Customer loyalty - what does it mean?

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There is a lot written these days about customer loyalty and its importance particularly during difficult economic times. Can anyone afford to lose even one customer? The cost of acquiring a new name customer can be extremely high so doesn’t it make sense to try and keep as many customers as possible? I read a Playbook posted on the BusinessWeek website titled "Playbook: Customer Loyalty Do's and Don'ts." I found it a good refresher of tips to remember. I have listed some of the tips below that I found most helpful:

Ben McConnell, co-author of Creating Customer Evangelists: How Loyal Customers Become a Volunteer Sales Force

  • Do find ways to bring customers together regularly, whether it's through a quarterly or yearly conference, party, or meeting. The ones who'll show up are probably the evangelists, and they love to meet other evangelists. Meeting one another under your party banner will help reinforce their feelings of emotional attachment. Plus, it gives them something new to tell others.
  • Don't allow even one employee to be grumpy or haughty toward customers. Evangelists are just as, if not more, loyal to your people than they are to your product, service, or brand. An employee with a bad attitude toward customers is like a virus that spreads bad word of mouth, and the years spent cultivating a good reputation can be lost in months or weeks.

Glen Urban, professor at MIT Sloan School of Management and author of Don't Just Relate—Advocate! A Blueprint for Profit in the Era of Customer Power

  • Do remember that loyalty is built over time through a collection of positive experiences.
  • Don't assume that the lack of complaints is equal to a satisfied customer base.

Frederick Reichheld, a fellow at Bain & Co., founder of that firm's Loyalty consulting practice, which strives to help clients improve customer, employee, and investor loyalty, and author of The Ultimate Question: Driving Good Profits and True Growth

  • Do keep the following in the mind: Customers who become promoters must first believe that a company offers superior value in terms of price, features, quality, functionality, ease of use, and all the other practical factors. Additionally, they must feel good about their relationship with the company—they must believe the company understands and values them, listens to them, and shares their underlying principles. A company able to combine these factors will create promoters, customers who eagerly recommend a company or service to family members, friends, and colleagues.

It has been my experience that the most loyal customers have an evangelist in their organization for our software product. If there isn’t at least one person who is evangelizing the use of the product throughout their company, then there is likely lower user adoption and lower customer loyalty.

Being in Professional Services at a software company I am always on the lookout at my customers for who is or who can be the evangelist in the customer’s organization. If one does not exist it is certainly worth the time and the effort to nurture and cultivate the relationship with the customer to grow one. I love the reminder of not allowing even one employee to be “grumpy or haughty” towards customers. Fortunately I do not typically have to deal with my co-workers being grumpy or haughty toward my customer. However, I do need to remember that whomever I bring in from my organization to speak with the customer I should educate them on who they are talking to, what their concerns are, and not to give generic advice to the customer, but rather make it as specific and unique to that customer as possible.

Everyone from my company who speaks to the customer represents the whole of the company. Customer loyalty is built on a collection of positive experiences. I personally believe first impressions are very important and this includes building a relationship face to face. In this day of internet and web meetings, etc. it is too easy to be cost conscious and not travel to customers because everything can be done over the phone. But can you share a meal over the phone? Can you look at the person’s personal photos on their desk and inquire about their family?

A great relationship is built by some face to face interaction and lots of positive experiences. “Don’t assume the lack of complaints is equal to a satisfied customer base.” Isn’t that the truth! I personally find that if a customer is too quiet over too long a period of time that they may no longer be utilizing our product as broadly as before. Most very active customers are asking for regular interaction. So if you haven’t heard from someone in a long time it may be a good time to reach out and check in. Or even worse, maybe your biggest supporter is no longer with the company.

The last tip is really important. A customer may be interested in your product if it is superior and offers superior value, but if your company is difficult to do business with, the company may not choose your product. You must not only listen to your customers, but action on what they tell you. I have heard from customers in the past that they get frustrated when they fill out surveys or provide feedback or questions and no one ever follows up. If you don’t action on your customer’s input it will certainly breed dissatisfaction.

Do you have any other tips on how to maintain customer loyalty?

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