In the name of cost-cutting—and even customer service—many companies hide behind automated phone attendants, do not train their employees, use Web sites without live customer contact information, or develop inflexible policies that fail to allow for unusual needs or allow employees to use their best judgment when necessary. According to G. Andrew Barfuss, from the Brigham Young University Center for Entrepreneurship, even more aggravating are those companies that provide poor customer service while advertising or marketing how much they value their customer base.

According to Barfuss, “Entrepreneurs whose businesses deliver real customer care will be recognized and rewarded by loyal customers who are tired of the posers and the fakers.”

So, how do companies “fake” customer service? Larry Hollis, vice president of business development for Rosendin Electric, San Jose, Calif., said bogus customer service means pretending to care while not really meeting customer needs.

“Providing promotional trips or gifts may be nice and might make the customer think the company cares about them, but they don’t actually improve service or increase loyalty,” he said.

In the competitive environment of electrical construction, cost-cutting is important. However, too often companies make the mistake of trading real service for perceived cost savings.

“Too often short-term cost savings achieved in the way companies interact with their customers come at the expense of real relationships and loyalty. No savings can offset the complete loss of a customer who decides to buy from someone else,” Barfuss said.

Ways to increase loyalty

According to Paul R. Timm, Ph.D., professor of organizational leadership and strategy at the Marriott School at Brigham Young University, customers who complain and have their problem addressed are more likely to become loyal to the company than customers who never have a problem with the service they receive.

According to Timm, “Putting ‘your ears on’ is one of the most powerful strategies for building customer loyalty and company profitability.” Active listening has long been recognized as an essential management and marketing tool, Timm said on his Web site (drtimm.com). But too often, companies listen sporadically or fail to develop systematic strategies for receiving and using customer input to make improvements to customer service. Surveys by the Office of Consumer Affairs note that 25 percent of customers are dissatisfied with some aspect of a typical transaction; the majority of customers take their business elsewhere rather than complain; and a dissatisfied customer will, on average, tell a dozen other people about a company that provided poor service.

“Handling the complaints heard from two or three dissatisfied people can save 30 or 40 possible defections,” Timm said. In addition, companies that effectively solicit and handle customer complaints can charge up to 15 percent more than the competition.

According to Rosendin’s Hollis, the key to improving customer service and loyalty lies in being responsive.

“It sounds easy, but many companies don’t respond quickly to customer needs,” Hollis said. High levels of quick, complete responsiveness demonstrate to the customer that the company really respects the client’s needs.

Honesty and integrity rate at the top of the list for improving customer loyalty. Cheating or otherwise lying to the customer is one of the best and fastest ways to hurt your business.

“You shouldn’t even approach a customer without being willing and ready to follow through on your promises and provide the best field expertise for each specific application,” said Tom Tatro, vice president of operations at Contra Costa Electric Inc., Martinez, Calif. He also advised not to approach projects as a one-time-only opportunity.

“Look at each project as the first step to building a long-term relationship,” Tatro said.

Collecting feedback from customers about how the company is performing against certain criteria is another essential ingredient to increasing their loyalty. According to Michelle Schofield, director of corporate communications for Satmetrix Systems Inc., Foster City, Calif., collecting feedback helps the contractor identify how to improve customer service.

“It is essential that the data get into the hands of employees, especially those that interact with the customer, so that the company can take positive action, one customer at a time. After all, a customer that will recommend you is the most loyal one you can have,” she said. Hollis also advises using the data from surveys and customer needs analyses to figure out what the customer is really looking for.

“Ideally, you would also provide general contractors with the data to help them determine industry trends and what the customer is requiring and receiving from the electrical contractor,” Hollis said.

According to Shep Hyken, CSP, president of Shepherd Presentations LLC, St. Louis, loyalty is about the next time the company interacts with the customer.

“The focus should always be on what the company is doing now that will make the customer choose the company the next time,” he said. Hyken said the choices the contractor makes should always be a positive influence on the relationship with the customer, even if those choices may not be obvious or become evident immediately.

“Confidence and loyalty are created when the company does what it says it will,” he said.

In addition, the contractor needs to guarantee its services and stand behind everything it does. If there’s a problem, don’t blame others or use the “it’s not my department” defense. After all, customers don’t do business with a company. They do business with the people who represent the company, and they want to be heard and assured that their needs will be addressed.

According to BusinessTown.com LLC, an informational Web site for entrepreneurs and small business owners and operators, building customer loyalty will be easier if the company has a loyal work force, especially those who provide technical support and customer service. The increasing trend today is to send customer service and technical support calls into a queue for the next available person—this creates no personal loyalty and probably less overall loyalty for the company.

Market your loyalty

Marketing programs aimed at current customers are an important aspect of building customer loyalty.

“There is a lot of competition to retain customers, so it’s important to market your reputation as a provider of high levels of customer service by demonstrating the satisfaction experienced by your existing customer base,” Tatro said.

In addition, a good safety record is an excellent marketing tool, particularly for electrical contractors with large customers in the industrial or healthcare markets.

“A good safety record demonstrates the company’s ability to perform the work and lowers the customer’s risk of unanticipated costs,” Tatro said.

The best marketing engine, however, is through the creation of positive word-of-mouth.

“You can’t take the customer for granted. The contractor must focus on engineering its business to deliver value to the customer, which, in turn, fuels growth through positive word-of-mouth,” Schofield said.

Contractors must develop specific programs and activities to help build customer loyalty. It doesn’t happen by itself.

A company’s management team must be dedicated to improving customer loyalty and training employees in proper customer service, Hyken said. He additionally recommends regularly asking employees for examples of how they provided great customer service in an effort to promote constant self-examination of what sort of customer service the company is actually providing.

“Customer service is not restricted to customers. The contractor needs to promote a corporate culture that encourages employees to discuss their ideas with management on how to improve customer service and how to better meet both the customer’s and the company’s goals,” Hyken said.

Optimally, your company will retain 100 percent of its customer base. Unfortunately, you can’t make everyone happy, certainly not all of the time. And even satisfied customers, on average, don’t return, even though their needs were met.

“There’s a big difference between a satisfied and a loyal customer,” Hyken said. “The goal is to increase confidence.”

To maintain growth, therefore, the contractor needs to constantly search for new business, even if their customer retention rate is excellent.

“There’s always turnover as customers’ needs change or they stop needing you, for whatever reason, and as new markets and new technologies develop,” Hollis said.

As the electrical industry grows complicated with evolving technology that opens new opportunities and markets, it is more vital than ever to treat customers well to increase their loyalty and improve your level of repeat business.

BREMER, a freelance writer based in Solomons, Md., contributes frequently to ELECTRICAL CONTRACTOR. She can be reached at 410.394.6966 or darbremer@comcast.net.