In this era of tough competition, more businesses are seeking to differentiate themselves through customer service. But how many businesses show this in ways customers recognise and genuinely appreciate?

The truth is that service excellence is not something one does on an ad hoc or piecemeal basis. It requires a sustained effort, perseverance and consistency.

In markets like Singapore, businesses strive to acquire "loyal" customers. The simple reason is because loyal customers bring in the most profit. They are satisfied with your products and services, and patronise you repeatedly. They then recommend you to their friends and associates.

The global research company, Gallup, showed that "loyal" customers typically spend twice as much as "satisfied" customers. They defect to the competition at half the rate.

The customer loyalty challenges

The first challenge that companies face is to achieve differentiation from their competitors. While such product differentiation is apparent in industries like consumer electronics, most service industries find it difficult to sustain any competitive advantage based on product features alone.

In the financial services industry, a product can be emulated by a competitor within hours. As a result, businesses are seeking to differentiate by improving on customer service.

The second challenge is to understand what customers really want by shifting them from being merely "very satisfied" with product features to becoming loyal to your business and your brand.

The third challenge is to organise product and service delivery in such a manner that customers recognise and appreciate the value that is being placed on them.

They will reward you in return, with their loyalty and follow-on business. This means customers must experience something beyond the traditional "Greet", "Smile" and "Thank you".

Loyalty roadmap

A four-stage management model can help meet these challenges and move organisations towards building a differentiated customer experience, and delivering it deliberately and consistently across all touchpoints.

1. UNDERSTANDING THE PROBLEM AND THE OPPORTUNITY

This means learning and understanding what makes for a "customer experience".

Employ motivational and behavioural research techniques to analyse customer feedback and complaints.

2. IDENTIFYING WHAT CUSTOMERS REALLY WANT

In Singapore, customers enjoy a bewildering choice of alternative suppliers. A business that is "good" at what it does is unlikely to truly succeed.

Organisations must learn about what it takes to make customers "feel important" and "cared for".

This makes them truly enjoy the service experience. It is this "emotional engagement" that makes the overall experience memorable.

3. DESIGNING A COMPELLING CUSTOMER EXPERIENCE

Design your business processes from the "outside in", from the perspective of the customer.

This ensures that tasks are completed more efficiently according to the customer's requirements.

Advertising and marketing collaterals, along with the process of delivery, fulfilment and after-sales service, must be mapped to ensure that potential "combustion points" are removed and "emotional rewards" are introduced to deliberately make the overall experience much more memorable.

Ensure that everyone in the process flow, from the business units to each individual colleague, knows precisely which element of the customer experience they are tasked with.

The result is that delivery will be consistent, across all direct and indirect touchpoints. In a bank, for example, this includes branches, contact centres, ATMs and even the Internet.

4. ASSURING SERVICE EXCEEDS CUSTOMER EXPECTATIONS

Focus on customer outcomes when it comes to measuring the customer experience. The outcomes of routine operational activities should align with the organisation's customer experience strategy.

Ensure that performance indicators such as customer complaints are regularly reviewed by a service council, chaired by the chief operating officer.

The purpose of the council is to seek constant improvements in customer service.

Give staff incentives for sales and service. For example, OCBC Bank's branch performance indicators demonstrate that branches with higher levels of customer engagement achieve higher revenues.

Implement customer-based competencies into the annual staff performance appraisal so that staff can better understand the role they play in delivering a great customer experience.

Equip all staff with emotional quotient-based training so that they know how to build emotional engagement with customers.

The payoff

While the efforts may seem considerable, the potential benefits are equally considerable.

OCBC Bank's recent customer engagement survey, conducted by Gallup, showed that "fully engaged" (loyal) customers were more than twice as profitable as average customers, and over 50 per cent more profitable than customers who are "satisfied" with the bank's financial products, services and processes.