Allegiance Blog

We are looking forward to the upcoming Allegiance Engage Summit 2010 on May 16 – 19, 2010 at the Chateaux Resort at Silver Lake in Deer Valley, Utah. It’s not too late to join us! This year’s user conference will bring together inspirational speakers, customer and employee loyalty experts, industry leaders and Allegiance customers to uncover ways to solve today’s most pressing business problems.

More than 60 percent of the conference agenda consists of panels and presentations by Allegiance customers, who will share insights and experiences on improving Voice-of-the-Customer (VOC) and Voice-of-the-Employee (VOE) programs. For professionals in market research, feedback management, VOC, customer retention, loyalty or human resources, the Engage Summit 2010 will provide critical information, best practices and peer-to-peer networking on ways to capitalize on customer and employee engagement.

Keynote Inspirational Speakers

•  Billy Beane, VP and general manager (GM), Oakland Athletics
• Robert Stephens, founder of the Geek Squad
• Rama Ramakrishnan, Ph.D., Senior Lecturer, MIT Sloan School of Management

 Industry Leaders and Loyalty Experts

•  Todd Rowe, Group VP and General Manager, WW Mid-Market Division, SAP
• Bruce Temkin, VP and Principal Analyst, Customer Experience Management, Forrester Research
• Vicky Stennes, VP In-flight Experience, Jet Blue
• Gary Rhoads, Ph.D., Loyalty Expert, Co-Founder Allegiance, Inc.

 Session Topics

•  Creating value and ROI from your survey/feedback data
• Customer and employee panels on engagement wins
• Customer case studies: Zions Bancorporation, Life Time Fitness, others
• Making insight out of the social media boom
• Market research panel on advanced data collection techniques
• Survey Design and Analytics boot camps

To register for the Allegiance Engage Summit 2010, to find out more about this year’s speakers, and to see the conference agenda, please visit http://engagesummit.com. We hope to see you there!

In my last blog post, ‘Customer Feedback: The Key to Creating More Value’, I dispelled some of the myths about collecting customer feedback. I also promised that in my next post, this one, I would tell you how and why, if you listen to customer feedback, it can show you where and how to gain a competitive advantage, and improve customer loyalty and engagement. So, here I go:

While there are several great examples that come to mind on how companies are using customer feedback to gain a competitive advantage, since there isn’t enough room in this blog post for all of them, I’ll just share one. (So as not to make this blog a promotional piece, I picked a neutral one).

In the book ‘What Customer Really Want’, author Scott McKain tells a great story about how a coach bus company that transports music stars across the nation to their concerts (i.e. clients either lease or purchase its buses), was originally planning to improve the interior of its buses because it believed that if it did, its customers would be willing to pay more, and the company would make more money.

However, in the midst of picking out fabric, flooring, etc., the company realized that it had never asked its customers what they thought about its plans. So, the company did. To the company’s surprise, it found out that while its customers did want nice interiors, the single most important factor to them in selecting a coach company was the bus driver! (i.e. Someone who could get these music stars to their destination safe, especially if they had to drive through the night. And, someone who would also serve as a good ambassador for the band with fans).

The company immediately launched a driver education program to teach its drivers how to communicate more effectively with customers, and how to retain and grow customer relationships. The company also changed its reward system so that drivers were compensated according to how well they served the customer, and how well they cultivated long-term relationships with them. Once the company did that, it moved from fourth in the marketplace to first, and grew from 28 to 56 coaches.

My point is if you want to grow your revenues and increase your customer retention, customer loyalty and engagement, you have to ask your customers for feedback. It’s the only way to find out what they really want, where and how your company can improve, and yes, even make more money and gain a competitive advantage.

Kimberly Mathie, MarComm Manager, Allegiance

I was fortunate enough to attend this year’s CUNA Government Affairs Conference (GAC) in Washington, DC.  Someday I’ll probably tell my kids “I was there when it was all going down.” I literally stood a few hundred feet from the White House the same week President Obama was preparing to deliver his first budget proposal to Congress.  With the severity of the current economy, it literally felt like standing at the crossroads of the world.

Just up the street from 1600 Pennsylvania Ave, credit union executives from across the country gathered last week to ponder their own economic fates. U.S. Central, the largest corporate credit union in the United States, had recently announced investment losses large enough to require intervention. And just like the United States looked to taxpayer dollars for economic recovery, the National Credit Union Association (NCUA) weighed a financial assessment on credit unions to support U.S. Central and the failing “corporate credit union” structure.

All of the people I spoke with at the CUNA conference agreed: the NCUA’s Corporate Stabilization Program will have a significant impact on the credit union world. The assessment will hurt profitability. More importantly, there was significant distress that the assessment amount had not yet been defined. There will be a cost to every credit union, but no one knew exactly how much or how many times credit unions will be asked to contribute.

At some level the challenge facing credit unions is the same challenge we are all facing: How can we do more with less? Whether our incomes have gone down or our expenses have gone up, spending decisions are now integral to the survival of our organizations. Even though I don’t have an answer to the corporate credit union crisis, I can suggest one way to “do more with less” – and it comes from a personal experience.
 
While on a business trip to Portland, Oregon last year, I stopped at a small deli for a bite to eat prior to meeting with a CEO of a local credit union. As I stepped up to place my order, I noticed a small stack of business cards on the counter. The cards were from one of the credit union’s lenders who I was about to visit who undoubtedly provided services to the deli. Seeing my interest in the cards, a woman behind me leaned over and declared: “That is the best credit union in the whole world!”

What’s significant about this experience is that the credit union received free marketing from a person who had an obvious emotional connection with their organization. And the truth is, every organization has customers like her. They are out there, and they love your company. To borrow a term, they’re “engaged” with your company. If you ask them, they’ll be happy to tell you why they feel the way they do and what influenced them so strongly. If you can get more of them (the same way you got the first one) you can generate more and more of this kind of free marketing.

This kind of viral marketing is not only free…it’s ridiculously effective.  Allegiance conducted a study last year and found that 19% of “engaged” customers recommended their bank to an average of 4.1 friends—and 23% of those friends actually switched banks!  Your mileage may vary from industry to industry, but what a great way to acquire customers with very little incremental spending!

My experience at the deli have left me wondering: What would happen if the U.S. Government borrowed a page from the credit union playbook…

Brady Wycherly, District Sales Manager, Allegiance

There are a number of well known and popular ways that companies try to measure their overall customer satisfaction and loyalty. Traditional, overall satisfaction questions are still widely in use and provide a good idea of overall customer sentiment. Other loyalty metrics address customer behaviors such as the likelihood of customers to recommend a company or product to a friend or colleague.

While traditional satisfaction and loyalty scoring methods are great, they’re typically only a stepping stone on the way to engagement. The reason is that many of these methods aren’t able to answer questions such as: Of those customers who are likely to recommend you, are all of them equally likely to recommend? Are some customers more effective at recruiting new customers than others? Does each customer’s recommendation have the same impact? Etc., etc.

Each month, our company conducts a national benchmark survey called the Allegiance Pulse of America survey, which tracks the emotional loyalty or engagement of banking customers throughout the United States. In this survey, customer engagement is measured by several questions, covering overall satisfaction, ‘likelihood to recommend’ and other emotional and behavior outcomes. In addition, Pulse of America asks customers how many friends or relatives they have told about favorable experiences with their bank, and of those they told, how many actually switched banks as a result.

What we found when we separated engaged customers (i.e. those who have an emotional bond with a business) from other customers in this survey is that the engaged customers were nearly 4 times as effective at recruiting new customers as other customers, which proves that all recommendations are not equal. After all, it makes sense that a dispassionate customer’s recommendation doesn’t have the same convincing power as a recommendation from a customer with an engaged, emotional bond.

My point is that it’s not enough to simply know your loyalty score—you have to actively track, measure and understand the feelings and behaviors of your customers and understand your organization’s unique drivers of engagement and loyalty in order to know who’s recommending you and why in order to capitalize on that behavior by obtaining more effective customer referrals. And that’s where technologies (such as those offered by Allegiance) can help pick up where other traditional methods of measuring customer loyalty and satisfaction leave off.

Alan Bainbridge, Allegiance Best Practices Consulting Specialist

In the consulting work that I do with companies, I find that businesses looking for ways to increase their sales and profits often overlook a critical ingredient: employee engagement.

The reason this is an important ingredient is because there is a direct connection between employee engagement and customer engagement, otherwise known as “The Spillover Effect”.

For example, in their book, Return on Customer: A Revolutionary Way to Measure and Strengthen Your Business, Don Peppers and Martha Rogers, founders of management consultancy Peppers & Rogers Group, emphasize that “Motivated employees are clearly more productive and keep a company’s employee churn rate down, which lowers expenses. Yet they also have a profound impact on customers as well by creating positive experiences through efficient and smart customer service.”

And, my colleague, Dr. David Whitlark and I, have also found this to be true. For example, in a large research study that we conducted on engagement, we found that one out of every 10 customers was hurt by disengaged employees. We also found that the work environment combined with employee attitudes has a significant impact on a customer’s perception of quality. For this reason, it’s important that companies lead with their strengths, emphasize the positives, and remove the barriers that lead employees to be disengaged with their jobs, their organization and customers.

After all, in the end, the Spillover Effect is much more than a discussion about employee happiness. It is about emotional engagement that is continually shared from employee to employee, employee to customer and customer to customer. And it is a concept that encompasses and impacts all aspects of a business, ranging from company culture to profits.

Companies that understand and leverage the Spillover Effect to their advantage will realize higher customer and employee engagement, and ultimately, greater profits.

To learn more about this topic, read the new Allegiance “Spillover Effect” white paper.

Dr. Gary Rhoads, Allegiance Loyalty and Engagement Expert

In the current economy, there is a very real and growing concern about how to gain and to keep customers. This was apparent at the 2008 North American Conference on Customer Management (NACCM) this year, with attendance lower than it has been in some time. The irony is that much of what was presented provided insight on how to reach out and hold on to customers during tough times.

In stressful times such as these, many companies tend to pull away from their customers, and may even cut back on ‘satisfaction and loyalty’ programs to try and improve their bottom line. This, unfortunately, is a mistake because it cuts at the very heart of what we all need to be doing during this time – engaging customers to the point that they are willing to ride out tough economic times with us, rather than viewing us as yet another business that really doesn’t care about its customers and is willing to drop them or cut out the programs and products they care about most as soon as times get tough.

This was part of the overarching message at NACCM, including a conference speech I gave on engagement—that it’s important to continue to invest in improving customer engagement. However, one must be smart about how one goes about it. And the five most important take aways from this year’s conference were:

Engaging your customers (moving beyond ‘satisfaction’ and ‘loyalty’) will create a relationship between your customers and your company and/or its product that will help you weather the economic storm or even any mistakes your company may make – engaged customers really do stick with you and spend more money!

Use tools that are as effective as possible with the least expense (web-based tools are ideal for this) – tools that will not only provide you with data, but will help point you toward what is really going on with your customers

Don’t just ‘survey’ your customers – use tools that will provide you with leading indicators that will allow you to predict how a much larger group of customers will react based on the responses of a smaller group.

Don’t forget your employees! Engaged employees have a positive effect (a ‘spillover effect’) on the engagement of your customers.

Engaging your customers means taking action –Even small improvements can mean an increase in your customer’s share of wallet, positive word of mouth and referrals and increased retention and productivity from employees

The key in all of this is to overcome the reactionary fear that comes with a downturn in the economy and to look beyond. By spending smarter and in the right areas (what area is more important than those people who allow us all to be paid?) we can do more than survive…we can continue to thrive.

Kevin Mellander, Director Customer Care, Allegiance

The most expensive things in this world are those that are rare. What you treasure and that you protect the most are those things that cannot easily be replaced. If you think about it, the highest thing you and your customers value in common is the most important element in your company’s products and services.

I most value my time. Time is rare indeed. It is fleeting. It cannot be preserved and saved for later. You either make the most of the moment you are in or it is lost forever. How can you best measure how you are valued by another person? Measure how much and the quality of their precious time they spend with you.

Allegiance has spent significant time and money writing and speaking about engagement. Engagement is the emotional bond that can (and I propose must) be built between an employee and his/her company, as well as between a company and its customers. We have worked hard to build technologies that can measure this bond. We have worked equally hard helping our customers not only implement these technologies but also to work with their people to improve the processes surrounding the measurement and improvement of engagement.

Lately, we have changed our thinking about engagement. We have begun to understand that engagement isn’t some intangible concept, but like time, it is an equally precious resource. In fact, engagement IS time.

Look at your most valued customers. They are usually most valued because they are engaged with you—and therefore spend their money with you. How do you know they are engaged? It is because they spend their precious time with you, usually in providing feedback about your products and service levels.

Look at your most valued employees. Once again, we value them because they give of their time. These most valued employees often give over-time. They get things done, quickly and timely, and as a result, we profit from them.

May I suggest a few time-based things you can do to increase customers’ and employees’ engagement:

Appreciate their time by word
When a customer or an employee spends time providing feedback, celebrate! Take time to thank them vocally as quickly after they spend time with you as possible. Follow up (with more time) to send them a note of appreciation. The more time and effort you spend on the note the better.

Appreciate by spending your time
Spend some time to evaluate the suggestion and evaluate its potential positive impacts on your business. Further explore how it might impact other less obvious elements of your processes. Then make the changes necessary. And of course, communicate back the results and how much you appreciate those results.

Reward
Share with them some of the rewards of the improvement. This may not always need to be monetary. Customers may appreciate even more the company that spends their time to reward engaged behavior. Perhaps you can reward a customer who improves your bottom line by offering your best consultants’ or executives’ time to analyzing and improving their business.

John Epeneter, VP Product Management, Allegiance