Profitability
built on Loyalty

Type of Organization

"Invest in your CUSTOMERS
and they will Invest in YOU"
    Risk Management
 
   
 
Risk Management could also be called Preventative Management, just wouldn't have the impact of the word Risk. As the word implies, this is all about mitigating the risks that might present themselves to the organization in advance so that all the bad stuff won't happen. There are many ways to focus on eliminating risk, such as financial risk, product risk, liability, quality, customers, employees, intellectual property, personal injury, and on and on.
   
 
What we want to focus on in our discussion of Risk Management is the preventative nature around the two most valuable aspects of your organization - Customers and Employees. And oh, by the way, these two impact the Financial side more than you might think but more on that later.
   
 
To start, we believe that any Risk Management program that doesn't have a component around reducing or eliminating the risks associated with both your customers and employees isn't risk management at all - it is creating risk for your organization. In our discussion about Customer Loyalty we pointed out that this is the primary group that gives you revenue. This, to us, makes this a very important group. Second, we also pointed out that Employee Loyalty is the group that can both cost you additional monies and risk and also help you eliminate risk in your organization so we think these are pretty important people as well. Not withstanding the outside forces and economic conditions (which are not in your control anyway) we believe the two of the top areas an organization should focus on when wanting to reduce their overall risk are Customer Loyalty and Employee Loyalty/Retention.
 
 
Take it a step further. One of the questions we ask many of the CEO's we work with is, "What percentage of your Customers would you say are Loyal to your company?" We can then go on to define Loyalty in a way that is appropriate to them but a key component is that their Customers give them extra chances to show what they can do when things don't go well. Put another way, when they screw up something, the customer doesn't run the other way looking for other options, they give them additional chances (number of chances depends on how Loyal they are) to make it right and prove themselves over again. Back to the question. Most CEO's give us a number that ranges from about 10% to 40% - with the occasional one being as high as 60%. Regardless of the number, we then ask the question, "So if less than 50% of your customers are Loyal, that means they are willing to buy from you until the "next best deal" comes along and then they are gone, correct?" This is because they aren't Loyal and only Loyal customers give you additional opportunities. Merely "satisfied" customers are only there because no one, yet, has presented them with the "next best deal."
 
   
 
Well, that is what we call the "shock question" because once you put it in those terms for the top executive, he realizes that the other percentage (90% - 60%) are "AT RISK of DEFECTION" and that is a huge risk to most top executives. When they see that at any one point in time a competitor can come along and wipe out 60% - 90% of his customers because they aren't loyal, all of a sudden Customer Loyalty becomes of major significance in the area of Risk Management.
   
 
Now, let's apply the same logic to the Employees of the organization. They are not necessarily as mobile as your customers but they can be equally dissatisfied and "looking for the next best deal" to come along in the form of another job. We also ask the CEO's and VP of HR a simple question to tie into this, "When things turn a little sour for your organization (and they do for all organizations at some point), which group of Employees do you think will start to look around first?" We all know the best and most marketable employees are the ones that start to look first because they always have options in the market where the least marketable ones do whatever they can to hang on and keep their jobs, knowing there aren't many out there for them. Second question, "What percentage of your best employees do you feel are truly Loyal to your organization?" Again, the numbers are well below 50% and the same analysis applies that was done for the customer - most are AT RISK of DEFECTION.
   
 

So, given this analysis, is there any reason why the CEO of an organization wouldn't consider Customer Loyalty and Employee Loyalty a significant factor in determining the Risk of the organization? Rhetorical question we know, but it has to be asked. Focusing the efforts of the organization on building Customer and Employee Loyalty is not only good for business and the Performance Measures, it is a great way to lower the overall Risk Level of the organization.

If this makes sense and your answers to the questions above are in line with those from other clients of ours, we would encourage you to give us a call and let us talk with you about how to significantly reduce the overall Risk to your own organization by using our Simple Solution to build Loyalty and reduce your Risk - and give you Powerful Results.


 
 
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