Nine Ways To Build Customer Loyalty

happy shoppers

Image by zoetnet via Flickr

Loyal customers spend more, provide free word of mouth promotion and visit more often.  Yet small businesses often focus on chasing new customers as a way to improve the bottom line.  Here are ten simple ways to increase loyalty and build profits.

1. Make a connection, and then plug in. A recent survey shows that 71% of customers who ended a business relationship did so because of a poor customer service experience.  That mass exodus totaled $83 billion in the United States alone or $289 per customer in annual sales.  Further research shows that consumers are begging for a conversation with a real person more than ever.  In a world filled with tweets, status updates and text messages, it is ironic that consumers, particularly young consumers, seek human interaction as part of their shopping experience.   Automated phone systems save money. Call backs from a well-trained customer service representative earn loyalty. Once you make the personal connection, then do your thing on Twitter, four square, Google + and Facebook to deepen it.

2. Shop around. The best way to discover how to treat a customer is to be one.   Academics study consumer behavior using a PANAS scale, which measures how positive vs. negative interactions affect consumers’ experiences.  Next time you wander into a Wal-Mart or a Home Depot focus on the experience.  If you are a service provider shop a competitor’s web site or try to navigate their telephone help line.  What about your experience made you feel good? What added stress? Take notes.

3. Consider payment options. I worked with a wedding service provider who was struggling with cash flow.  Everybody paid in June, July and August- wedding season, while most of the shopping was done over the winter months as the planning began.  I recommended the company offer a payment plan-splitting the total cost of services over a few months. The perception was that the total purchase was less because the focus shifted to the manageable monthly payment rather than to the size of the total bill.  Result: Customers were happier (boosting referrals) and they bought more stuff. Total sales since implementing the payment plan have increased 400%.

4. Say Hello and Goodbye.  Such a small thing, right? The truth is that customers remember the first and last moments of their interaction with you far more than anything that happens in the middle. That means the way you greet and thank each customer is critical.  We recently conducted a study of consumers’ buying behavior after manipulating only the way they were greeted.  One group was welcomed with a friendly smile the other with a straight face.   Not surprisingly, the smile group bought more items and paid more for each one.  You pay friendly employees the same hourly rate as you may grumpy ones.

5. It’s the little things. The other day I spent 40 minutes at a store I have visited for years waiting for a clerk to sell me a $50 item sitting just out of reach behind the counter.  The clerk was trying to land a big sale but ignoring the counter. A few customers came and left and the phone went unanswered several times.  My 40-minute wait gave me plenty of time to consider my options so I never need to return. Oh, and the big sale never materialized.  Remember:  Lots of loyal customers guarantees cash flow.  You won’t feel it at first, but losing them will hurt more than not converting one (relatively) big whale.

6. Challenge your employees. Don’t assume your employees care about your customers; they probably don’t.  It is your job to let them know that you expect them to deliver a great experience, and also help them understand that it will make their job much more rewarding.

Victory Promotions, a 19-employee screen printing firm in Watertown, NY, spends more time educating employees than most.  Owner Chuck Lamon, 43, attends trade shows focusing on core products but never travels alone; his sales reps join him on the pilgrimage to Atlantic City with notebooks in hand.  “When a sales rep discovers a new product line they are trained to not just learn the product inside and out, but to identify one of our lead customers that the product would interest,” says Lamon. “Without a potential customer and the sales reps connection to the product, why should we even consider it?”  More importantly, the more the reps make the case to themselves, the more excited they get about making it to potential customers.  “We come back exhausted but full of new ideas and the employees are always anxious to share with our customers what they discovered for them.”

7. Do the unexpected. I am currently managing the launch of a coffee brand.   A press release has resulted in some positive e-mails congratulating our team on the concept (social responsibility is the brand focus).  We created thank you “bundle”, including a logo coffee mug, sample of our coffee and a personalized short note to each person who egged us on. Of course, we enclosed an order form for our entire line of products. (Any other ideas? Please comment on this post.)

8. Anticipate needs. Customers are very good at convincing themselves that they need what they want.  It is your job to provide what they want and then just give them a reason to need it. Loyalty comes when you are able to predict what you customers are going to need before they know it.  Here is a great new book by a very skilled strategist, named Adrian Slywotzky, on this very topic: Demand: Creating What People Love Before They Know They Want It.

9. Invest in the right customers. Urban legend has it that Nordstrom had a policy that so favored the customer that a manager once gave a full refund for a set of tires – yet the store never sold tires.  Might be an extreme example, but Nordstrom is still surviving while most department stores (and the main streets that they built) are a thing of the past.  Zappos, meanwhile, gives customers 365 days to return shoes, a nightmare for accountants trying to record assets and liabilities, but a home run for customers – and Zappos revenue rose by almost 20% in 2009 (not exactly a great year for the economy), to $1.2 billion.  Extreme examples for small business owners, but the point is that we must invest in customers today, recognizing the long term benefit of loyalty is well worth the short term investment.

The local tack shop that my daughter visits to buy her horse related products knows how to do this.   While the store is filled with products that interest riders, plenty of shelf space is dedicated to items the hundreds of regular riding customers would never buy, but the small number of stable owners and riding instructors will.  And when an instructor or stable manager becomes loyal, all of their riders follow.  Genius: Build loyalty around loyalty.
