Does Outsourcing affect Customer Loyalty?

A recent study by researchers at University of Michigan and University of Richmond shows that outsourcing/offshoring certain aspects of your business can affect customer loyalty. The research, titled “Does Offshoring Impact Customer Satisfaction?” and posted on the Social Science Research Network, points to collected data that shows:

offshoring of front office processes that interface directly with the customer has a negative association with customer satisfaction, customer loyalty, perceived quality and customer expectations. On the other hand, we find that offshoring back office processes that do not interface directly with the customer has a positive association with customer loyalty.

Well…I could have told you that myself…and many of you probably could have guessed this was the case.  It is good to have some academic research to back up my ‘gut’ feeling.  I’m still reading through the article, but so far the research methods seem fair and sound.

Hat tip to ArsTechnica for the link to this research.

BTW – You can download the paper in its entirety at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1010457

Five Customer Retention Tips That Really Work (Guest Post)

This is a guest post written by Heather Johnson, who regularly writes on the topic of career exploration. See her byline at the end of this article for Heather’s contact information.

Although employee engagement might be the buzzword around the office, customer retention is obviously important as well. Managers can become so focused on marketing that they lose sight of the customers they already have. It is cheaper to retain your current customers than to seek new ones, so heed the following tips in order to boost your bottom line.

  1. Value Your Customers – Customer service must be sincere in order to be effective. Make your customers the number one priority and ensure that every employee is trained to do the same. By consistently treating all customers with respect and honesty, they will see you as a dependable company to do business with.
  2. Offer Specials – Customers like to feel as if they are being awarded perks for choosing your company. Not only should there be company-wide specials throughout the year, you should give exclusive discounts to your most valued repeat customers.
  3. Address Problems Immediately – Never let a customer complaint go stale. If someone contacts your business with a complaint or a cancellation, ensure that they receive top priority. Troubleshoot this issue with the customer and try to reach a satisfactory agreement for everyone.
  4. Empathize – You must always display empathy with your customers, whether indirectly or directly. If you are following rule number one, “value your customers,” then this empathy will be sincere and most effective. You truly do want the best for your customers, as that is largely what is best for the company.
  5. Socialize – Your business should actively socialize with their customers and gather feedback. This can easily be done through a company Web site and corporate blog. Make the customers feel as if you are involving them with every step and always value their input.

Customer turnover could be the largest financial drain on your company. In fact, it is estimated that acquiring new customers is five times more expensive than keeping the ones you already have. By following the five tips above, you should increase your chances of making every customer a long-term customer.

By-line:

This article is contributed by Heather Johnson, who regularly writes on the topic of career exploration. She invites your questions and writing job opportunities at her personal email address: [email protected].