Comparisons

Why is customer loyalty so important in the United States?

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Keeping customers gives you a better bottom line

The longer you keep them, the better. It costs less to sell to current customers because the cost per sale is reduced, and repeats are more frequent.

The question is how

The answer we’re told is to go past customer satisfaction to Loyalty…one-sided Loyalty of the customer to your product or service.

Supposedly, by raising customer retention rates as little as 5%, the average value of a customer increases from 25% to 100%. As a result, not as many new customers are needed to build your business and achieve real growth. All you need to do is maintain the Loyalty of your best customers.

Best Customers?

Yes, defined as the most profitable ones. In other words, the most profitable customers now are the only ones that this theory says are worthy of your best efforts.

What about the new customer who has not established a “track record” yet?

How about the prospect who represents a quantum leap?

What about the customer that has been a significant contributor to the bottom line in the past but is now declining?

The price of Loyalty

The one-sided brand which these programs currently propose. It is the loss of those three customers. It is a price you cannot afford.

Yes, you want to query your contact management system for the most profitable customers.

You want to know which parts of your service or product line are most important to them.

You definitely want to define the value these high-yield customers seek from you and let everyone in your organization know them.

But don’t set the metrics in stone.

Relationships are dynamic, not static!

Dynamic relationships demand dynamic measurements. What is worth tracking?

Consider these:

Referrals—not only the number but also the worth based on initial purchase and ongoing purchases.

Tolerance—the customer’s willingness to wait for your product or service even when a competitor is immediately available.

Buy-in—actual investment in your company in terms of stock or alliances or standing by you in a time of crisis.

Trust—the critical element in any relationship. How much trust are they putting in your on-time delivery and manufacturing capability? What is at stake for them with your consulting services? Do they go out of their way to come to your store? What do they put on the line in this relationship?

You need to establish measurements and track them over time. Those measurements need to have variables built on what is happening to them and you. That, and how much you insulate them from the competition.

Loyalty is only part of the dynamic relationship between you and your suspects, prospects, and customers. Your ongoing task in this relationship is to know your partner. That means understanding the business requirements and the personal differences between customers.

Your prospect and customer management system should include ways to remember those things, allowing you to personalize how you approach customers. Only by working with their needs, desires, hopes, and dreams can you build a protective barrier between them and the competition.

How? You have to make each customer believe they are unique. The Loyalty program boosters think this is done by spiffs and special awards. They believe that unique cards and clubs, and point awards (customer retention programs) make people loyal.

Those activities do change behavior…to a point. But you can’t buy Loyalty. For instance, we all know someone who travels a fair amount. Most have two or three airlines that are acceptable to them. However, frequent flier mileage is not the only factor in their decisions.

Departure time counts. On-time service counts. Personal assistance in-flight counts.
Every single interaction you and your staff have with that customer counts. A spiff can’t make up for spending time in the “penalty box” waiting for a gate on arrival at your destination. Payoffs don’t cancel out sloppy service. Special cards or clubs won’t win them over if your product doesn’t perform.

Do you want Loyalty? Then try being loyal to them

Rewards? Start by delivering what you promise… consistently. That’s the reward they’re looking for.

Spiffs? Remember that it offends some folks to be offered money to make a deal with you. They may rethink why they wanted to make a deal in the first place.

Loyalty is constant. It is allegiance to the relationship. It is fidelity, staying true…for both you and the customer. It is achieved through devotion and caring, and knowing one another.

Loyalty is gained, not bought.
It is given away, not sold.
Give some away today.
I guarantee it will be returned.