Customer loyalty must be a focus.
With an ever increasing number of choices available to us these days, holding on to loyal customers is more challenging than ever. That doesn’t mean it’s impossible to build loyalty. It does mean that companies must try harder to deliver a customer experience that promotes satisfaction. With so many products that offer many of the same features and benefits, it’s the experience with that product and brand that can differentiate it.
There is all kinds of research that supports the value of investing in customer loyalty. Depending on the industry and the source, it can be anywhere from 5 – 25 times more expensive to acquire new customers than it is to keep existing ones. Not only that, the probability of selling to an existing customer is 60 – 70%, while the probability of selling to a prospect is only 5 – 20%. According to these stats, the bottom line looks a lot better with repeat, loyal customers.
So the research supports the value of a loyal customer, but how does a company go about encouraging loyalty from its customer base? One of the most important ways is delivering on your customer promise. Most brands have a customer promise—an agreement between a company and its customers. Oftentimes it’s a collection of “we will” statements…“we will treat you fairly,” “we will deliver a quality product,” etc. It’s what separates a company from the competition and why customers should consider doing business with them. The customer experience is dependent upon how well a company fulfills its promise.
For smart brands, that means not setting the bar too high because not fulfilling a customer promise is one of the fastest ways to lose loyal customers. So formulating a customer promise must be a careful and thoughtful process. It requires examining what steps customers go though in doing business with a company. That includes identifying every point of interaction and the pain points—areas where the experience is less than stellar—as well as the areas of excellence. Then addressing those points in the customer promise and committing to making the customer experience a pleasant one.
According to a 2015 Gallup poll, the highest-performing companies deliver on their brand promises only 75% of the time. Whether or not a company fulfills its brand promise depends on those who are on the front lines and expected to deliver that promise: employees. If employees aren’t on board with and equipped to deliver the customer promise, then it’s nothing more than a collection of words. There is no meaning or substance behind them.
A brand promise also isn’t a set it and forget it kind of thing. It takes periodic re-evaluation to ensure it remains relevant to the customer and is something employees are able to consistently fulfill. If you do happen to stray from it or make a mistake, it’s important to correct it quickly and thoroughly until customers are satisfied. Otherwise, the promise quickly become a collection of shallow statements with no meaning behind them. Customers who are dissatisfied are actually an opportunity to create loyalty. Studies have shown that dissatisfied customers made satisfied are actually more loyal than customers who were never dissatisfied.
Customer loyalty can be rated based on the level of customer engagement. Frederick Reichheld of Bain & Company developed the Net Promoter score, which is made up of three different kinds of customers, promoters, passives and detractors. Promoters are loyal enthusiasts who keep buying and referring others to a brand. Passives are customers who are satisfied, but unenthusiastic and more likely to jump to a different brand. Detractors are unhappy customers who can damage a brand through negative word-of-mouth. The more promoters a brand has, the more likely it will outperform its competitors and remain a strong brand. They are a company’s most engaged audience and have a strong, emotional attachment to a brand.
The investment made in promoting customer loyalty pays off in repeat and additional purchases, as well as referrals—all of which positively impact a company’s bottom line. Those who remain true to their brand promises deliver customer experiences that create confidence and satisfaction in their products, which leads to greater loyalty. Promoting customer loyalty is time well spent and an investment that exponentially pays off. Not only that, it’s necessary for a company’s survival in today’s competitive marketplace.