Why is loyalty important and where do I start?
I'll present you with two major strategies below but generally it is about paying attention to your customer. If you get that step right customers will follow you and spend more money on your products/services. There are two ways of paying attention to your customer. It's either communication or the product itself. But at the core of it is a solid understanding of your customer and your ability to serve their needs and personalise your offerings.
Loyalty and retention are the outcome of personalisation.
Personalisation is the core of any loyalty strategy, whether you are an online or traditional retailer. If you don’t have a loyal customer base, retention will be non-existent. Ultimately, any business needs to increase profits which are driven by loyal customers. On average 80% of profits are generated by 20% of customers – your loyal customers. It’s your task to increase the absolute number of these loyal customers.
But let’s get it straight from the get go. Customers won’t just become loyal customers because you have a loyalty card. Generally, there are two types of loyal customers and it’s your job to create either or both of the two following scenarios.
A unique and great product/service. If you offer a product/service that no-one else can offer you ultimately create loyalty among your customers. They will embrace you and your team for understanding their needs and offering exactly what they want. They will come back to you for the same reason. And they are likely to share your experience with the rest of the world. All of the above will help you tremendously to build a brand around your product/service. One example of that is Tesla or Apple. While they do many more things to create loyalty among their customers, their products themselves are unique and outstanding. And those products can be a stand-alone reason for recurring purchases of customers.
Your relationship with the customer. At the heart of every relationship is a mutual understanding of each other. Your customer knows your name, so you have to know your customer’s name. Your customers know your important events, anniversaries, and product offerings, so you have to know theirs. Personalisation is the key to a great customer relationship and the baseline for creating loyalty. Amazon, is a great example of this. Their products itself aren’t special or different compared to their competitors but their personalisation is. They know their customers and can base different offerings on that. Amazon was the first eCommerce store that really mastered personalisation. Again, customers are not just loyal to Amazon because of this single factor of personalisation but it is a very important part of their operations. This is highlighted by one sentence of Jeff Bezos’ first letter to stakeholders in 1997.
“Tomorrow, through personalisation, online commerce will accelerate the very process of discovery [..] to create real value for its customers.”
Your decision now is to unlock either the first, the second, or both of the above suggestions. The more you work with a customer centric approach the better. Either your customer relationships are really good or your product/service is. If neither is the case, make sure that you change it. The first and easiest step is to simply know the name of your customer. Not just online, but also if you have got a traditional retail store. If you have both, make sure that you have a seamless integration. If a customer shops online they deserve and expect the same service offline. Second, understand your customers and make sure that you LISTEN to them. Create true relationships with each and every single customer and take it from there. If you need help with creating meaningful relationships while running a business, have a look at my free loyalty guide which you can get here.
In my next post I am going to write about why the customer is always right. (hint: it has to do with emotions)
Stay tuned and have fun!