Customer loyalty - the backbone of your business
The first thing to understand is that Customer Satisfaction does not equal Customer Loyalty. Satisfaction is what people say. Loyalty is what they do. Research usually samples Satisfaction, and people will say "It's fine" even if they never intend to spend money with that company again.
Loyalty is essential for a business to succeed. The purpose of a business is not to make money. Its purpose is to serve its customers. If it does that right it will make money.
Loyalty starts with your employees. All your employees. Every level of every transaction must be conducted with an attitude of appreciation towards the people who spend money with you.
There are six main factors that create customer loyalty:
1. Price. Offer value - lots of value for the price you charge.
2. Quality. Whatever you are offering, make it of such good quality that customers will enthuse about it.
3. Delivery. Make it easy for customers to order, receive and experience your product or service.
4. Service. This is about making every contact a pleasant experience, and going the extra mile whenever possible.
5. Recognition. Customers need to be remembered and recognised.
6. Feelings. Increasingly, customers are buying on the basis of the experience they have, and how they felt about the experience.
There are three financial reasons for developing Customer Loyalty:
1. It is much less expensive to sell to an existing customer than to gain a new one.
2. Loyal customers provide a continuous flow of income.
3. The lifetime value of a loyal customer is vast.
Customer Retention should be a primary aim for every company. Attrition (loss of customers) is just money down the drain. To make best use of your resources: Â• Identify your best customers and treat them like royalty Â•
Segment your customers with biggest growth potential and go to work on finding out what else they need, and providing it Â• Recognise which customers are unprofitable, and either convert them or allow them to switch to another supplier Spend all your time looking after your good customers.
They keep you in business.