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How to Identify and Manage Potentially Loyal Clients?

Yannick Poubanne France

There are at least four ways to develop a business. Gaining new clients, developing existing clients, retaining clients, and reactivating former clients! The most expensive way is the first one, costing up to ten times more than the others (Reichheld F. 1996). Often it is the only one available for a new business, conversely in a mature business it is worth developing programs focusing on existing clients. These programs are usually called loyalty programs but it is different to develop existing clients than to retain clients. The former are more potentially loyal clients than the latter and it will be easier and more cost effective to approach them. In order to help practitioners improve their results in their client loyalty programs, it is useful to be able to identify potentially loyal clients and to properly manage them.

1. What is a potentially loyal CLIENT?

A long time ago, Wind (1978) reviewed client loyalty and found that it was not just a matter of positive behavior towards a supplier. In fact, client loyalty is made of two dimensions: behavior and attitude. The former refers to visible actions undertaken by the client such as repurchasing and recommending. The later is invisible because of its affective and cognitive nature. It can only be revealed through a survey. However, it is very important because it is the predisposition to act. It is what is in your client’s mind when their think about you! These two dimensions will help us distinguish potential loyalty, from true loyalty, spurious loyalty, and no loyalty, as shown below:

Client Behavior

Positive

Negative

Client Attitude

Positive

True loyalty

Potential loyalty

Negative

Spurious loyalty

No loyalty

Different types of loyalty (Wind 1978)

A potentially loyal client is consequently somebody predisposed to behave positively towards your practice because his attitude is positive. Unfortunately, you don’t see him as potentially loyal and prefer to see the spuriously loyal one as good client because he repeatedly purchases from your practice. However, the spuriously loyal one hasn’t a positive attitude and you very much risk being surprised one day to find him visiting another practice, especially if it is cheaper! Potentially loyal clients are a tremendous source of practice development provided we know they exist, we know how to identify them, and how to manage them.

2. How to identify potentially loyal CLIENTS?

2.1 Data analysis and survey

Because potentially loyal clients do not yet behave very positively towards your practice, you will find them at the bottom of your clients list when decreasingly sorted by yearly expenditures. Unfortunately, you don’t know yet how to distinguish them from non-loyal clients, but you have located them. One way to sort it out is to run an attitudinal questionnaire.

2.2 Questionnaires

A survey among these low-spending clients in order to identify the positive ones can be organized. Therefore, it supposes that you can link the survey results to your sales database, by client names. It is ethically not recommended to tag each client questionnaire with the client identification number, because people would know that we are going to use the opinions. The only way is to ask the surveyed clients to leave their names at the end of the questionnaire, and surprisingly, most of them will do so. This enables you to link attitude to behavior toward your practice, and so identify “positive attitude but negative behavior” type of clients, i.e., your “potentially” loyal ones.

If the previous approach is too heavy or without results, an easy way is to directly ask clients to declare their level of spending per year through your practice and simultaneously, their attitude towards the practice. Asking people to leave their names will enable you to identify a big number of potentially loyal clients to start working with.

The questions to identify potentially loyal clients are not satisfaction questions. While it isn’t excessive to repeat them in services area, you don’t get much information from classical satisfaction surveys. Most of the people will tell you that they are satisfied. Instead, the attitudinal concepts you must measure are commitment or attachment to your practice.

Commitment can be operationalised through the following questioning: “Please rate your agreement with the following assertions: If my preferred clinic is closed, it would make little difference to me to choose another one.  I consider myself to be very loyal to this clinic. When another clinic is cheaper, I will generally go to it rather than to my usual one.”

Attachment to the clinic can be determined the same way by the following questions: “Except in case of emergency, if the practice is closed I always prefer to wait. If another practice were cheaper, I would probably go to it. If a practice opened near my home, I would probably try it.” In both cases, the average score to these items will represent the intensity of respectively commitment and attachment.

2.3 Cross selling analysis

There is a special population of clients offering you the opportunity to easily identify potentially loyal clients: The ones owning both dogs and cats. A simple segmentation of the client list can help you identify four different groups of clients. Group A: the ones spending more than the average for their dog and more than the average for their cat; group B: the ones spending more than the average for their dog and less than the average for their cat; group C: the ones spending less than the average for their dog and more than the average for their cat; and group D: the ones spending less than the average for their dog and less than the average for their cat. It is clear that groups B and C represent two sources of development for the practice thanks to potentially loyal clients. Moreover, this method needs no questionnaire.

2.4. Information from your clients that complain

Remember your personal last experiences of complaint. Why did you actually do it? What were you expressing unconsciously? I would bet you did it first because you wanted to get the service or the product you expected, but second, because you wanted to maintain a good level of relationship with your supplier. Client complaints very often represent client commitment, i.e. the willing to maintain a fair commercial relationship the way it used to be. Clients not only invest money in services with you, they also invest time and affect in the relationship, and they don’t want to loose it.

Consequently, clients that complain, especially the ones purchasing few products or services from you, are potentially loyal clients if properly managed. Moreover, remember again from your last experience of complaint—if you were properly managed, what was your feeling and your behavior just after the event? I would also bet that you felt happy (even happier!) to be taken into consideration and you talked about it positively. It is a fact today, that good complaints management generates client loyalty and favorable world-of-mouth.

3. How to manage potentially loyal CLIENTS?

3.1 Service recovery

The classical technique of service recovery is based on the three following steps: listening, rephrasing, and offering solutions. In order to generate loyalty, it is vital to put the emphasis on the fact that during these steps the client has to feel he is treated as a human being. Too many service recoveries communicate that the client is a number and that his case is a code in the computer. To convert a client complaint into client loyalty, we must personalize the recovery and do something we usually do not do. The client must feel he is important for you because while complaining, he is showing that you are important for him.

3.2 Education to develop client involvement

Involvement is a state of mind saying that something is important for you. For instance, you can be involved in cars, dancing, etc. Clients involved in their pet and especially in their pet’s health, are more likely to become loyal to your practice, and particularly, clients with a positive attitude towards your practice. Developing client involvement will then help you convert potentially loyal clients into loyal ones. For veterinarian, the tool to develop client involvement is client education.

3.3 Service communication

A simple reason why your potentially loyal clients do not behave more positively towards your practice is that they do not know which services are available. Communicating your services is then the way to develop their loyalty. Classical tools include practice tours, leaflets, boards, brochures, etc…

3.4 Trials to develop familiarity

When somebody has already a positive attitude towards your practice, it is very worthwhile to make him try new services or products he may benefit from. Contrary to clients with no attitude who purchase by habit, the potentially loyal clients will deliver you a very good return on your investment. So have them try your pet food, your boarding, or your grooming services. You will then develop loyalty based on familiarity to your service. They will not be tempted to compare with something else, and if so, will be very reluctant to change.

Conclusion

Client behavior is still a vast area to explore, especially in the veterinary area, because people are changing faster than our ideas. The loyalty relationship is actually more complex than “satisfaction implies loyalty.” However, as demonstrated today, loyal clients have both a positive attitude and positive behavior towards the practice. Missing one of these two generates bad surprises for the practitioner. For instance, promotions or price cuts develop only positive behavior but not positive attitudes, and the result is short-term spurious loyalty. The same actions on committed clients, however, have a long-term effect of true loyalty generating solid profits.

references

1.  Peppers, Don and Martha Rogers, “The One to One”, 1998.

2.  Reichheld F. (1996), “The Loyalty Effect”, Harvard Business School Press.

3.  Wind, Jerry, “Issues and Advances in Segmentation Research”, Journal of Marketing Research 15, no. 3 (1978).


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