Steve Yastrow

True Loyalty

I’d like to hear your comments on my latest newsletter, True Loyalty.

As I mentioned in my last post, I’m at the 2008 Loyalty Expo in Orlando, where 500 professionals are gathered to discuss the latest ideas in customer loyalty. My keynote speech this morning focused on True Loyalty, where I encouraged the audience to evaluate their loyalty efforts not by the number of transactions these efforts generate, but by how they create customer relationships.  I closed with a story from a recent newsletter, called Turning Customer Loyalty Upside Down, describing how loyalty in a We relationship is a two-way street.

Creating True Loyalty is especially important in tough economic times. Most companies have significant untapped potential in their current customer base.  (See my recent newsletter, The Apple Farmer.)

Is your company focused more on transactional loyalty, or are you heading in the direction of True Loyalty?

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What are your customers loyal to?

I’m preparing my keynote speech for the 2008 Loyalty, Incentive and Reward Expo, this Monday, 11/5, in Orlando.

Among the many issues I’m thinking about, ponder this one:  Are your customers loyal to your promotions, or loyal to their relationship with you?

(Do you think this is a major issue? I do.)

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Don’t miss the chance (for) encounter

Two fabulous Chicago theater experiences this weekend: Steppenwolf’s adaptation of Haruki Murakami’s Kafka on the Shore, and Chicago Shakespeare Theater’s production of Peter Shaffer’s Amadeus.  Both were powerful and, if you are in Chicago, please see them.

At this moment, I want to share one passage from Kafka on the Shore.  Kafka, a 15-year old runaway meets a girl, Sakura, on a bus. As they ride together, Sakura asks him about a Japanese saying that talks about people traveling together.  The saying is ‘In travel a companion, in life compassion.”  Sakura asks Kafka what the saying means, and he says “I think it means that chance encounters are what keep us going.”

Although Kafka on the Shore is very cryptic and its meaning is not obvious, one thing that is clear throughout the story is how people meet each other, interact and make a difference in each others’ lives.  Altough I need to study Kafka on the Shore to understand it more deeply, I am struck how this one theme stands out so clearly in a dream-like tapestry of magical realism.

That the 15-year old’s name is Kafka is no coincidence, as he tries to confront the labyrinth of life in the story. But this makes it all the more interesting that he says “chance encounters are what keep us going.”  As Martin Buber wrote, “All real living is meeting.”  Our encounters with other people are what make life real.  Don’t miss the opportunity for encounter, whether it presents itself by chance or through interactions you plan in advance to have with others.  When confronting the complexities of life and business, follow Murakami’s advice and look for opportunities for relationship-building encounters with others.  They are what keep us going.

(I’ll write about Amadeus once I can get a hold of the text. Mozart has an amazing passage about harmony that makes for great brand harmony discussion.  I want to get the words right. No luck finding the text online tonight.)

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Turn the downturn into rounding error

(I published this post in June on tompeters.com.  The news of the past few weeks encouraged me to republish it here.)

The U.S. economy is in bad shape. If, by chance, you haven’t heard about this yet, just turn on cable TV news for 30 seconds.

What does this mean to your business? It could be terrible, but it doesn’t have to be.

How can I say that?

For the last few months, I have been asking workshop audiences the following questions:

1. What percent of your customers are giving you all the business they reasonably could?

2. What percent of your referral sources are giving you all the referrals they reasonably could?

The answers to these questions have stunned me, because they have been so low. I knew they would be quite a bit lower than 100%, but I’ve found that most executives estimate that only somewhere between 0 and 25% of customers are giving them all the business they could. The numbers are even lower for referral sources.

So, let’s say that the economic downturn has softened the market for your products or services by 10—20%. Yes, that’s a lot. But it pales in comparison to the 75% of the business you are missing if your current customers are only giving you 25% of their potential business.

Here’s the cold, hard (but potential-laden) truth: For most companies, the untapped latent profit in their existing customer relationships is much greater than the magnitude of our current economic problems.

The downturn is real. But so is the amount of business you are missing from your current customer relationships. How do you develop this potential with your existing customers?

Customers who believe they are in “We” relationships with you will give you a larger share of their business. They are willing to pay more, and they are less likely to leave you for a competitor. On the other hand, customers who are in “Us & Them” relationships with you are more likely to spread the business around among your competitors, and will also be more likely to bolt to the competition for a lower price. If you create “We” relationships with your customers, one relationship-building encounter at a time, you will go a long way towards making up for—and maybe even surpassing—the effects of the soft economy.

So …?

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We disagree, Jeffrey

Jeffrey Gitomer is one of the leading experts in sales, by any measure. His Little Red Book of Selling and seminars are legendary. But I have to disagree with him this time.

Yesterday, a number of people forwarded me Jeffrey’s latest Sales Caffiene newsletter, in which he recommended that his readers banish the word “We” from their vocabulary as they interact with customers. The people who sent me the newsletter were curious for my reaction, since, as they know, I believe that “We” is one of the most important words to describe a customer relationship.

Unfortunately, Jeffrey sees the word “We” only as a tool for bragging about your own company, as in “We are #1 in our market” and “We’ve been a leader since 1982.” He says that you should avoid the word “We” because it’s more important to talk about your customer, not about yourself.

Yes, of course, it’s more important to talk about your customers than to talk about yourself. But, to me, “We” isn’t about bragging about yourself, because the “We” I’m thinking of doesn’t only include you and the people in your own company. The “We” I am aiming for is one in which your customer can’t think of you without thinking of himself at the same time. In your customer’s mind, your company evolves beyond being “them” or “those guys” to being “We,” because the customer sees the two of you bound in genuine partnership.

So, I’ll agree with Jeffrey in that you shouldn’t brag about how great “We” are, since your customer doesn’t care. But I also want to encourage you to embrace the word “We” … not in the way Jeffrey describes it, but in the way you aim for your customers to view their relationship with you: As a “We” relationship.

If you don’t know Jeffrey Gitomer, check out his site. It’s full of amazing ideas. But this is one on which “We” disagree.

(For a quick description of a We relationship, check out the first audio link on this post.)

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Mr. Lincoln - Master of Encounter

Just finished a wonderful book, Team of Rivals, by Doris Kearns Goodwin. The book focuses on how Abraham Lincoln built his cabinet. Instead of choosing cronies and old pals, Lincoln’s choices included three of his major rivals for the 1860 presidential nomination, William Seward, Edward Bates and Salmon Chase. None of these men thought Lincoln was presidential material, and, in fact, he was considered a light-weight who was not prepared for the job.

Lincoln won them over – especially Seward – by genuinely and methodically building his relationships with them. In fact, relationship-building encounters were a key to Lincoln’s success, whether it was at the highest political echelons or meeting the troops at the front. (Chase was the toughest relationship in the cabinet for Lincoln, but that was due more to Chase’s awkwardness with personal relationships than it was to anything Lincoln did.)

What’s especially interesting is that Lincoln was very successful at building relationships from afar, through letters and telegrams. I’m often asked, in speeches and workshops, if the proliferation of electronic communications – text messages, emails, instant messages, etc. – are making it harder for us to have human encounters. The truth is that it’s now easier to connect with people who aren’t nearby. Sure, electronic communication can be a crutch, but people can respond immediately to text messages, and you can instantly be in a dialogue with someone a continent away just by dialing their cell phone. And, of course, air travel makes it possible for us to include more in-person encounters in our relationships than was possible mid-nineteenth century.

We can learn from Mr. Lincoln. Every interaction can be a relationship-building encounter, if we genuinely believe that relationship building is at the center of what we need and want to do.

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React vs. Respond

Last week, in a workshop, an attendee said that his company is ‘reactive.’ The word didn’t sound right, so I asked him to explain. I quickly realized that he meant that his company is ‘responsive,’ not ‘reactive.’

I forgot about this exchange until last night, while I was having dinner with my friend Gene Hensley in Seattle, as Gene coincidentally mentioned the contrast between the meanings of these two words. “‘React’ is to re-act,” Gene said, “meaning that you act in a way you have acted before in the past. ‘Respond’ is to act in a way that is based on what’s going on right now, in this 60 seconds.”

Imagine that you complain about the way your meal is cooked in a restaurant. A server who ‘reacts’ to your complaint will pull a canned rejoinder from his inventory of past experiences, treating your situation in a routine, recycled way. A server who ‘responds’ to your complaint will not base his response on past customer interactions, but will respond directly to what is happening to you at this moment.

I don’t think this is a subtle distinction. Your customers can easily tell if someone in your company ‘reacts’ to their situation, treating them in a routine, rehashed way. They can also tell if someone in your company ‘responds’ to their situation, treating them in a genuine, personalized, unique way.

What is better for your business, reactions or responses?

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Could have only been with me

Here’s a relationship-building-encounter thought for today:

As you interact with a customer, consider what it will take to have your customer think, “This could have only happened with me. I am not getting the ’standard treatment.’ I am being treated in a way that recognizes and honors who I am.”

Customers have very sensitive antennae that tell them when they are getting a cookie-cutter, scripted, pulled-from-inventory sort of treatment. Yes, it’s more efficient to treat customers in a standard way. But, when it comes to building relationships, it is much less effective.

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Relationships can save legal fees

My father, Shelby Yastrow, is one of the most un-litigious lawyers you will ever meet. He was general counsel of McDonald’s at a time when they had no written vendor contracts – just handshakes.

Dad told me of advice he got from one of his first mentors, Glenn Seidenfeld, shortly after completing law school: “If you have a good relationship, you don’t need a contract and you’ll never look at it; if you have a bad relationship, no contract is good enough.”

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Caroline’s Ice CRM clarity

What does mint chocolate chip ice cream have to do with CRM?

One of my “rant buttons” is the way Customer Relationship Management (CRM) is usually discussed as a software-oriented, direct marketing, customers-in-the-aggregate, technology tool. Shouldn’t we focus, first, on how to manage human relationships with individual customers, and then look at how the technology can support those one-on-one relationships? In practice, it usually doesn’t work that way. Here’s a recent post I wrote on tompeters.com that sums up these thoughts.

Last week, during a presentation to 200 employees of one of our health care clients, my associate, Caroline Ceisel, made a spontaneous comment that put customer relationship management in usable, human terms. Caroline was leading a discussion on how to use information we learn about an individual patient, at one point in time, to personalize the patient’s relationship with the practice at a later point in time. Caroline said, “It doesn’t matter if you know your girlfriend likes mint chocolate chip ice cream if you don’t ever get her some.”

From where I was standing, near Caroline at the front of the room, I could see the faces in the audience. They practically glowed with understanding.

Sure, technology is very helpful in remembering those “nuggets” about individual customers. But those nuggets only matter once you pull them out and use them to give customers what they want. Think of all of the nuggets about individual customers that are sitting in your CRM database. Is your company using that information only to execute more streamlined direct marketing campaigns, or are you using that information interact with individual customers in ways that are relevant to each customer?

Remember, it doesn’t matter if you know it. It only matters if you use it.

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