How to retain customers

Suresh Lulla

Proactive organisations look to receiving any kind of feedback from customers as a way to better understand them, especially negative feedback. According to research, only a few consumers actually follow through with their complaints, but those who do will usually have some valid points that represent the thoughts of many others who did not complain to avoid confrontation. This opportunity must be taken to interact with consumers and understand their point of view, since most complaints are usually to do with failed expectations. A complaint should be seen as a good way to assess how well the organisation is meeting customer’s needs.

Customers are changing their expectations with regard to service and standards. According to the March 2008 ‘Boiling Point’ study conducted by The Mental Health Foundation, 64 per cent of respondents felt that consumers are getting angrier and those who work in the customer service area are aware of this shift. As a society, consumers are becoming more demanding and want instant service & response, just as it works on email, telephone and ‘ondemand’ TV programmes.

Tips to retain customers

Inculcate a harmonious customer relationship with these five steps:

  1. Acknowledge customers while they are waiting for service
  2. Always make eye contact, most importantly at the beginning and at the end of dealing with a customer
  3. It is all right to admit that one does not know something, just as long as an effort is made to find out about it
  4. Call the customer back when promised, even if it is only to say that one will need more time
  5. Follow the old Chinese proverb that sees an opportunity in every crisis

Tying customer service to customer loyalty

Improving customer service and increasing customer loyalty need to be twin goals of every organisation. Dr W Edwards Deming, one of the leading statisticians in the US, created a system that has led several companies such as Fuji, Toyota, Honda and Sony to high levels of service excellence by following some simple rules, which are part of his 14-point system of excellence to transform business effectiveness.

  • Create a sense of purpose to improve service
  • Constantly improve the system to improve quality and increase productivity
  •  Increase participation for on-the-job training modules
  •  Inculcate leaders who will inspire others
  • Institute programmes of self-learning and self-improvement

Focussing on existing customers
Customer service is one of the most important matters an organisation can focus on, even more than developing a new client. Some studies indicate that it costs a company five times more to replace a customer than to simply retain its original customer. Long-term clients and customers are also likely to spend more than new ones, so they must be retained at all costs.

It is important to remember that how a customer comprehends service rendered is greatly dependent on their mood, or, as Jan Carlson of Scandinavian Airlines coined the phrase, ‘moments of truth’. This is what occurs when there is a lasting interaction between a customer and service personnel, which can leave either a positive or a negative impression, and these are the keys to delivering and maintaining high levels of service standards.

View from the industry

Here are a few examples that set the standards in the industry:

Toyota: With the launch of the Lexus brand in the US, Toyota took its after-sales service level to new highs. The company has always strived for excellence, and followed this ‘pursuit of the essence of luxury’ to the hilt. Creating an after-sales service was an extension of this quest for brilliance and for continuing to value their customers. Waiting areas in Lexus service departments are plush, with amenities such as an indoor putting green, a refreshment bar, Internet access and an accessories store.

Most dealerships also provide complimentary loaner cars as well as free car washes, and some even have designer boutiques and cafés. The company also offers the usage of premier parking lots at entertainment and sports events as well as shopping malls that are reserved only for Lexus owners. The emphasis on service excellence is so high that employees are sent to service-oriented companies such as Nordstrom and Ritz-Carlton hotels as part of their training.

HDFC: The housing loan market in India has been completely altered by the service initiatives of HDFC. By making their service completely free, HDFC emphasised on sharing their professional knowledge with their customers, on building approvals, legal documentation, financial advice and so on. By offering a ‘door step’ service, HDFC was able to tap into a huge gap in the market and service these customers who might not be able to visit the HDFC Office.

Beyond just financing, HDFC can also help in finding both commercial and residential properties for sale and lease. The company has also followed through on its commitment to cut down on the red tape associated with home loans and has set up a decentralised process of disbursing funds through its branches. In essence, HDFC completely changed the way home loans were processed, making it significantly easier for consumers to buy their dream home.


Customer service is no longer an intangible, nebulous activity. It is how the majority of customers perceive an organisation, almost like the brand image of a company, what they remember of it, what they tell their peers and what they carry away from the store. It also is the acid test that determines whether they will remain loyal customers or switch to another company.

Suresh Lulla is the Managing Director of Qimpro Consultants Pvt Ltd, Founder of the BestPrax Club, and Chairman of the IMC Quality Awards Committee.