The Butterfly Customer - Capturing the Loyalty of Today's Elusive Consumer

by Susan M. O'Dell and Joan A. Pajune John Wiley and Sons, Toronto, 1997 

 "Butterfly customers" are defined by O'Dell and Pajunen to be people that flit from one store or supplier to another, always searching for a lower price or a different shopping experience. They have no loyalty to any particular store, and are always in search of a better deal or a new promotion. "Constantly in motion for the best deal, the greatest choice, the latest trend, this creature selects a store or brand apparently at random, often abandoning the tried and true for the newest, the closest, the cheapest. It's exhausting to be a butterfly and disheartening to serve one. There isn't one single store that captures all of their interest, dollars or oh-so-precious time. Consumers have been transformed from loyal, reliable and predictable patrons into transients - here today, flitting across the street tomorrow." Butterfly customers have been spawned by the proliferation of options in the retail environment, in the last few decades, including suburban shopping malls that pulled people away from traditional downtown retail and service environments, and national chains of specialty stores that can take advantage of huge purchasing power to obtain the lowest prices for consumers. This is compounded by the fact that many consumers no longer trust retailers and service providers to deliver what they say they will, and to live up to expectations. According to the authors, there are eight characteristics of Butterfly Customers: They will readily accept offers to be loyal customers (through signing up for club memberships, points programs, etc.) but these programs will not truly create loyalty they move across market segments, buying a luxury car one day and waiting in line to save $1 on a pair of socks the next they are intelligent, educated and informed they are cynical and skeptical, tending to disbelieve advertising messages and always reading the fine print they would rather switch than fight - "The current reduction in customer complaints has less to do with a great improvement in service than it does with a collective shrug. What energy the Butterfly Customer does have is devoted to switching, not fighting." they are endlessly interested in the experience of others, and word of mouth is seen to be the most trusted and reliable source of information they are not embarrassed to be Butterflies, and see this pattern of behavior as being praiseworthy in today's economy they know their own worth "It's a wonderful time to be a Butterfly as retailers and service providers everywhere strive to entice this elusive new breed of customer. Every day customers are bombarded with new concepts, new products and new services to try. And there are sales and special offers galore, all designed to lure prospective buyers from retailer to retailer, from bank to bank, from credit card to credit card, and from brand to brand looking to see what's new, what's better, what's different." From the business perspective, though, Butterfly Customers are expensive to win (as there are significant costs entailed in getting their attention in the first place), difficult to service (as they are highly demanding), and almost impossible to keep. However, all is not lost for the poor retailer....At the other end of the spectrum, the authors propose the concept of the "Monarch", a loyal customer who will return again and again because he or she trusts the retail or service operation and knows that what they expect will be what will be delivered. "The Monarch is still a butterfly. The characteristics we described earlier still describe them. They are intelligent, curious, suspicious, and know their own worth. But the Monarch is a species of butterfly which, despite taking various byways and pathways, can be counted on to return to the familiar on a regular basis. These loyal Monarch Customers are less expensive to attract. It usually doesn't take an expensive advertising campaign or give-away promotion to entice them back to your business. They take less transaction time from your staff and are quicker to buy because they are less skeptical and don't need a large amount of convincing. They are more willing to buy and less price sensitive all around." The authors describe five characteristics of Monarchs: Monarchs always return - sooner or later Monarchs often send someone in their place (i.e. recommending and referring other customers) Monarchs always have an opinion - unlike the disinterested Butterfly customers who would rather switch than fight, Monarch customers always have an opinion that they will share if asked Monarchs share their homework, and will freely provide information on what the competition is doing Monarchs are forgiving and giving: "Monarch customers have a remarkable tolerance for the sheer ordinariness of service life. They know the coffee won't always be at exactly the right temperature and even the perkiest of airline attendants sometimes has a bad day. Customers who are loyal put elasticity in their transactions with you. They allow you to screw up once in a while and often even pitch in to help when the going gets rough." So, the big question becomes how do you create Monarchs from Butterflies (or, on the other side of the coin, how do you prevent your existing loyal Monarchs from abandoning you and becoming Butterflies)? O'Dell and Pajunen maintain that it boils down to building (or re-building, as the case may be) trust with the customer. They propose the idea of the 'service kaleidoscope' - a three dimensional way of looking at a business to determine the extent to which it breeds trust in the customer. These three dimensions are: the media dimension the physical dimension the people dimension If the three dimensions are in harmony with one another, then the customer knows what to expect (and gets it), and develops a feeling of trust with the business. If the three dimensions are out of synch, then a feeling of discomfort and distrust will develop. So, for example, if the media message about a retail environment suggests that offers upscale and quality merchandise, yet the physical surroundings suggest 'bargain warehouse' and the staff are surly and untrained, the customer will experience dissonance and not trust the business. (In O'Dell and Pajunen's terms, their "trust account" will be depleted.) They likely won't be back, having turned into a Butterfly Customer for someone else. Loyal Monarch Customers can be found in those environments where the three dimensions are in accord and support one another. The authors have developed a self assessment tool for a business (which they call a '3-D audit', as it focuses on these three dimensions) and much of the book outlines the questions to be asked and procedures to be followed in undertaking this kind of assessment. Another fundamental point that they make is that there needs to be another kind of three-dimensional harmony in place for a retail or service business to work - this time between the managers, the employees and the stockholders. This underscores for them the importance of leadership in creating the kind of environment that customers will trust - as this will create profits for the business, jobs and wages for the employees, and a return-on-investment for the equity owners. One interesting point of contention for the authors that they deplore frequently throughout the book is the 'service excellence' feats that some other writers have lauded as examples of outstanding customer service (the sort of thing where a hotel front desk clerk charters a plane to return a briefcase that a guest has left). They say that these sorts of things are merely silly stories that raise expectations among consumers, but ultimately only end up costing everybody more (after all, somebody had to pay for that flight, most likely subsequent customers through prices that had to be raised to pay for all these feats of service heroism). The Butterfly Customer is an interesting (if somewhat lightweight) book, with undoubtedly several good ideas about improving retail and service offerings to attract more loyal customers. Whether it really is as possible as they seem to suggest to create and keep loyal customers in this era of ever-proliferating consumer options is an open question at this point.

Mind Your ABC's. Get Rid of the D's

Mind Your ABC's. Get Rid of the D's.

Too many D’s and not enough A's: this is one thing in life that holds many of us back, without our even realizing it. It touches our everyday lives to an amazing degree. Let’s look at some examples in both our business and personal lives.

BUSINESS RELATIONSHIPS:The customer is not always right; the RIGHT customer is always right.

Not all customers are created equally. Some buy a lot from us, respect our opinions, and pay their bills on time. On the other hand, some just really drain us with small orders, constant complaining, and late payments. If you hang around these negative ones (they attach themselves to us), how are you ever going to have the time and energy to deal with the positive ones? I’m sure you can think of five to 10 customers who make your life a misery.

What if . . . ? Yes, what if they didn’t exist? Or, better still, what if they were dealing with your competitors and bringing them down? You would free up capacity that is being badly used and turn it into good capacity.

Replace those 10 baddies with one goodie and you are ahead of the game. First, get rid of the baddies. In case you haven’t figured it out, those are the D’s. Wouldn’t it be fun for you to double the number of baddies that your competitors deal with? It will drive them crazy, and they will lose some of their A customers to you. So, rank your customers A, B, C, & D. If getting rid of your D customers is difficult for you (maybe you don’t like to say no), then set stringent rules for them and insist they must follow them:

· Get their credit card number/ banking instruments before they buy.

· Develop a minimum size order.

· Insist they deal with you by fax or email.

You set the rules. If they don’t leave, they will become better customers. Your A customers are the best ones. So, treat them best. Next come your B’s and then your C’s. You need to set the parameters for A, B, C, and D. If you need help give me a call. Target your marketing activities toward A customers. Find out what delights them and make it part of your culture!

The questions you should ask yourself to help develop your strategies are:

· What can I do to convert my D customers to C, my C to B and my B to A?
· How can I get more A customers?
· What can I do to delight my A customers?

Now look at your suppliers and your employees, and follow the same pattern. You’ll improve the quality of your working life!

PERSONAL RELATIONSHIPS:Take control.

What about in your personal life? Are there people who drain you? Take more control and put limits on those relationships. Small changes here will make big differences in the quality of your life. Are you involved in too many volunteer activities? What are the unimportant things that are taking up your time? Freeing up even 15 minutes a day from marginal activities and spending it with your family will have a huge impact on your life. We are constantly reminded of how fragile life is. Don’t wait until it is too late. Sit with your family, share these thoughts and make a new family strategy now. Learn how to delight each other.

"What I do today is important because I am exchanging a day of my life for it."

Customer Satisfaction is WORTHLESS: Customer Loyalty is Priceless

by Jeffrey Gitomer

Subtitled "How to make customerslove you, keep them coming back, and tell everyone they know", Gitomer's book holds that traditional customer satisfaction measures are essentially meaningless. A merely satisfied customer, he maintains, is still likely to shop around the next time he or she needs to buy your product or service, for a better price or a more convenient offering. A loyal customer, on the other hand, is more likely to make a point of coming back to you specifically as the supplier, and moreover, is likely to recommend your product or service to others.

To illustrate this, he shows an interesting concept that he calls the "ladder of customer service"


The key is how to develop loyal customers, not simply satisfied ones.
Gitomer holds that it all boils down to something easy to say, but harder to do in practice: GIVING GREAT CUSTOMER SERVICE. To show what this means in practice, he has articulated 13 principles of customer service success, which are:

1. understand that your customer is your paycheck - (an interesting suggestion that Gitomer has here is to paste a picture of your children eating dinner above your desk or workstation, to reinforce the knowledge that your customers are the source of your bread and butter).

2. know that your attitude (which he conceptualizes as the way you dedicate yourself to the way you think) determines the degree of excellence of the service you perform

3. customers call, contact, or visit for one reason ­ they need help! - Gitomer advocates being as helpful and speedy in your response as possible to customers when they call, rather then letting then linger in voice mail limbo, or be left uncertain as to whether you can help them or not ­ as he says" give them help, not hell"

4. the value of a customer is 20 times his annual sales volume - Gitomer recommends thinking in relationship marketing terms ­ about the lifetime value of a customer

5. a customer ready to repeat his purchase is a powerful business advantage - the point here is that a major strategic business advantage that you have over your competition is customers who want to buy from you again and again - retaining these loyal customers (and developing more, of course) should be a key business strategy
6. customer satisfaction is worthless: "Satisfaction is no longer the acceptable standard of customer service. Satisfaction is no longer the acceptable measure of customer service success. The standard and measure of success for the next millennium is loyal customers." (p. 79)

7. when you're done speaking with a customer, or when the transaction is over, that's when they start talking - Gitomer recognizes that word of mouth is the most powerful form of advertising, and that customers who say good - or bad - things about you are extremely influential

8. word of mouth advertising is 50 times more powerful than advertising

9. your friendliness and willingness to help is in direct proportion to your success

10. company policy is written in terms of the company, not the customer - Gitomer's point here is that whenever a customer request cannot be dealt with, it is very bad form to fall back on 'company policy' as the reason why - company policy is written for the benefit of the company, not the customer - the customer doesn't care a whit about what the policy might be, they only know that they are dissatisfied because they can't get what they want - when absolutely necessary, he recommends using phrases such as "in order to be fair to everyone" which at least puts the emphasis on the benefits to customers, not the company

11. service is a feeling ­ "Service is a feeling, and you know what it is ­ whether it's good or bad. If you can't remember what 'bad' feels like, call the DMV, Post Office, IRS or Social Security. That's bad. Then call L.L.Bean ­ that's good." (p. 84)

12. the secret to successful customer service is start with... YES - Gitomer says that instead of saying 'no' to customers, say 'yes' whenever possible, even if it is something along the lines of "yes, I see your concern"

13. the customer's perception of good or bad service is the measure of your success or failure
Most of the book is given over to an elaboration of these principles. A 'golden rule' that Gitomer suggests to help clarify these is to pretend that the customer is your grandmother, and to treat them with the respect and eagerness-to-please that you would your real relative.

According to Gitomer, great service is anything extra that you can do for your customer that will make them take notice of you and say WOW! He presents many examples of this kind of service in the book (such as the hotel that calls ahead of your visit to see if there is anything they can have prepared for you upon your arrival, or the tire store that has someone greet you in the parking lot with an umbrella when its raining).

WOW! Service will in turn generate free word-of-mouth advertising (because people like to tell memorable stories) that will in turn help build your business. Plus the customers will be not merely satisfied when the next opportunity rolls around for them to purchase your particular good or service - they will be loyal.
The most important determinant of providing WOW! Service is attitude and self-motivation, and Gitomer talks throughout the book about how to improve one's knowledge and positive attitude about the business they are in.

Customer Satisfaction is WORTHLESS: Customer Loyalty is Priceless is a quick and easy read, with lots of interesting examples and points to ponder. (For example, he provides a useful checklist of things to do when customers call up to complain - and you can be sure that one of then is NOT saying "Sorry - it's company policy"). Gitomer's style is very open and user-friendly, with interesting variations in the typeface to enhance reader interest and curiosity. Throughout, he presents quizzes and self-evaluation questionnaires to help the reader evaluate their own levels of service.

Add Value to Your Business

The purpose of creating a business is to sell it. When it comes time to sell, you want the success of your business to be dependent on systems and not on you. Therefore, you must work on your business as well as in it. You always want to keep the big picture in mind and not get immersed in the details. How do you approach this? Develop systems to enhance it.

There are just four ways to grow your business:
1. Increase the number of customers of the type you want.
2. Increase the frequency with which they deal with you.
3. Increase the average value of the sales transaction.
4. Improve the effectiveness of the processes in your business.

Remember that one of the four reasons for being in business is to have fun.
Your business is there for your benefit; you are not there for its benefit.


What you can measure, you can manage. If you are not measuring a process, it is almost certain that you are not managing it. Think about your business and what makes it profitable. Are you measuring these processes?

• How many customers do you have?
• How many new customers did you get during the last month and the last year?
• What was the source of these customers?

If you and your team are doing activities that you cannot measure, then the chances are that those activities are adding no value. If they are adding no value, why waste your time doing them?

Build your Unique Core Differentiators (UCD’S). This information bulletin is part of our UCD’S. What have you got?

Look for a second dimension in selling your product. Extended warranties, companion selling, etc.

Learn to really listen. Don’t prescribe a solution unless you really understand the problem. Cutting the price is the easy option - but there is often a better way. It will be harder, but you will earn more money and add more value to your business.

Lower the barriers to doing business with you. Some businesses still do not accept credit cards. (Have I hit a sensitive nerve here?) Should you be taking debit cards?

The more specific things you can tell, the more you can sell. What are the reasons your customers deal with you? Tell these reasons to others and see if you gain new customers.

Avoid changing horses in midstream. If you have tested or measured a system or a process and it works, stick with it until you develop an improved system or process.
Know the power of one. Direct your efforts to one customer or to one prospective customer who requires your service or product; don’t direct your efforts to those who don’t require them.

Learn the value of discovering key frustrations.
Systematize: have a specific way of doing every thing.

Set performance standards: have a best way of doing things.

Invert your pyramid and empower your team. The team you have in place can solve most day to day problems. They can do it faster and more effectively than you can. You just need a way of identifying the solution and applying it. Give them the skill and the authority.

Don’t just reverse the risk, remove it. If you give guarantees, you must have systems in place so that the only result will be the one where you will meet your guarantee.
Give your team a clear and detailed action plan. Be pro-active in following up on orders.
Create offers to add value and to encourage faster responses. If offers increase responses considerably, why run an advertisement without an offer?

Add a 3rd dimension to marketing your product. Consider a Host Beneficiary program. Who else is serving your customers? They want access to your customers. You want access to theirs. Find a way to work together to benefit both.

These ideas will only work if you implement them. As the Nike people say, "JUST DO IT!"