2009-05-07
5 Ways to Build Customer Loyalty

You've read the studies that show it costs many more times to win a new customer than to retain an existing one. You know the secret to making use of this statistic is to increase customer loyalty. After all, successful businesses typically see 80% of their business come from 20% of their customers. Too many businesses neglect this loyal customer base in pursuit of new customers. However, since the cost to attract new customers is significantly more than to maintain your relationship with existing ones, your efforts toward building customer loyalty will certainly payoff. Here are five ways to build customer loyalty.

1. Be easy to interact with
Building a lasting relationship requires communication. Reach out to your steady customers by communicating in ways to which they are receptive. Some customers like phone calls while some customers prefer email. Some just want the facts, while others enjoy some entertainment. Don't forget that communication goes both ways; provide multiple channels for customers to deliver their feedback. Provide incentives to increase your word-of-mouth marketing by rewarding your current customers with discounts and free services when they recommend a friend. Become a problem solver for your customers and they will remain loyal. The Rockefeller Corporation survey shows that 68% of customers leave because they think that you do not care about them. Only 14% leave because of product dissatisfaction and less than 9% because of price.

2. Take them by surprise
Give your customers something more than expected. Don't tell them in advance, just do something to demonstrate your appreciation. It can be as simple as a greeting card, email or small token to show your appreciation. Loyalty is a relationship that should not be taken for granted. So don't forget to say thank you, customers like to feel appreciated. Give repeat customers exclusive offers and let them know before anyone when your newest product will be coming out, invite them to exclusive customer events, or offer them a discount for repeat business. Only 10% of customers leave because their needs have changed; so the opportunities to retain customers are tremendous.

3. Start with your employees
Loyalty works from the top down. Train employees in the manner that you want them to interact with customers. Your most effective asset for customer loyalty is your sales force. If they feel you really care about them and their needs, they will remain customers. Make sure that your staff understands everything they can about your products. Empower employees to make decisions that benefit the customer. Employees should be flexible and solve customer complaints to the best of their ability. Studies show that customers tend to become more loyal when their complaints are handled immediately and effectively so turn complaints into opportunities as quickly as possible. Research also shows that the reason most customers leave has nothing to do with the product. A study by RightNow Technologies shows that 73% of customers leave because of poor customer service.

4. Your loyalty program can't be where your effort stops
Go beyond simple reward programs that encourage repeat purchases, but don't actually build loyalty. Customers become loyal to people, not programs. Loyalty programs are easily copied or matched by competitors, and in many cases customers can switch loyalty programs without losing anything they value. Keep abreast of trends and make sure that you offer what's in demand now. Keep your credibility by avoiding hidden agendas. This is especially important for sales and promotions; don't be like some companies and trick customers by putting important terms in fine print.

5. Ask your customers what you can do to improve
Find out if you are doing a good job, and if there are problems react quickly. By the way, your customers will not likely tell you if there are problems. Numerous studies have shown that complaining customers don't complain. More often than not the customer just goes to your competitor. An average business only hears from 4% of unhappy customers (White House Office of Consumer Affairs). Another unfortunate fact is that 85% of unhappy customers tell 9 people about their experience, and 13% tell 20 people. However, a happy customer tells just 5 people. Your ultimate goal should be to try and find any problems before the customer complains. The best way is for you to simply ask how you are doing. Did you know that CosPro can include surveys with their demo programs? Call the CosPro agency for details on how you can obtain valuable target market research.