Do Right by Your Relationships, Loyalty Will Follow
In our cost-conscious society, companies are vying for consumer/client dollars like never before. No doubt, differentiating your business through certain products or services helps with your competitive edge. But it probably isn’t enough.
What you need to succeed are loyal customers or clients — that golden 20% that drives 80% of your business’ profitability.
How do you get loyal customers?
Do right by your relationships with them, and you’ll build that critical, core following, which will ultimately net big returns. Specifically, don’t just address problems or provide rewards that YOU believe customers/clients want and deserve, but do the homework to determine their true wants and needs. Consistently providing this demonstrates the humanity behind your brand.
“Research from Bain and Company shows that 80% of company executives believe their company delivers outstanding value and a superior customer experience, but only a staggering 8% of their customers agree with them,” says Allan Hauptfeld, president of Vantage Research + Consulting, Inc. “This major disconnect is very telling, indicating how little many executives understand about what clients are really thinking, feeling – and talking about. Bottom line, this is a relationship problem that makes customer satisfaction difficult to achieve and customer loyalty almost impossible to secure in any sustainable fashion.”
“What’s more, when it comes to customer satisfaction vs. customer loyalty, there’s a big, often misunderstood difference between the two,” Hauptfeld says. Customer satisfaction is about successfully providing what’s rational and expected, e.g., on-time service, accurate orders, products that work, clean bathrooms, etc. Meanwhile, customer loyalty develops when you exceed expectations, perhaps anticipating and catering to customers’ needs or wants, thus creating solutions, not to mention opportunities to make people genuinely happy and impressed. Interestingly, stamping reward cards or giving discounts to those flashing their loyalty cards does not generate “the love.” This loyalty comes from genuine relationships — those that are carefully cultivated between the customers/clients and you.
“This starts and ends by getting service with a sincere smile, or can even mean someone going the extra mile to provide some service, product or answer without it coming across as extraordinary,” Hauptfeld says. “It’s about making life better or more meaningful in some intangible way. Customer loyalty is emotional, speaking to the intrinsic value your brand provides.”
Why does this loyalty matter?
It’s far less expensive to retain loyal customers than to generate new ones, according to studies from both Bain and Company and E-Marketer. And while it’s true that happy customers don’t talk as much as unhappy customers, they DO talk about their positive experiences with others, helping you effortlessly gain new, more qualified leads. (Their friends or associates have already “pre-sold” them!) The compound benefits should result in a more stable, if not ever-improving, customer/client base. And in our cost-conscious world, a strategy like that – which keeps profits booming and business from busting – is certainly one worth following.
Does your business align to the 80/20 rule of business profitability?