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

Patriot 4440 Sprayer close up
ManagementFlashing Back And Moving Forward On Spray Drift
May 3, 2016
The potential for pesticide drift remains an unavoidable feature of modern agriculture. Here, too, history repeats itself. “When Roundup debuted, Read More
ManagementBiotech Crops Developments and Millennials
April 28, 2016
Editors Eric Sfiligoj and Paul Schrimpf talk about the latest activities in biotech crops and a major shift in the Read More
StewardshipNRCS To Help Farmers Measure Conservation Impacts On Water Quality
April 27, 2016
The USDA has announced the availability of $2 million to help farmers install edge-of-field stations that monitor water quality as Read More
Valley Irrigation Valley 8000 series on corn
EquipmentValley Irrigation Receives Environmental Stewardship Honor
April 26, 2016
Valley Irrigation has been recognized as a Groundwater Guardian Green Site by the Groundwater Foundation. The Groundwater Guardian Green Site Read More
Trending Articles
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
HerbicidesHerbicide Resistance In Waterhemp Continues To Grow
April 22, 2016
Twenty-five years ago, waterhemp was virtually unknown to Illinois farmers. Today, the broadleaf weed blankets corn and soybean fields across Read More
Eric SfiligojBiotech Corn Drop More Economics Vs. Consumer Rejection
April 18, 2016
Since their introduction into the agricultural marketplace, biotech crops has steadily grown in acreage in the countries of the world Read More
Crop InputsBayer: 5 Reasons We Disagree With Maryland Neonic Ban
April 12, 2016
We’re disappointed that the Maryland legislature chose not to stand up for sound science and the rights of Maryland’s homeowners Read More
Corn
OpinionChallenging Global Economic Conditions Putting More Heat On U.S. Ag Retailers
April 7, 2016
There it is. That vague, slightly sickening feeling in the pit of my stomach. Things are getting weird out there. Read More
Latest News
Young Corn Field
Crop NutritionEnhancing In-Season Nitrogen Use Efficiency Is In The D…
May 5, 2016
Spring is here and crops are in the ground. Do you have a plan for your nitrogen during the growing Read More
ID3 Air Induction Flat Spray Nozzle | Lechler
Nozzles2016 Nozzles And Tips Report: Waste Watchers
May 5, 2016
Every year in the spring, ag retailers and their grower-customers prepare for the coming crop season. This involves prepping crop Read More
Industry NewsHELM AGRO Adds New Marketing & Business Development…
May 4, 2016
HELM AGRO US, Inc. has announced the hiring of Troy Bettner as the company’s new Marketing & Business Development Leader. Bettner Read More
Palmer amaranth in soybean stubble
HerbicidesWSSA: Billions In Potential Economic Losses From Uncont…
May 4, 2016
What losses would corn and soybean growers experience if they were forced to eliminate herbicides and other control techniques from Read More
Spray Drift
HerbicidesRoundup Ready Xtend: Silver Linings In Label Delays For…
May 4, 2016
Since 2014, Monsanto has trained more than 20,000 growers and retailers on all aspects of its new dicamba-tolerant system at Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsSyngenta Board Appoints New CEO
May 4, 2016
Syngenta announced today the appointment of J. Erik Fyrwald, currently President and CEO of the U.S. chemistry distribution company Univar Read More
Crop InputsIntrexon Establishes Crop Protection Enterprise
May 4, 2016
Intrexon Corp., a leader in synthetic biology, has announced the formation of Intrexon Crop Protection (ICP), a wholly-owned subsidiary dedicated to Read More
Patriot 4440 Sprayer close up
ManagementFlashing Back And Moving Forward On Spray Drift
May 3, 2016
The potential for pesticide drift remains an unavoidable feature of modern agriculture. Here, too, history repeats itself. “When Roundup debuted, Read More
Giant Ragweed
HerbicidesSurvey Provides Insights On Giant Ragweed In The Corn B…
May 2, 2016
A new survey published in the journal Weed Science offers insights into the distribution and management of giant ragweed, a Read More
Truck dumping dry fertilizer
FertilizerFertilizer Logistics Q&A: Southern States’ Joe Wlod…
May 2, 2016
Joe Wlodkoski, Director of Agronomy Procurement, Fertilizer, Southern States Cooperative, is a 40-plus year fertilizer industry veteran. He is quite Read More
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
West Central Dome structure
FertilizerFertilizer Logistics 2016: All Clear, So Far
May 1, 2016
After a relatively hairy early start to the spring fertilizer movement season with flooding in Louisiana and St. Louis, things Read More
BAICOR
CropLife 100BRANDT Acquires Utah Specialty Fertilizer Company
April 28, 2016
BRANDT, a leading agriculture retailer and manufacturer of specialty ag products, has acquired a majority interest in BAICOR, L.C. BAICOR, Read More
Soybean field
Industry NewsVerdesian Life Sciences Adds Vice President Of Business…
April 28, 2016
Verdesian Life Sciences has announced the addition of Marc Treurniet to the plant health and nutrition company’s management team. Treurniet Read More
ManagementBiotech Crops Developments and Millennials
April 28, 2016
Editors Eric Sfiligoj and Paul Schrimpf talk about the latest activities in biotech crops and a major shift in the Read More
Industry NewsNachurs-Alpine, Pathway Biologic Extend Marketing Agree…
April 28, 2016
Nachurs-Alpine Solutions (Marion, OH) and Pathway Biologic (Plant City, FL) announce an extension to their exclusive marketing agreement specific to Read More
MicronutrientsCharah Add Three Warehouses For SUL4R-PLUS Fertilizer
April 28, 2016
Charah, Inc., a total solutions company providing unparalleled service and innovation for the coal-fired power generation industry, announced today that Read More
Spenser Forgey, Yahama Fortix
FungicidesIndiana Farmer Wins Arysta LifeScience FORTIX Fungicide…
April 28, 2016
Arysta LifeScience North America recently presented Spenser Forgey, a grower from Young America, IN, with a new 2016 Yamaha Grizzly Read More