Will Rs Be A Factor in Your Business’s Future Success?
By Martin R. Baird
      When I was a kid, I was one of millions of school children who learned the Three Rs of Reading, ‘Riting and ‘Rithmetic. It was easy to remember and fun to say.  But do you know there are other Rs that could be a huge factor in your business’s potential success?

      I have a feeling you know nothing about these Rs. What I’m talking about stems from exhaustive research that was published in the Harvard Business Review, and I want to address that research before I unravel the mystery of the Rs. Bear with me and keep reading because I’m about to explain something that could turbocharge your business.

      The research that caught Harvard’s attention concluded that so-called customer "satisfaction" has zero correlation to the future growth of any business (yours included, I might add). I’m not sure about you, but I find that shocking!

      The research discovered that people are fickle, that they will say they are satisfied when, in fact, they are not. It takes something entirely different to get them to act in a manner that creates new business and that is the subject of this column. You probably don’t realize it, but you are living proof of this theory. Think about how many times you’ve been at a restaurant and had either food or service that was subpar. But when the server came by, you said everything was fine. You’re not the only one. I had dinner with a friend at a nice Italian restaurant, and he complained to his wife and the rest of us about everything from the taste of the appetizer to the temperature of the coffee. When asked by the waitress how the meal was, he said, "It was good, thank you." If restaurants routinely surveyed customers as they walked out the door, they probably would expect to get referrals and new business, only to be disappointed.

      Then there’s the situation in which a customer can be satisfied on Monday and dissatisfied on Tuesday. So is that person a satisfied or dissatisfied customer?

      This is the fundamental problem with customer satisfaction surveys. The data has little or no value because customers have no vested interest in being honest with you. Or their mood changes, resulting in conflicting information.

      The good news is that none of this matters. What does matter is, as I said, something new.

      Now I come to the first two Rs – Risk and Reputation. I’m talking about a customer risking his or her reputation for you. When a person risks their reputation, they are vested in the outcome. For example, when a person suggests you have dinner at a particular restaurant, their good name is at stake. When a customer tells a friend about you, they are really putting their reputation on the line. Research shows that the vast majority of people hold their reputation as the most precious thing they have. So when someone puts their reputation at risk, they do so with caution to avoid tarnishing it. They are also not fickle about risking it.

      The research published by Harvard also found that when a person risks their reputation, their behavior matches their words. If Joe tells Betty to buy her printer paper at XYZ Business Supply, Joe is very likely to patronize that store.

      The next R is recommend. According to the research, if a person recommends your business, they are not only telling others to use you, they are signaling to you that they will continue to patronize you. Here’s where the rubber meets the road for your business. You need to measure, track and manage your customers’ willingness to recommend. It is a critical sign. Their willingness to risk their reputation and recommend you can result in new and repeat business.

      If you take this important step, be sure NOT to use comment cards or satisfaction surveys. By now, you should understand why they are a waste of time, energy and money.

      The final R stands for Referrals. Referrals are the cornerstone of business growth. When one of your customers tells a family member, friend or business associate to contact you, that is a golden opportunity. Now, I’ve done many seminars on referrals and how to earn more of them. The information has ranged from asking more often to simple tricks to remind you to ask. I’ve read the studies that say people would be happy to refer if they were simply asked.

      That’s all well and good, but what I’m writing about is Referrals 2.0. You can quantitatively measure customers’ willingness to give you a referral. This is important because you end up with a statistic – let»s call it an index – that you can track. The more clients you have who are willing to refer, the higher the index goes. The higher the index, the more likely you are to have new and repeat business. You can have all this without doing the one thing many business owners dread – actually asking for referrals. Also, this process takes you from guessing and hoping to a score that is easy to monitor.

      The real opportunity comes from the comments customers share about why they think you earned that score. These comments give you the guidepost you need to make improvements to the way you run your business. Customers will tell you the reason they rate you as a 3 or an 8. This narrative gives you your marching orders for improvement. I’ll let you in on a surprising secret. Most of the comments will pertain to service issues. That’s wonderful news because you can control the quality of the service you provide.

      Think about it. If you take this research seriously, you have a way to measure customers’ likeliness to refer you and know what to do to increase that likeliness.

      These simple R words could revolutionize your business. They could move you from hoping for growth to generating it and predicting it. None of this is rocket science, but it does take knowledge, commitment and follow–through. Getting your R factors in order is a critical step that is best started today.

      Remember, it comes down to Risk, Reputation, Recommend, Referrals and, finally, a new level of results for your business.

      Martin R. Baird is chief executive officer of Robinson & Associates, Inc., a consulting company that helps businesses measure and manage the quality of customer service and improvements to their internal operations to enhance business performance and increase revenues. He is a highly regarded speaker in the areas of marketing and client retention and development. Robinson & Associates may be reached at 208-991-2037 or at lbaird@raresults.com.