Six Degrees Of Customer Loyalty

CIOs need to embrace and embody them, says a customer loyalty expert, whether they're dealing with internal customers, or -- as is increasingly the case (and should be) -- external customers.The Brookeside Group is a consulting firm that specializes in customer loyalty. Founded in 1994, Boston-based Brookeside leverages research work done in the 1970s at Harvard on employee loyalty. Jim Kane is a partner and senior consultant with Brookeside. Kane says there are six factors essential for customer loyalty, and that those factors apply equally to the online, virtual, Internet-driven, e-commerce-oriented world as they do to the brick-and-mortar world of conventional commerce.

"Loyalty is based on relationships. What's interesting today, and what affects CIOs, is that relationships are now becoming virtual," says Kane. "The same elements that exist in human relationship now exist in virtual relationships."

Here are the six factors that affect loyalty, according to Kane: Integrity -- The customer believes that you're honest and fair. Competency -- The customer believes that you can deliver on what you say you can. Recognition -- The customer believes that you see him or her as an individual. Proactivity -- The customer believes that you will anticipate his or her needs, and sees you as a trusted advisor. Savvy -- The customer believes that you understand the world and the challenges that make things difficult for him or her. Chemistry -- The customer likes working with you.

In terms of generating loyalty in the virtual world -- by embodying all six loyalty factors -- Kane uses the example of Amazon. "I don't know if a human works there, yet they do all of those things very well," he says.

CIOs need to keep that in mind when planning and executing external-facing IT systems. CIOs need to be as customer-focused as any executive in the company. CIOs are "essentially building relationships with the company's customers" through technology, says Kane. "I don't think there are any companies that their technology isn't touching their customers," he says, and "if that technology is affecting customers negatively, that's creating barriers to loyalty."

The same goes for the CIOs' internal customers, the employees in the organization, although with a slightly different focus. While internal customers can be looked on as something of a captive audience -- employees can't jump ship as easily as external customers can -- it's very important for companies to develop loyalty among their employees. And it's important for the CIO to remember that technology touches almost every employee in the company. "The technology, and the efficiency of those systems, plays a key role in how much [employees] like working there," Kane points outs.

Why is it important? Because the degree to which a company's employees are loyal affects how loyal its customers are. "If you can create loyalty internally -- and you can -- it translates out, it affects customers' loyalty," says Kane. He even has a number associated with that effect: Kane maintains that companies with loyal employees can affect customer retention by as much as 38%.

Be that as it may, the point is this: technology affects customer loyalty, both internally and externally. CIOs have to be aware of that, and make sure they're doing everything they can to positively influence that loyalty -- or the opposite will be the case.