3 Principles of Customer Loyalty


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The most successful organizations are those that realize the true value of nurturing lasting relationships with customers, and in today’s competitive environment holding on to your existing customers can be the key to survival. In short, customer loyalty matters and it’s here to stay and creating customer loyalty will need to be a key component of your business success strategy.

Many companies failed to do this pre-recession, focusing on shorter-term quick wins that left them with a disloyal and unappealing customer base.

In order to maximize sales from existing customers a company must focus on three things:

  1. Identifying loyal customers
  2. Recognizing the importance of delivering outstanding customer service
  3. Establishing an up-sell / cross-sell strategy that rewards loyalty and advocacy

Building customer loyalty doesn’t happen naturally. It takes specific work and strategy. Here are some practical customer loyalty concepts to consider as you build your most loyal customer base:

1. Identify your potential loyal customers

Before you can increase your revenue per customer, you need to understand which of your customers offer you the best opportunities for maximum growth. Identifying your most loyal customers is a solid starting point, as they are likely to be open to the idea of spending more if you can offer them something of interest. A simple analysis of your customers will not only help maximize the revenue they bring, but it can also help attract new customers of a similar profile.

Next you need to analyze their buying behavior. Find out when and what they buy, as well as their interests and preferences and create profile groups to identify different groups of loyal customers: do some groups hold more potential than others, or require a different approach to customer management? The more you segment your customer base, the more focused you will be and the greater the potential of increasing loyalty and spend.

2. Deliver the outstanding customer service customers expect

Once you’ve identified your loyal customers, you need to ensure they’re as happy as possible. This will maximize the likelihood of retaining them, and make them more open to spending more with you.

Customer satisfaction is essential to building long term, profitable relationships and to achieve this, a business first needs to understand what their customers think of them. Invite them to give feedback so you can identify what you could be doing better, and just as important, what you are doing well already.

Communicating with your customers also provides you with the opportunity to confirm whether expectations have been met, make them aware of other products they may be interested in and express appreciation for their business.

With an increasing number of retailers now very active online, communication with customers has never been more important. We are human after all and having that personal connection with who we buy from will encourage repeat orders, and loyalty.

Providing excellent customer service will not only increase their spend, but also make them advocates of your brand. A recent article in The Guardian demonstrates that customer advocacy (which stems from customer satisfaction and loyalty) can deliver a demonstrable return on your business investment. Understanding this, and developing training, processes and procedures that support your customer facing staff is essential for almost every business looking to improve customer loyalty.

3. Establish an upsell / Cross-sell customer loyalty strategy that customers value

There are essentially two ways to get your customers to spend more: by increasing the transaction size and/or increasing the sales frequency. Let’s deal with increasing transaction size first. The most common way to achieve this is to educate your customers on the variety of products you offer and simply add an upsell incentive or one-time offer to your sales process. Whether it’s online, in a brochure or in store, there are many ways to entice customers to buy more and increase their transaction size.

The second option is to encourage your customers to make repeat purchases more frequently than they currently do with do. Find ways of marketing to your customers to keep front of mind so it’s you they think of when they need to make a repeat purchase, but also let them know about sales, promotions and new product launches to make them do business with you more often.

For both options above, carrying out statistical analysis of your customers will help you identify key purchasing drivers. This will allow you to pin-point what you need to focus on to increase spend and stop your customers leaving to go to the competition.

Engage customers to build customer loyalty

So now you know the three principles of customer loyalty. These three principles are proven ways that connects with customers and engages them in the service you’re delivering.

Finally, make sure you reward customer loyalty; whether it’s offering discounts, a freebie, loyalty points or preferential service. This strategy can more effective than traditional customer loyalty marketing or just including company trainings talking about the customer loyalty definition.

Loyalty matters, and customer loyalty should be rewarded as well as viewed as a potential source of additional revenue that effects your bottom line.

Republished with author's permission from original post.

Flavio Martins
Flavio Martins is the VP of Operations and Customer Support at DigiCert, Inc., a leading provider of enterprise authentication services and high-assurance SSL certificates trusted by thousands of government, education, and Fortune 500 organizations. Flavio is an award-winning customer service blogger, customer service fanatic, and on a mission to show that organizations can use customer experience as a competitive advantage win customer loyalty. Blog: Win the Customer!


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