Customer loyalty in service companies has some sensible differences from product sales businesses.
Because, by their definition, the services have some characteristics that make them especially susceptible to loyalty campaigns.
So let’s get right into the flour.
What differentiates a product from a service?
There are particular characteristics of the services that are relevant when talking about loyalty:
- The service is produced at the same time as it is consumed.
- The perception of service quality is closely linked to the treatment.
- Almost all services can be offered on a recurring basis.
The service is produced at the same time as it is consumed.
This is the main difference between services and products.
While the latter can be produced, stored and sold when the occasion arises, the former cannot, because they are custom-made and enjoyed as they are consumed.
I don’t care if you think of a taxi ride, a business consultancy or any other service. It’s always like that.
It is particularly relevant in terms of customer loyalty. With a loyal customer base you can predict with some accuracy the flow of customers you will receive and ensure that you do not have peak areas where you have to discard customers or valley areas where you stand idly by.
This, which in theory may seem a little abstract, I see clearly every time I take the car to the workshop.
My mechanic, Antonio, is always busy. Without exception.
At first, I wondered if he had so many customers that he had to say no to some of them or if it was the same as when he has a lot of work.
Now that I’ve been going for years and we’re friends, I understand perfectly:
When I go with an urgent breakdown, he tries to take a look as soon as possible.
When I go with something that is not in a hurry, he looks for a hole in his agenda.
He is not worried that postponing the repair will mean that I will go to see someone else because he knows that I am delighted with him and I am absolutely faithful.
The perception of service quality is closely linked to the treatment.
If you are going to buy an iPhone and you are not treated very well, you will probably be upset with the shop or the salesman who has sent you.
However, as soon as a couple of days go by and you’re happy with your new phone, chances are you won’t even remember what you were treated to in the shop.
Think though when you go to eat in a restaurant.
The food is delicious, but the waiter treats you badly and makes you wait 40 minutes until your dishes arrive.
Probably you don’t care how good or bad the food was and don’t go back to that place.
See where I’m going, right?
In services, the perception of quality is linked to treatment much more than in products. That is why, if you bet on building customer loyalty through expectations and you sell a service, you have to make sure that the attention is perfect and personalised.
Almost all services can be offered on a recurring basis
This is one of my favourite qualities.
If you sell a SaaS, for example, the best way to ensure customer loyalty is to sell a year instead of a month of service.
If you have a workshop, the best way to ensure customer loyalty is to offer annual maintenance instead of repairs.
And if you have a fleet of taxis, the best way to ensure the loyalty of a hotel is, instead of putting your phone at their disposal, to close a partnership contract for a period of time.
All these ways of making a recurring service are much easier to implement in the world of services than in the world of products, and are the grail of loyalty.
So how do you build customer loyalty in service companies?
Taking into account all the features we have discussed here, there are 2 things you should take into account when establishing customer loyalty programmes if you offer services.
You can and should strive for long-term agreements
Closing a deal for 6 months, 1 year or even 5 is the best way to get loyal customers.
You give them time to try out the full service and you create a brutal barrier of entry to your competition: having already paid for all those services in advance, if they want to change to another provider, they have to pay again.
You will hardly ever be able to build loyalty by price. You’ll have to do it for a deal.
Saving on price means saving on service provision, and that almost always leads to a poorer quality service.
In order to work on customer loyalty you will have to do so via expectations, and, as with services, the perceived quality can be summarised in the treatment received, this is the facet that you must take most care of.
Make sure you offer a 100% personalized experience.
Can I work on customer loyalty in service companies without a CRM?
You should not.
Don’t get me wrong. If you have a few dozen clients, you could manage with an Excel (although I don’t recommend it).
But if it is a question of more than 30 or 40 clients, to apply systems of loyalty based on offering a personalized treatment and of quality without a CRM is impossible.
And Efficy CRM is the best to do it.
Do you want to try it?
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