Magazine Article | October 1, 2001

Collaboration Increases Customer Loyalty

Source: Field Technologies Magazine

Create lifelong customers by becoming partners.

Integrated Solutions, October 2001

Many people are familiar with the following customer loyalty statistics:

  • Fifty percent of customers are lost every five years due to changing needs that remain unmet, new technologies, or competition. Reducing this defection level by as little as 10% to 15% can double profits.
  • The effort to capture new customers costs six times more than the effort to retain existing customers.
  • Loyal customers spend five times more than indifferent customers on annual maintenance, upgrades, and additional products offered.

These statistics show that customer loyalty has a direct impact on company profitability. But how do you address the issue of maintaining a loyal customer base?

Seek Customer Input
Many feel the answer comes from a traditional CRM (customer relationship management) approach of integrating the customer support function with marketing and sales. This approach allows you to provide improved customer support and better understand your customers' buying habits to generate revenue with increased sales. While this methodology does improve customer loyalty to a degree, the traditional definition of CRM has a missing component: Build better products by making the customer your collaborative partner in the development process.

This is especially true in the technology industry, where new product groups are constantly looking for ways to improve their product line. The tendency is that they become inward focused and get too caught-up in the "technical" aspects of their product or service and lose sight of the changing customer needs. Because these needs are constantly changing, the product must evolve to meet those changes to keep the customer loyal.

Teams engaged in building new releases and new products need to be constantly outward focused on customers, and always in touch with customers' current needs. This focus goes beyond the initial market research, and is an ongoing process which constantly keeps customers in the loop. Companies must create a collaborative environment between engineering, customer support, and the customer.

Collaboration Is Critical To Success
In order to develop products that, upon release, best meet customer needs, acknowledge your customer as a partner and a source of knowledge and information. In turn, customers will begin to view your company as an outsourced development team that creates products with their input - products that are immediately beneficial to the way they work. As customers see that they have a direct impact on the product, they will become steadfastly loyal.

The first step in establishing this partnership is to build a central repository for all product issues. Customers have easy access via the Web to submit issues into this data repository so they can share their ideas quickly and easily. The customer support group uses this database to manage all their technical support issues. The new products group can use this database not only to manage their design and testing tasks, but to identify key new features and enhancements that should be considered for the next release as well.

The next step is to establish a customer-centric workflow process with a continuous feedback loop. Integrate the customer support and engineering teams into a common workflow and provide continuous updates to the customer. This greatly reduces the chance of miscommunication - the customer stays in the loop, and overall customer support is enhanced.

The final step in establishing a partnership means involving all your customer types in the development process. For example, both large and small customers, and customers who are both technical and nontechnical should be involved so each customer perspective is represented. By bringing customers into a consultative role, treating them as industry experts who partner with you in the development process, you are certain to build products that continue to meet the changing needs of your customers and the market, and ensure customer loyalty. And loyalty - as the statistics point out - enriches the bottom line.

Questions about this article? E-mail the author at