SEARCH



CUSTOMER LOYALTY
Five years ago, AgVantage Software Inc. decided not to go out of business — although it had plenty of reasons to do so. The CEO had just passed away and left the company in turmoil.

“We lacked leadership, employee morale was low, customers were dissatisfied, and we hadn’t had a new sale in the last three years. We were surviving strictly on our current customer-support fees, which were continuing to rise so we could stay in business,” says Michelle Blomberg, a co-owner and the current president and CEO of AgVantage.

On the night of the CEO’s passing in 2000, Blomberg and the four other remaining owners of AgVantage, a Rochester, MN,-based software developer for agricultural cooperatives, agreed to buy the business and not cut their losses quite yet. “It was a tough decision,” Blomberg says. “But the one thing we had going for us across the board was loyalty. We had customers and employees that remained with us even when things started to fail.”

This loyalty, however, didn’t mean that customers were happy. They grudgingly accepted the rising fees as they had already invested thousands of dollars in the equipment and spent hours training staff.

   
CUSTOMER BONDING
When Blomberg became the company’s president and CEO in 2001, her first order of business was to start listening to customers. In their book, “Customer Bonding: Five Steps to Lasting Customer Loyalty” (NTC Publishing Group, 1996), marketing consultants Richard Cross and Janet A. Smith label such customer interactions as Relationship Bonding, which they identify as the third step (following Awareness and Identity Bonding) in the process of developing customer loyalty. “You and your prospect or customer or supporter are no longer at arm’s length. Your customer is now actively involved, and you are interacting directly with him.”

Blomberg invited AgVantage’s Minnesota customers to a local hotel for a face-to-face discussion about what the company was doing wrong. Unanimously, they told her that the support team was taking too long to return calls and the product was not progressing fast enough.

Equipped with answers direct from the customers, Blomberg extended this new customer-driven strategy to its annual user conference, AgVantage’s primary marketing vehicle. Created in 1985, nine years after the company was founded, to educate its customers about the software, the event was now an opportunity for the struggling 20-person company with no official sales or marketing team to demonstrate and communicate its new corporate strategy to customers.

In 2000, AgVantage turned its user conference over to its customers — permanently. Now, instead of assuming it knows what attendees want, AgVantage lets them choose the session topics, dictate the agenda, teach the classes, and even vote on what products they want developed over the following year.

At the 2005 conference, AgVantage adopted the theme “Customer Connections,” and integrated its new customer-driven strategy into practically every aspect of the event, providing peer-to-peer education, creating intimacy between customers and employees, including customers in product development, offering personalized perks, letting attendees decide the agenda, and identifying and resolving customer stumbling blocks.
   

Provide Peer-to-Peer Education
In response to customers wanting opportunities to learn from each other, AgVantage added more peer-to-peer activities to the 2005 event. “On last year’s survey, attendees wanted more time to talk among themselves about how they do things during their work day,” says Lori Campbell, the conference coordinator. In addition to asking customers to teach eight of the 65 classes at the event, AgVantage introduced a new type of seminar to the conference: customer-to-customer connection (CCC) classes.

In the event’s four CCC classes, moderators invited customers to share information and ask each other questions about specific software. Moderators also helped each group generate ideas to solve customers’ problems.

In the session led by Blomberg, attendees in management positions broke into groups to discuss topics related to business success, such as using employee strengths and how to become a better leader. Blomberg asked them questions such as: What is the hardest thing you’ve had to do as a manager? What type of team-building do you do? What customer-service tips do you have? Leading the session gave Blomberg an inside ear to what her customers were talking about.

AgVantage also supported more peer-to-peer networking and teaching opportunities with a new take on roundtable discussions called “Meet the Pro.” During breakfast of day two, attendees could participate in discussions with 12 customers who are “pros” on hardware, software, or staffing issues. Each pro was assigned a table and a specific software function to teach, such as “Accounts receivable — setting up a bad debt company as a term code.” Depending on the topic, some pros had laptops set up and handouts to pass out. Every 15 minutes for a 45-minute period, attendees could switch tables and topics. At the end of the breakfast, Blomberg visited each table and recapped the discussions for the entire group.

“I learn more from other customers than I do from the classes,” says customer Terry Bell, information-systems department manager at Auglaize Provico cooperative, who has been both a teacher and pro. “You can bounce ideas off each other and talk to an actual user.”

 
Create Intimacy
Since the user conference is AgVantage’s main opportunity to cement relationships and build customer loyalty face-to-face, it works to create a feeling of intimacy at the event between attendees and its staff. At the 2005 event, Blomberg accomplished this by laying the company’s cards on the table in her welcome speech.

She shared that the company almost collapsed in 2000 because of poor customer service and cited examples where they had taken customers for granted. For example, she told of a time when she bumped back an installation date for an existing customer to first provide service for a new one.

“It was a mistake on my part,” Blomberg admits. “But when you make a mistake and are up front about it, people are more likely to respect you and be more open to sharing information about themselves.”

By getting personal, being vulnerable, and speaking honestly about management mistakes — which most CEOs would go to great lengths to hide from customers — Blomberg acknowledged and related to her customers’ needs and struggles, and established a “we’re one of you” intimacy.

Blomberg then gave attendees a chance to get to know the rest of the 21 AgVantage employees in attendance (out of 25 total employees) and the other attendees. Staff members organized attendees into teams of eight for a scavenger hunt. Each team received a sheet of items to collect throughout the day and 15 trivia questions to answer about attendees and staff, such as: What AgVantage customer had his appendix removed a couple of months ago? What AgVantage employee used to be a high school math teacher and coach before getting into the business? What was the name of the band that Chuck B. (the CIO) played in?

Each attendee was allowed to ask one member of the staff for an answer. Not only did attendees learn personal details about the event’s community, but the hunt also encouraged them to talk with AgVantage employees with whom they might not interact under normal circumstances. The winning team was recognized at the evening’s social event.

This moved the company into Cross and Smith’s fourth step in the customer-bonding process: Community Bonding. In this step, the authors say, “Your customers are not only bonding with you, but with each other. They desire interaction with others who share their interest in your organization, your cause, or your product or service” –– which Blomberg has witnessed.

“The conference has become very intimate,” she says. “Maybe it’s because it’s been going on for so long, or because we get so many return attendees, but it’s almost like a huge family.”
 
Include Customers in Product Development
“There used to be one hour at the conference where our customers could come and tell us their complaints,” Blomberg says. “We’d be sitting at the front of the room, and people would be firing all these things at us: ‘This does not work,’ ‘You need to change this,’ ‘I called you on January 12, and it took you two weeks to call back.’”

In 2000, AgVantage created a conference session called customer-driven development (CDD) to focus the feedback. “It’s a way to gather customers’ input and then build the product based on that information,” says Lisa Sick, vice president of quality assurance at AgVantage. “We’re trying to make the majority of people as happy as possible.”

By 2005, AgVantage offered 10 CDD sessions, led by software programmers and members of the support team. They show attendees the new features of software packages that were developed over the year, and give tips on how to use the changes. Attendees can suggest features they’d like to see in the next version and tell programmers — the people who actually make the changes — what they love, hate, and can’t live without. In return, programmers can ask attendees why they don’t like a particular function or why it’s difficult to use.

“We can start to ask questions right then and there and get a good dialogue going with the customers,” Sick says. Campbell adds, “It’s how we decide what changes we’re going to make to the software. If you have one or two people who are very vocal, you can end up making changes that aren’t best for the group. By having it out in the open, we can get more input.”

At the end of the class, attendees rank each change discussed based on its importance to them and what they want developed first. They can bring the list back to their office and have other employees rank the items online.

Lisa Olson, information-technology manager for Medford Cooperative Inc., brings a list of discussion items to the class. “I talk to our staff to see what they want developed and I jot down ideas throughout the year. It allows us to work with them to customize the programs so we can better meet the needs of our customers,” she says.

If enough people agree on a change, and AgVantage makes it a standard feature, then individual users don’t have to pay a customization fee for the feature.

After the event, AgVantage tallies up which items received the most points, and uses those results to develop products throughout the following year. Then at the following year’s event, AgVantage revisits the list of changes and reports on the progress it has made.

Two years after implementing the classes, Blomberg again gave customers an hour to voice complaints at the conference — but she didn’t receive a single one. “You would be amazed how the complaints go away when you give customers an opportunity to talk to people with the same problems in the same room,” she says.
 
OFFER PERSONALIZED PERKS
AgVantage’s version of leaving a mint on its customers’ pillows is to go out of its way to identify and meet the needs of individual customers.

For example, although only eight to 10 customers are certified public accountants and required to take continuing professional education (CPE) credits, Campbell completes the necessary paperwork and procedures, such as labeling the classes as beginner, intermediate, or advanced, so those customers can fulfill their requirements at the conference. She has to check other state’s regulations each year and keep attendees’ hours and survey information on file for five years. Although this creates additional work for Campbell, she says, “It’s a big deal for some people, and they really appreciate it.”

AgVantage also caters to C-level customers. Starting in 2003, Blomberg began offering one-day leadership passes to customers in management positions who wanted to attend the event and network, but didn’t have time — or interest — to sit through technical classes. With the pass, they could attend sessions about executive-level issues, which were all led by Blomberg and other CEO customers. In 2003, no CEOs attended the event, but 25 came in 2005.

Finally, to honor customers’ accomplishments, AgVantage awarded two engraved clocks during the welcome reception to two customers that had attended every conference since 1985. Campbell also sends a certificate of completion and a letter recapping the event to each attendee roughly two weeks after the conference. Bell, who has attended 10 conferences, saves his certificates and has the two most recent ones framed and hanging in his office — another testament to the customer loyalty AgVantage has developed over the years.

“AgVantage has really put its focus where it needs to be, and I appreciate it,” observes Bell. “Their whole approach to selling their products is more customer-focused and customer-driven. Before, they said, ‘Here’s what we have and what’s available’ — even though it may not have been what I wanted for my business.”
 
LET ATTENDEES DECIDE THE AGENDA
To ensure that the event remains focused on customers, Campbell sends a one-page, double-sided survey each January (five months before the conference) to the previous year’s attendees. The survey asks attendees to mark their level of interest (1-10) in potential session topics for the conference, such as handheld inventory software, disaster recovery, how to use agvantage.com, leadership training, and employee motivation.

“It’s not just software and hardware. A lot of these people like to pick up other skills, too. And to talk about software for three days can be...well, it’s nice to throw in a mix,” Campbell says.

Attendees can also mark their top choice of entertainment for the social night activity, from theater to bowling to a dinner cruise. Campbell collects the surveys by February 2, and spends the next six weeks designing the conference schedule around the results.

To get feedback during the conference, attendees fill out surveys on each individual session as well as an eight-question evaluation on the overall event, which includes questions about attendees’ preferences on the next year’s location and hotel accommodations.

Two weeks after the 2005 event, Campbell also sends attendees an e-mail asking for general feedback. More than 20 percent of attendees, replied with comments about what classes were the most and least useful. By maintaining communication with attendees pre-, during, and post-event, AgVantage can adjust and customize the content to fit attendees’ needs.
 

IDENTIFY AND RESOLVE CUSTOMER STUMBLING BLOCKS
Because its customers generally don’t have cash to spare, AgVantage keeps registration costs to a minimum to attract as many attendees as possible to its event.

“The Agri-business industry has its ups and downs. It’s affected by weather and crop conditions, and profit margins are generally pretty tight,” says Campbell. “Keeping costs as low as possible has been a part of our success. It helps us increase attendance, and our conference attendees are some of our strongest supporters via testimonials for prospective customers.”

To celebrate the 20th anniversary of the conference, AgVantage offered attendees a deal that the fourth person from the same company could attend for free. Otherwise, the cost was $595 with a $50 discount for early registration. Customers who spoke or taught also received a free pass, and roundtable pros got $100 off their registration.

AgVantage also allows customers to redeem “AgVantage dollars” to pay for conference registration. The dollars are awarded to customers who purchase annual technical support, the company’s bread and butter. The amount rewarded is equal to 5 percent of the total fee, so if a company has technical support for a lot of packages, it can earn enough dollars to send one or two people to the conference.

In 2000, AgVantage also started to offer sponsorship opportunities to other vendors. In 2005, 17 vendors participated. “The dollars they provide help keep the cost down for attendees,” Campbell says. “And they help us promote our software and services.”

Vendors sponsor activities such as afternoon refreshments and an optional evening of dinner and music, which costs attendees $60 rather than the actual cost of $100. Nine of the sponsors set up tables throughout the conference. To encourage interaction, attendees had to speak with sponsors in order to collect items and win the scavenger hunt.

In another attempt to ease its customers’ tight budgets, AgVantage bought the 20 computers it uses in lab classes, instead of renting them, and sold them to attendees after the 2005 event at a discount.

CUSTOMER REFERRALS
For AgVantage, putting the power in the hands of its loyal customers has paid off. Its sales have been steadily increasing, up 84 percent from 1996 and 32 percent from 2000. And in the last five years alone, AgVantage has captured 30 new customers — compared to zero for the three years prior to the change in leadership.

Eight of the new-customer sales occurred within four months of the June 2005 user conference. Celebrating its 20th anniversary in Minneapolis, the three-day conference attracted 148 customers representing 65 companies — the highest number in its history and a 32-percent increase over 2004.

“Our company sales during our current fiscal year have been stronger than at any time in our 29-year history,” Campbell says. “We’re getting such good customer referrals and recommendations now. All of our new customers have heard about us from word-of-mouth.”

This elevates AgVantage into Cross and Smith’s fifth and final stage of customer bonding: Advocacy Bonding. “If your customers or supporters think highly enough of you to refer you to others, you have achieved the very highest level of trust.”
   
REBECCA HULS INTERIM MANAGING EDITOR