Customer loyalty is vital for your business. How do you win it?
As much as you would never guess by the way most companies do business, customer loyalty isn’t just a nice to have. It is essential and the key focus of some of the best startup accelerators when evaluating new ventures.
It can also appear hard to get. Even for those who try to invest heavily in complex customer loyalty programs. So, why is it so important that you do better? How can your business nail this far earlier and more consistently?
The Importance & Value Of Customer Loyalty
For most companies developing loyalty is an afterthought, and it shows. The upfront is very transactional. It’s all about winning a sale at any cost. Then later, when it is obvious loyalty is needed, a whole lot of time and money is thrown at trying to bring that customer back or keep them.
Loyal customers with longer lifetimes are worth a lot. Even with products with very small price tags, there can be tremendous value over time. Just as our customers of higher ticket priced items, but which have traditionally had longer periods between repeat sales. Do the math. How much is a lifetime of having a customer worth? If you had all their business for this product or service for the rest of their lives, how much would that be worth? What about if you add in all of the other products and services you may develop over the next couple of decades? How about when you add in the referrals of their sphere of influence?
This is still just a small percentage of the net value. To really understand the value of customer loyalty you must also factor in tangible brand goodwill. This can lead to justifying higher prices. Companies with proven track records of customer loyalty may be able to negotiate many other beneficial terms on their own backend as well.
At a minimum, the increased efficiency and profitability of loyal customers and referrals must be counted. Each of these transactions is much more profitable than new cold customer acquisitions. All other things being equal, one company that is churning customers is going be dramatically less profitable than another which is selling the same number of units each month and year.
This directly impacts company health and competitiveness. These are diverging scenarios, with one company rising and the other falling behind. Which do you want to be?
So, how do you get a headstart on building customer loyalty?
Do What You Say
It sounds so simple but is apparently incredibly rare. No one believes ads or sales pitches anymore. It is just a matter of how badly they are going to take advantage of you after you sign, get the real bill, and discover the fine print playing out.
It shouldn’t be this easy to stand out, but it is. Simply doing what you say, for the price you advertise, and delivering on time can be such a miracle today that it is hands down the easiest way to blow customers’ minds and instantly win their loyalty.
It’s sad but true. On the bright side, it requires no complicated rewards programs or tens of thousands or millions of dollars promoting and maintaining them.
Deliver Great Value
No one loves feeling that they overpaid for something. Not even if it only costs $1. Wowing customers with value may be all you need to gain their loyalty and love. If people know they will always get more from whatever you are offering, and that it will always be of good value, they are going to keep buying. They will often do it simply out of loyalty to support you. You don’t have to over manipulate advertising in the future or over-promise. Roll out to your past customers and they’ll carry the ball a long way in marketing and promoting for you, for free.
Provide Friendly, Courteous, Effective Customer Service
Not even price can compete with customers being treated well for long.
People want to be treated nicely. Like they are valued customers, and you care. That alone has immense value. It won’t cover up or be a replacement for a horrific product or price gouging, yet it will create and build loyalty.
First, they want to be treated in a friendly way. Being polite and courteous is just good manners. Though there are companies who proclaim how courteous they are and may be polite but are not friendly at the same time. Then customer service has to be effective. Your reps have to be able to solve things.
Set A Powerful Customer Loyalty Program In Motion From Day One
Why wait? Why spend more on trying to rope them back in later when you could enroll them in a great program from day one?
Rewards and points can be frivolous and not seen as valuable by many customers. They have lost too much trust in them. Though you can begin offering real rewards from the beginning, in a simple way, and kick off long term partnerships.
Create Personal Relationships
Business may be very transactional today. Especially, with the internet, bots, and automation. Yet, investing in personal relationships can more than pay for itself. We all crave that connection. Authentic human relationships are far stronger than anything you can try to replicate with a bot and AI. At least for now.
Put The Customer’s Interest First
This may confuse them at first, because they aren’t used to it any more. Yet, authentically putting their interests first, even if it means not upselling at that moment, or even holding back on trying to close them will win you immense loyalty.
Try out these tips. Just remember, that this isn’t a one time deal. To retain that loyalty, you’ve got to keep it up too, and a big part of that is making good ongoing business decisions that don’t sour it by sacrificing the long term for the short term.
Prior to CoFoundersLab, Alejandro worked as a lawyer at King & Spalding where he was involved in one of the biggest investment arbitration cases in history ($113 billion at stake).
Alejandro is an active speaker and has given guest lectures at the Wharton School of Business, Columbia Business School, and at NYU Stern School of Business.
Alejandro has been involved with the JOBS Act since inception and was invited to the White House and the US House of Representatives to provide his stands on the new regulatory changes concerning fundraising online.
Laila Azzahra is a professional writer and blogger that loves to write about technology, business, entertainment, science, and health.