February 15, 2010
By Lauren McKay,

Extreme Loyalty Requires Extreme Commitment

NEW YORK — Jeanne Bliss isn't afraid to get into character.

Donning fatigues, a helmet, and full-on military gear on stage in front of several hundred attendees at the recent Net Promoter conference, Bliss was participating in an activity that new employees at USAA face upon hire. Bliss, the author of I Love You More than My Dog and managing partner of consultancy Customer Bliss, led a panel discussion with three companies that have taken customer loyalty to the extreme. One such panelist, Wayne Peacock, the executive vice president of member experience for United Services Automobile Association (USAA), used Bliss to demonstrate his company's commitment to understanding its constituents. Each employee of USAA, an automobile insurance provider to those who have served in the armed forces, dresses in military apparel in an effort to connect with its customer base.

When she wasn't stepping into combat boots and taste testing MREs, Bliss was introducing customer experience champions from Zane Cycles, Southwest Airlines, and USAA. Why are these three companies so commendable? Perhaps because achieving customer loyalty is no walk in the park. Especially in an economic crisis, businesses are faced with tough decisions, Bliss said. Everyday as individuals and as business people we make hundreds of decisions -- and how we go about them tells a story about who we are and what we value. "How we choose to correct something that goes wrong, how steadfast we are in delivering goods, that all indicates how much we consider ... the people on the other end of our services," Bliss told attendees. The following companies show how customer experience can not only improve customer loyalty, but can be the basis for how the company operates:

USAA

The automobile insurance and investment service provider has 7.4 million members. One out of every five members has served in the military. Understanding the clientele is a huge goal for USAA -- one of the reasons for its interesting employee orientation. USAA demonstrates its commitment to celebrating military holidays by putting on large productions in the headquarters for events like the Marine Corp's birthday every December.

"It's important that we are genuine and real," Peacock said. He told the NP crowd that not only does the company begin each meeting with an iteration of its mission but it truly tries to uphold the core values:

Facilitate the financial service of our members and their families.
Provide a full range of highly competitive financial products and services.
Be the provider of choice for the military.

Going beyond the norm with its service has generated staggering results for USAA. Peacock said that USAA boasts close to a 98 percent retention rate. USAA was ranked number one on Forrester Research's Customer Advocacy Index, and it took home the top spot in the 2009 Net Promoter ranking for customer loyalty.

Zane Cycles

A person is a person, not a transaction. At least that's the philosophy Christopher Zane, the president of bicycle retail shop Zane Cycles, holds close to heart. "We're in the bike business, but not really," Zane said. "We're in the service business." When Zane Cycles first opened, it offered free service for a year to all customers. When its competitor matched the promotion, Zane upped the offer to two years of free service. When the competitor matched that as well, Zane pledged to offer lifetime service for all customers. No cost, no questions asked.

Zane says he knows that service costs his company money -- the deal also comes with a lifetime parts warranty and a 90 percent price-protection guarantee -- but he says it's never too much. People tend to self-regulate, he says, using a jar of quarters as an example. If you pass the jar around, most people will only take a few -- only rarely will a person try to empty out the jar. More often than not, people only take their perceived share. That model works for Zane's bike service. "We provide more service than seems reasonable," he told the audience, "but people who only take a little fund those who take a lot."

Zane also calculated an average customer's lifetime value -- a figure he pegged at approximately $12,500, an amount that more than pays for the free service. "Even when someone deliberately sticks a screwdriver in a wheel, we still fix it," Zane said. "We aren't going to waste $12,500 over a $6 tube."

The company also takes an interesting approach in its hiring. "We want our help to be embraced so we don't hire 'bike people,' " Zane said. "We hire nice people."

Nice people apparently pay off: Zane Cycles has averaged 23 percent growth annually for 29 years, according to its founder, and operates on 45 percent margins. His one-store empire now does $15 million in annual sales.

Southwest Airlines

Fred Taylor has gotten great at apologizing. As the senior manager of proactive customer service communications for Southwest Airlines, Taylor says "I'm sorry" more times a day than some people will utter in a year. Taylor writes around 240 letters a year to Southwest passengers, oftentimes apologizing for unseen problems on flights or with travel scheduling. Taylor was plucked from the front lines by Southwest in 2007 to start reaching out to customers proactively. Now the team of five measures customer experience system-wide and looks at pipelines where complaints could surface. "We have a process in place that gathers facts of experiences and determines validity and what we need to speak to," Taylor said. "Then we formulate correspondence to customers. It's not canned, rather it's unique to each [flight] experience." In his messages to Southwest customers, Taylor will:

Acknowledge the situation;
Apologize for the experience;
Invite the customer to fly again with Southwest;
Many times include a gesture of goodwill (such as a ticket voucher); and
Sometimes add a video that explains the situation.

Taylor says the goal is to get the message -- usually electronic -- out to the customer within 24-48 hours after the experience. Bliss begged the question, "Why can't other airlines do this?" To that, Taylor responded that Southwest's culture is centered on customer experience. It's difficult for other companies to see the value this brings to their business.

"I am fortunate to work for a company that puts forth a lot of support and resources to make sure my team [can] accomplish our mission each and every day," Taylor said. Southwest's proactive communications team receives positive feedback on a daily basis. Customers commend the company for recognizing mistakes and apologizing for bad experiences, Taylor said.

According to Taylor, 70 percent of Southwest customers who receive proactive communications return to the airline and bring others with them. "We create a wow factor…and a positive storytelling experience," he said.

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