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
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
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
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.