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

ManagementMACA 2014: The State Of The Agricultural Industry, And Then Some
October 9, 2014
The trade association’s annual gathering featured speakers from across agriculture and beyond. Read More
StewardshipA Multi-Layered Approach To Water Quality
October 6, 2014
Illinois event highlights research and technology designed to better monitor and improve water quality — and the benefits of cooperative, coordinated effort. Read More
StewardshipMichigan Agriculture Leaders On Toledo Water Ban: We Want To Be Part Of The Conversation
August 8, 2014
Leaders of Michigan agricultural organizations said Thursday that the government should not have a “knee-jerk reaction” based on last weekend’s water ban in Toledo due to fertilizer run-off in Lake Erie. Read More
ManagementRussia Bans U.S. And EU Ag Product Imports In Ukraine Sanctions Battle
August 7, 2014
Russian President Vladimir Putin has banned the import of agricultural goods from countries that have imposed sanctions on Russia. Read More

Top 100 Articles

CropLife 100CHS: Driving Momentum To Help Farmer-Owners Grow
December 11, 2014
CHS Inc., the nation’s leading farmer-owned cooperative and a global energy, grains and foods company, must capture new opportunities to Read More
CropLife 100BRANDT, Verdesian Ink Distribution Agreement
December 9, 2014
The agreement grants BRANDT the exclusive right to sell and market Verdesian’s patented Steric chemistry in the Turf and Ornamental and eastern U.S. ag markets under the BRANDT Reaction product line name. Read More
CropLife 100CropLife 100: The Colors Of Custom Application
December 5, 2014
Although many color spray rigs are in the yards of the nation’s top ag retailers, the majority of them still come in only a few shades. Read More
CropLife 100Pinnacle Invests In Meridian Agriculture Distribution
December 4, 2014
Meridian will provide retailers with supplier-branded products and numerous opportunities to differentiate themselves from their competitors. Read More
CropLife 100CropLife 100: Entering A New Seed Era
December 4, 2014
The seed category has been re-vitalized during the past few years, and more good news (and varieties) are headed the industry’s way in 2015. Read More
CropLife 100CropLife 100: The Depressed State Of Fertilizer
December 3, 2014
Following downright giddy growth earlier this decade, fertilizer sales have fallen back down to earth the past two years. Read More

Latest News

Seed/BiotechKaren Arthur Joins AgriThority As Seed Treatment Produc…
December 19, 2014
Prior to joining AgriThority, Arthur directed research and development programs, overseeing laboratory and field research, to build the Valent U.S.A. seed treatment portfolio. Read More
EquipmentJohn Deere To Sell Crop Insurance Business
December 19, 2014
Deere & Co. has reached a definitive agreement to sell its crop insurance business, subject to regulatory approval, to Farmers Mutual Hail Insurance Co. of Iowa. Read More
Crop InputsNufarm Fills Regulatory VP Position
December 18, 2014
Nufarm announced today that Rob Schwehr has been promoted to the position of Vice President of Innovation & Regulatory Affairs for Nufarm Americas. Read More
Seed/BiotechReport: China Approves Viptera Corn, U.S. Officials Awa…
December 17, 2014
Chinese authorities have informed some agriculture industry officials the government has approved U.S. imports of a type of genetically modified corn developed by Syngenta. Read More
FertilizerMonty’s Plant Food Brings In New Sales Rep
December 16, 2014
Monty's Plant Food Company has hired Warren Kearns as its newest Sales Representative for the South Carolina area. Read More
EquipmentHagie Wins 2014 CropLife IRON Product Of The Year Award
December 15, 2014
The self-propelled sprayer maker has a hit on its hands with the new STS Series model. Read More
Syngenta
Seed/BiotechSyngenta Sees China Approving Contentious GMO Corn Soon
December 15, 2014
Syngenta will make an announcement when it receives official documentation from China that Agrisure Viptera corn, known as MIR 162, has been cleared for import. Read More
Crop InputsVerdesian Life Sciences Names Vice President Of Communi…
December 15, 2014
Amy Bugg will oversee the execution of all promotional strategies for the corporate brand and the complete product portfolio. Read More
StewardshipFarmers, Retailers Attend 4R Certification 4U Workshop
December 15, 2014
More than 160 farmers and ag retailer attended the “4R Certification 4U” workshop December 12 to learn more about the 4Rs of nutrient stewardship, water quality research in the area and cost-sharing opportunities. Read More
Matt Hopkins10 Best New Agriculture Apps For 2015
December 15, 2014
These new agriculture apps are certain to help ag professionals do their jobs more efficiently in 2015 and beyond. Read More
ManagementARA Learnings, Retail Buying Intentions: Welcome To Cro…
December 12, 2014
This informal video program puts news and events effecting retailers into context, and features Editors Paul Schrimpf and Eric Sfiligoj. Read More
Seed/BiotechMonsanto Herbicide-Tolerant Technology Closer To Commer…
December 12, 2014
The final EIS moves Monsanto one step closer to the introduction of Bollgard II XtendFlex cotton and Roundup Ready 2 Xtend soybeans, paving the way to provide access to dicamba-tolerant soybeans and cotton. Read More
Seed/BiotechUSDA Issues Final Environmental Impact Statement On Her…
December 12, 2014
The USDA Animal and Plant Health Inspection Service (APHIS) is issuing a final environmental impact statement on varieties of cotton and soybeans that have been genetically engineered for resistance to several herbicides, including the one known as dicamba. Read More
CropLife 100CHS: Driving Momentum To Help Farmer-Owners Grow
December 11, 2014
CHS Inc., the nation’s leading farmer-owned cooperative and a global energy, grains and foods company, must capture new opportunities to Read More
LegislationARA Applauds CFATS Passage Prior To Holiday Adjournment
December 11, 2014
The streamlined bill provides a four-year authorization of the CFATS program and guidance to DHS on key issues of chemical facility security Read More
Seed/BiotechBayer CropScience’s ILeVO Approved By EPA
December 11, 2014
EPA has approved ILeVO, the only seed treatment that protects the root system against infections caused by the Sudden Death Syndrome fungus and has activity against dangerous nematodes. Read More
Biologicals in Emerging Markets Map.
Crop InputsBiocontrols Could Quadruple By 2025; Will Regulators Pl…
December 11, 2014
The European experience with GMOs offers caution — and a promise — for biologicals. Read More
Crop InputsBASF Donates $75,000 To Feeding America
December 10, 2014
The donation will support Feeding America’s National Produce Program, an initiative that helps with planning, transportation and logistics to ensure fresh produce deliveries to the 200 member food banks around the country. Read More