To best understand the value of customer loyalty to your business, consider the definition of a customer. The word customer comes from the Latin word custumarius, which means "a person whom one has to deal." Loyal customers are not just the folks standing in front of your cash register paying you money, they are all the people you deal with on a regular or repeat basis.
You have both internal and external customers. For our discussion we'll call people standing in front of your cash register external customers—the traditional customer. They pay you or your business money for the products and services you bring to the marketplace.
Internal customers are all the other folks with whom you deal. Internal customers might be your suppliers or vendors. A building contractor deals with subcontractors and is dependent on those people to complete the building project. Subcontractors are the internal customers of the building contractor. If you work for a large corporation, your internal customer might be your boss or other people that depend on the work you do. If you work in the mailroom, the people to whom you deliver mail are your internal customers. You may work in the accounting department, and so your internal customers are those who rely on your reports. By using the Latin meaning of customer, you will find that you have many more customers than what is evident at first.
You may work for a company where you seldom meet with external customers. All your dealings might only be with internal customers, but you can still benefit from applying the principles that create loyalty to the internal people. You benefit when your internal customers are predictable and they are easy to do business with. More importantly, a loyalty relationship with internal customers identifies you in the most positive manner.
Woody Allen, the film actor and director, said, "Ninety percent of life is showing up." Harrison Ford admitted in an television interview with James Lipton of Inside the Actors Studio, that he owes a great part of his success to just being in Hollywood when he got his big break. When the studio was casting the part of Han Solo for the movie Star Wars, most of Ford's contemporaries had already given up hope on an acting career and had left Hollywood. Ford feels that he got the job because he showed up to the audition. Harrison Ford may have gotten the job because he showed up, but he was also prepared.
People get jobs and promotions, and advance in their careers for showing up. Showing up may be 90 percent of life, but your chances improve when you show up well equipped. Showing up as an actor, accountant, lawyer, programmer, or anything else gets you in the arena for consideration; but showing up equipped might be why you are chosen. Showing up as someone rather than something is your opportunity for being equipped. Coco Chanel, the extraordinary fashion designer, said, "How many cares one loses when one decides not to be something, but to be someone."
A relationship of loyalty is pertinent for internal as well as external customers. The relationship of loyalty distinguishes you as someone, not a something. There are rewards for applying the principles of loyalty to everyone with whom you deal.
In the next chapter, we will be discussing the concept that "people do business with people." Ultimately, people are loyal to people. Customers may continue to trade on a repeat basis with a business, but it is the people who make up that business and who create loyalty. Internal customers are dependent on the work you do, product you provide, and the services you offer. Creating loyalty is the way for you to "show up."
Frank is a residential building contractor in Columbus, Ohio, who has been building homes since the 1970's. When Frank started in business it was a builder's market. Columbus was growing and there were more people looking for new homes than there were homes available. Frank's biggest challenge was finding the best subcontractor to help him build quality homes.
During the construction of Frank's first few homes he experienced every sort of problem that can plague someone new to the construction business. Some workers showed up late or didn't show up at all. Building materials were delivered at the wrong time, and then these materials sat uncovered, were damaged and had to be replaced. The drywall workers arrived before the carpenters and had to be rescheduled. Frank's first construction site looked like a war zone. The ability to finish a building project on time with the fewest callbacks to rework or repair construction made the difference in the profitability of a project. Frank knew that finding good plumbers, electricians, masons, drywallers, and other subcontractors would be of great importance to his success. Gradually he learned which subcontractors would show up on time and do quality work.
Frank survived his problems and he continued to build homes using those subcontractors he knew he could depend on. As a building contractor, Frank was ultimately selling the cumulative work of his subcontractors to a buyer. He developed loyalty with these subcontractors and was rewarded with their predictability and the ease of doing business with them.
By the late 1970s, high interest rates were reaching historically high levels. The builder's market became a buyer's market. Frank built homes on a speculative basis. He didn't have a buyer when he began construction. Earlier this had worked to his benefit because new home prices were rising and Frank saw his building projects increase in value during construction. He had built homes, acted as his own sales agent, and had profited handsomely. Now with the shift to a buyer's market, Frank's fortune was changing. In this new market he was paying high interest rates on construction loans and buyers were getting scarce.
For the first time in his construction career Frank contacted a Realtor to help him sell his property. He could no longer just stick a sign in the yard and expect to sell the property. He was going to have to spend some money on attracting a customer. The Realtor's commission was the cost of attraction.
Today Frank's two sons have joined him in the family business. Their business is prospering beyond their fondest dreams. They depend on subcontractors, architects, land developers, Realtors, and all others with whom they deal. The loyalty Frank and his sons have created with these internal customers guarantees their continuing success.
The principles that create loyalty and the benefits from having loyal customers are the same whether they are your internal or external customers. Knowing how to deal with the customer, predictability, and the cost of attraction are just as pertinent to dealing with internal customers as they are in dealing with external customers.