Retaining customer loyalty is vital to the long-term success and profitability of your business. With changes in the marketplace, you need to work harder than ever to maintain a strong customer base. Improving customer loyalty is an essential element in customer retention.
It’s far more expensive to find new customers than to keep your current ones happy.
In fact, the National Quality Research Center at the University of Michigan predicts that just a 1% increase in customer loyalty results in a greater than 3% increase in market capitalization. Yet, attracting and retaining customers remains a challenge for even the most admired brands. Truly committing to customer retention is hard work but the ultimate payback in sustainable growth and profitability makes the effort more than worthwhile.
Why is it important to improve customer loyalty?
We all know that the cost of finding new customers is much higher than the cost of growing existing accounts. The most effective way to control and reduce your marketing costs is to concentrate on developing existing business by strengthening customer relationships.
What’s the benefit of increased customer loyalty?
“Lifetime customer value” is a way of measuring how much your customers are worth to you over the length of time that you retain their business. Industry experience indicates that a number of benefits apply:
- A 5 % increase in customer retention could create a 125 % increase in profits.
- Extending customer lifecycles by 3 years could triple profits per customer.
What to Do
Understand Your Customers’ Business Needs
The real driving force behind a successful relationship is your ability to improve your customers’ business performance and give them the competitive edge. To do this, you need to understand their market challenges and determine how your products or services can improve their performance.
Increase Customer Contact
Strong customer relationships are built on continuing high-quality contact. Service oriented companies should maintain regular dialogue and create as many opportunities for contact as possible. These are some of the non-sales opportunities:
- Create your own seminar for clients and prospects.
- Invite customers to view Web seminars or other Web events.
- Use regular e-marketing to keep customers up to date with your latest relevant products and services.
- Arrange one-on-one regular meetings to obtain feedback from customers.
Enhance Relationships through Quality Service
Customers who are satisfied with the level and quality of service they receive are likely to continue buying from the same company.
A key part of the relationship-building process is feedback. You need to understand where your performance is good and where you need to make improvements. You can use a variety of techniques to obtain feedback; here are a couple that work well:
- Customer satisfaction surveys
- Service review meetings
Building community is part of a wider process of customer retention, but it can be used as an integral part of a customer loyalty program. Businesses are increasingly recognizing the potential benefits and setting up communities within their own Web Sites and blogs or other online communities such as LinkedIn.
A free newsletter is a cost-effective way to bring community members together. You can invite members to contribute material of common interest and add information of your own.
Move from Community to One-To-One Relationship
Building a community on your Web Site can help to strengthen customer loyalty by providing valuable information and benefits. But you need to take it one step further. Once you get an insight of what your clients really need or want then you can focus on marketing to them individually by offering tailored services to those needs and wants.
Express an Attitude of Gratitude
With budgets being tighter then every, it’s so important that you thank your customers for choosing to spend their dollars with you. This is the time of year when thanking customers for their loyalty is commonplace, so with everyone sending gifts and cards how do you stand out? Since you have already done the work above to get to know your customers, you should have a pretty good understanding of what your clients need or could use. Sending them something useful is more effective than just any chachka. Set a budget for yourself and then talk with a promotional product specialist, or a creative gift consultant. They can help you find just the right item to give. No matter what you give make sure that it carries your company brand.
Another option could include a well-designed company branded card. Either through an electronic card service or a traditional printed card, a simple hand written thank you can really make an impact and be cost effective for you. And don’t wait until December to mail it. Send it during the Thanks Giving season. What’s more appropriate than to give thanks to your customers during the month of November? Also, your card will get more attention because it won’t be lost in the December holiday communication.