John Jantsch: Hey, this episode of the Duct Tape Marketing podcast is brought to you by Rev.com. We do all of our transcriptions here on the Duct Tape Marketing podcast using Rev.com and I’m going to give you a special offer in just a bit.
John Jantsch: Hello and welcome to another episode of the Duct Tape Marketing podcast. This is John Jantsch and my guest today is Sandy Rogers. He’s the leader of the Franklin Covey loyalty practice and also a co-author Leading Loyalty: Cracking the Code to Customer Devotion. So Sandy, welcome.
Sandy Rogers: John, thank you. I’m thrilled to be here.
John Jantsch: So customer loyalty is one of those things that seems to have maybe gone out of the buyer behavior vernacular. I know my grandfather would about every three years go buy a Chevy Caprice because he was a Chevy person, but now I look at my kids and not so loyal to the companies and the brands that they buy from. Is that part of buying behavior gone?
Sandy Rogers: Well, it’s interesting. Some people argue that loyalty is dead. It’s easier to switch, right? Gas stations, restaurants, you can buy the same clothes from all these different places. But we find loyalty is alive and thriving in so many organizations. And it comes down to the behavior of the people and how they treat us.
John Jantsch: And I think that’s a great point because it was actually harder to leave. You had to go to that one place a lot of times because you didn’t have all the opportunities or the ways to find. So I don’t think that people are less loyal. They just put up with less, right?
Sandy Rogers: Well that’s right. And the competition for our business is definitely greater. Technology is playing a bigger role. But I think good old fashioned how we’re treated can really differentiate organizations today. But it’s all about putting their people into a position to do the things that we describe in the book Leading Loyalty.
John Jantsch: These loyalty programs have been around for a long time. In fact, you spent some time with a rental car company and they, airlines, rental car companies have these loyalty programs. Do those still work to foster loyalty or are they just kind of a holdover from the past?
Sandy Rogers: Well they certainly can help. But they’re easily copied by competitors and everybody’s got these loyalty programs, reward points, discounts and so on and what we’re talking about is not the loyalty that you get with inertia or momentum. We’re talking about the fierce loyalty that is [inaudible] in the heart. The kind of loyalty that gets people to go out and tell their friends about an experience, or about a brand. It’s… they describe these companies and these people as, “I love these guys!” And that doesn’t come from a rewards program. That’s from a personal interaction.
John Jantsch: Yeah, my favorite promotion is the promotion for new customers, right? I’m loyal and I’ve been with you for 10 years and the new person gets the discount, I don’t get anything. I almost think those are disloyalty programs. So since you kind of opened up this idea of the heart being at the center of loyalty in some ways, what role then does company culture really play in customer loyalty?
Sandy Rogers: Well I went to business school years ago and we learned a lot about strategy, right? A brilliant strategy to beat your competitors and be different in the marketplace and I love years later reading Peter Drucker’s comment that “culture eats strategy for breakfast.” And you know been at Apple and at Proctor & Gamble and at Enterprise Rent-A-Car and now Franklin Covey I just can’t agree more. And also seeing the impact of culture across so many organizations. Companies that do the same stuff, but they deliver such different results because of their cultures. Take Southwest Airlines or Chick-fil-A or Enterprise or American Express or Zappos, there are tons of examples of businesses that are one on the surface because yeah, that’s a commodity business and yet the outcome for customers is very different as a result of culture.
John Jantsch: I wrote a book called Referral Engine was one of my books as a lot of my listeners know and I wrote a line in there about referability and I think I said something like, “Your employees are probably treating your customers exactly like they’re being treated.” And I think that kind of goes to… I mean it makes total sense, doesn’t it? I mean the front line people are going to go out of their way… some of them are just going to go out of their way because they’re nice people, but most of them are going to go out of their way because they really believe in the mission.
Sandy Rogers: Well exactly. My friend Shep Hyken who’s written a number of books about customer service, and he says that, “The customer experience rarely exceeds the employee experience.” And Jack Taylor, the founder of Enterprise Rent-A-Car understood that so well. We were out visiting branches one day. I ran the branches in our [inaudible] operation. He was asking people, “Are you having fun?” And I said, “Jack, ask these people about their sales numbers. Ask them about their customer service scores.” And he kept introducing himself and saying, “Oh my gosh, are you having fun here?” And I said, “Why are you asking if they’re having fun?” He said, “Because Sport, if they’re not having fun, nothing else really matters. We’ve got to first earn the loyalty of our employees which then leads to the loyalty of our customers and then sales growth and then profit. And it has to happen in that order.”
John Jantsch: So the title of the book is Leading Loyalty so how does… I mean clearly the leader sets the tone for that. So how does a leader create loyalty?
Sandy Rogers: A leader creates loyalty by first adopting what we call a loyalty leader mindset. And our mindset, the way we think about the world, affects our behavior. And our behavior has to adhere to these three core loyalty principles that we talk about in Leading Loyalty. These are empathy, responsibility, and generosity. And principles are these things that you can’t ignore. If you ignore or violate these things, you’re not going to earn the loyalty of the important people in your life.
John Jantsch: So the principles are a great starting point. Unfortunately that’s where a lot of books end. One of the things that I like about this book is you also have a pretty detailed process. You want to kind of give us the high level view of what the process for earning loyalty of your customers is?
Sandy Rogers: Well it is. So we teach in the book the three core loyalty principles, empathy, responsibility, and generosity, but we teach how to bring those to life through two practices. So for example, the way that I have empathy for someone is that I need to understand their story so I’m feeling what they’re feeling. I accomplish this by first making a genuine human connection and then listening to learn their story. So those are the two practices that go with empathy. With responsibility, I’ve got to discover the real job to be done and then follow up to strengthen the relationship. And with generosity I’ve got to share insights openly in a generous way and surprise people in unexpected ways. And so you’ve got to do all of these things. The process we describe in the book is a series of 11 huddles, you and your team carve out 15 minutes a week to talk about these principles and practices and most importantly celebrate the people who are doing what you talked about last week in your 15 minute huddle.
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John Jantsch: So one of the things I see all the time is that a lot of times customers don’t remain loyal because nobody asks them to. I can’t tell you how many small businesses I’ve gone into and they’ve got a list of 1,500 customers that they haven’t contacted in two years. So what role does just simple follow up play in loyalty.
Sandy Rogers: Chapter Seven and Huddle Seven, so each of the chapters has a huddle at the end, is about following up to strengthen the relationship. And that’s what responsible organizations do and certainly ones that want to earn loyalty. One of the reasons John that I think people avoid following up is that they’re afraid of hearing about problems. And this is not something to be afraid of. In fact this is one of our best opportunities to turn a customer who may be a detractor into a fierce promoter. And so we talk about for example, if you come across a problem, use the five A’s in effective follow up and we borrowed these from the Apple Store. The five A’s are one, assume the other person has good intent. Assume they’re not trying to rip you off. They’re the 99 out of a hundred that are good people. Align with the person’s emotions. You don’t have to agree with them, but at least get on the same side of the table as they are. Apologize with no defensiveness. Ask how can I make this thing right? And assure the person that you’re going to follow through and do it. And so in Chapter Seven in the huddle you learn about these things, you practice. I mean these scenarios are great. It’s mostly fun to be the angry customer but then the other person uses the five A’s, make the person happy.
John Jantsch: So you mention two concepts that I want to go a little deeper in. The one is make a genuine human connection. I think that in some cases the online world we live in, social media we live in, in some ways we’ve lost that art a bit I think maybe just a touch. I mean you can run businesses today without actually ever meeting a customer. So how do we bring that back. I mean you actually have a process that you train people on, but how do we maybe bring that back into the business.
Sandy Rogers: Well we… You’re right. Many businesses that we are loyal to, we don’t talk to people. I’ve bought lots and lots of stuff from Amazon. I do lots of things with Southwest Airlines, and I might do it myself. I do a lot of things with my bank by myself. But when there’s a problem, even Amazon, I had a problem last year, and I found the phone number I needed to talk to a human being, and I was blown away by how well they took care of it, which gave me tremendous confidence to continue to serve myself and use the wonderful app they designed. But this idea of making a human connection happens in the products that we design. We decide when we use the app for the first time whether their designer was doing so with the principles that we talk about. Do they have empathy for me? Are they taking responsibility for what I’m really trying to get done, which is quickly change my flight to a different day. Are they being generous with my time or are they asking me for things they should already know because of my 10 year history with them. And in real life when we’re interacting with customers, that genuine connection is as simple as eye contact. It’s smiling and it’s acknowledging people.
John Jantsch: Yeah. Do you… I know you do a lot of training and I’m sure that organizations bring their teams, their retails staffs to you. Do you find that… I’m going to make all my younger listeners mad here, but do you find that that’s a generational thing that those basic things that maybe we were taught are not taught and expected as much in a younger generation?
Sandy Rogers: Well we know that Generation Z and Millennials have a lot of confidence interacting online with their thumbs and we through this book, one of our goals is to make sure everybody’s equally comfortable face-to-face and not picking on one group over another but it certainly helps to address what you’re describing. And just a little [inaudible 00:12:39], you could be the third person in line and I could be working the host stand and just with my eye contact and a smile and an expression I can let you know I see you, I’m so sorry you’re having to wait, I’m going to take care of you. And you know what? That’s going to make you feel okay. You’re going to be like, “All right. Good. The guy’s acknowledged me.” What is crazy is when people pretend like they can’t see us, like we’re invisible or something.
John Jantsch: One other thing that you mentioned that I want to go back to because I’ve heard this term before and I’d like you to maybe define it a little deeper. Understand the real job to be done.
Sandy Rogers: Well now an example I frequently give, a man comes into a hardware store, “I’m looking for a wrench.”
Sandy Rogers: “Oh, they’re right over in Aisle 14.”
Sandy Rogers: That’s not taking responsibility for anything. So instead, “Come with me. You’re looking for a wrench. What are you working on?”
Sandy Rogers: “Well, I’ve got this old fence in my backyard and I’ve got to pull these rusty nuts off these bolts so I can get rid of the fence.”
Sandy Rogers: “Well sir, do the nuts and bolts look like any of these?”
Sandy Rogers: “They look just like those hexagonal ones there.”
Sandy Rogers: “Ah, to grip the rusty edges of those nuts so you can pull the bolts out and get rid of your fence, you’re going to need a set of box wrenches and this should do the trick.”
Sandy Rogers: And so that’s the real job to be done is to help the guy get rid of his fence, not to sell him a wrench. And so many businesses miss that opportunity to ask a question that would allow their customer who they want to be loyal to explain what job they’re actually trying to do.
John Jantsch: Yeah. I’m almost laughing because particularly you go to your local neighborhood Ace Hardware, and that’s the approach that those old guys have always taken. But today you go to the sort of box store and let’s face it, they’re having trouble actually getting folks. Maybe that person’s been there a week and so how do you… I mean it really… it’s very difficult I think to… well here I’m answering your question instead of asking a question. Does it become difficult for an organization that maybe has high turnover because of the nature of their business to kind of keep that vibe and that culture alive?
Sandy Rogers: Well, you’re right. I mean why should I get in my car and go to some store if I’m not going to do any better than just buying it online and having it delivered to the comforts of home? So what’s going to differentiate that in-store experience are the people. And front line people have notoriously high turnover. They’re the least trained. They’re the lowest paid. They’re the least engaged according to Gallup. And yet they’re the most critical for defining that different between a good and a great experience, right? So it’s all about people and the behavior. So the first thing we’ve got to do is treat our people with the same principles that need to be applied to the customers. We’ve got to earn their fierce loyalty first and the secret to that is to put them into a position to enrich the lives of their customers. Rather than tying them down with scripts and policies they hate, instead encourage them to say, “Hey look, this is the mission.” Jack Taylor for Enterprise Rent-A-Car, founder of the largest car rental company said years ago, “It’s real simple. When people walk out that door they should feel like wow, that was one of the best experiences I’ve ever had.” And so that’s what we got to get more retail stores to be doing with their folks.
John Jantsch: So at FranklinCovey you do leadership, or I’m sorry customer loyalty training. What does that look like?
Sandy Rogers: We help organizations that want to dramatically improve their customer loyalty. And it’s built off the work I did at Enterprise years ago where we measured customer service across all of our branches and then we held people accountable for improving and over the next 10 years we went from delighting 66% of our customers to 80% of our customers across thousands of branches and we reduced the variation which is always the biggest problem in a chain from 28 points down to less than 12 points. We tripled the sales in this 10 year period from two to $7 billion. And this story got Fred Reichheld at Bain & Company to create the Net Promoters Score. It inspired the creation of NPS. And so our work at Franklin Covey in the loyalty practice is to help organizations do what we did at Enterprise. Measure their customer service accurately so they know who on their front line needs to get better at customer service and then give them a training process which we describe in the book so that everybody does these loyalty principles more often.
John Jantsch: Visiting with Sandy Rogers, author of Leading Loyalty: Cracking the Code to Customer Devotion. You want to tell people where they can find out more about the book itself and certainly about your training practices.
Sandy Rogers: They can learn about the book at their favorite bookseller, certainly at Amazon, Leading Loyalty: Cracking the Code to Customer Devotion. They can go to our FranklinCovey website and learn about what we offer in the area of loyalty and certainly find me on LinkedIn.
John Jantsch: Well Sandy thanks for joining us and hopefully we will run into you someday out there on the road.
Sandy Rogers: Thank you so much.