Marketing Tip of the Week

 Nine Laws of Customer Loyalty

It doesn’t just happen. You have to work at it, diligently. No matter how long they’ve been a customer, or how loyal you think they are, you could lose them at the click of a mouse, or the hang up of a phone. Want to invest in a sound loyalty insurance policy? Here are 9 laws to follow for establishing customer loyalty principals and procedures.

1. Build staff loyalty
It's a fact: firms with high levels of customer loyalty have also earned high levels of staff loyalty. Customers buy relationships and familiarity. They want to buy from people who know them and their preferences. Key rule of loyalty: serve your employees first so that they, in turn, can serve your customer.


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2. Practice the 80/20 rule
Roughly speaking, 80% of your revenue is being generated by 20% of your customers. A smart company segments customers by value and monitors activities closely to ensure high-value customers get their fair share of special offers and promotions.

3. Know your loyalty stages
Customers become loyal to a company and its products and service one step at a time. By understanding the customer's current loyalty stage, you can better determine what's necessary to move that customer to the next level of loyalty. There are six stages of customer loyalty: suspect, prospect, first-time customer, repeat customer, client and advocate.

4. Serve first, sell second
Today's customers are smarter, better informed and more intolerant of “being sold” than ever before. They expect doing business with you to be as hassle-free and gratifying for them as possible. They believe that you earn their business with service that is pleasant, productive and personalized; and if you don't deliver, they'll leave.

5. Seek out customer complaints
For most companies, only 10% of complaints get articulated by customers. The other 90% are unarticulated and manifest themselves in many negative ways: unpaid invoices, lack of courtesy to your frontline service reps and, above all, negative word of mouth. Make it easy for customers to complain, and treat complaints seriously.

6. Stay responsive
Research shows that responsiveness is closely tied to a customer's perception of good service. Because of the Internet, more and more customers are coming to expect round-the-clock customer service. Technology tools such as customer self-service, email management and live chat/Web callback are proving increasingly critical for companies as they address the demanding customer's responsiveness needs.

7. Know your customer's definition of value
Knowing how your customers experience value and then delivering on those terms is critical to building strong customer loyalty. Invest in customer loyalty research that enables you to understand, through the eyes of the customer, how well you deliver value.

8. Win back lost customers
Research shows that a business is twice as likely to successfully sell to a lost customer as to a new prospect. With the average company losing 20-40% of its customers every year, it's imperative that firms create strategies not only for acquisition and retention but also for win-back.

9. Use multiple channels to serve the same customers well
Research suggests that customers who engage with a firm through multiple channels exhibit deeper loyalty than single-channel customers. To achieve consistency, your firm must internally coordinate sales and service across multiple channels so that customer preferences are accessible no matter how the customer chooses to interact.


Melissa Data

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