We all know it's important to have loyal customers. But do you know how important it is?
A study by Bain & Company suggests that a 5 percent increase in customer loyalty can improve profitability by anywhere from 25 percent to 95 percent. It shows us there are big opportunities available for owners and managers who are willing to do what it takes to increase customer loyalty.
The good news is, it's not hard. And you can do it with the people and resources you have right now. It takes time, effort and patience to make it successful. But you can make a huge impact on your business.
Here's what you need to do:
1. Ask your customers what they want
This is different than what they expect. What customers expect is usually less (often a lot less) than what they want. But you need to know what they want.
What do they want in general? What are they trying to accomplish (or avoid)? Why did they choose you instead of your competition? What are their priorities and preferences?
Keep in mind different customers focus on different aspects of what your business does and how you do it. But if you speak with enough, you should see patterns and trends. You should develop some profiles of what various customers want.
Also look for how your customers want to be served. This will vary a lot and is harder to discover. Most people focus on what they want because it's easier to talk about. But people like to be treated well. We all have different definitions of what being treated well means. You need to learn what it means to your customers.
2. Tell your customers what to expect
Some companies try to be all things to all customers. They do too much and none of it well. Every company has a unique set of resources that gives it a competitive advantage. These are your company's strengths. Learn what they are. Use them to determine what your company can do better than anyone else in your market.
Once you know what your company does best, compare that list with what your customers want. These two lists should overlap (if they don't, you have a problem). Where they overlap is what your company should focus on. These are the things you need to do for your customers: the combination of what they want most and what you do best.
From this list you need to develop your message. You might call it a brand promise. You might call it your Customer Service Standards. What you call it is not as important as what you do with it. Use it to tell your story. It tells people why they should do business with you. and it helps them know what to expect when they do business with you.
Then make sure your customers, employees and management all understand your message. Do everything you can to share your message with these three groups. Post it in your store, on your website, on your business cards, in your ads and anywhere else your employees, management and customers will see it. Get it noticed!
3. Create easy ways for your customers to offer feedback
This is where many companies stumble. They focus so much on getting new orders and delivering the product or service, they forget what happens afterward. The only way you can consistently get better at what you do is with a steady flow of honest and direct feedback.
Find many ways for your customers to let you know what they think. Brainstorm with your employees. Make it a contest. Copy other businesses. Ask your customers. Do a Google search! Try different communication channels and keep trying until you find a bunch that deliver the amount of feedback you need (which is a lot).
Make sure this step is done by your employees. Don't rely on outsiders (consultants, survey companies, etc.) to do this for you. They are your customers and you need to communicate with them directly. You'll learn more from them this way and you'll develop closer ties with your customers. You'll also get another benefit. Customers love it when a company pays attention to them after the sale. They feel important because you're asking them what they think.
Finally, make sure your customers know how they can contact you. Publish and promote the many ways customers can connect with you. Encourage them to reach out to you often.
4. Listen to what your customers say
Many companies talk about customer feedback. Some do it well. Most don't. Because they don't work vary hard to hear what customers are saying about them. They might hear the obvious, like complaints and "thank yous" but nothing else. If you want to increase customer loyalty, you need to do better. You need to make a special effort to find out what customers are saying about your company, your products and your service.
This includes more than the feedback mechanisms you create (Step 3). It includes the many other ways people communicate about your company. The Internet is full of people's comments about their customer experiences. Make sure you are mining this resource on a regular basis.
When you build trusting relationships with your customers and you open the lines of communication, you position your customers as partners. They can help you learn how to do a better job. But you need to communicate with them to make this happen. You need a steady flow of quality customer feedback.
Are you doing what you said you would? If not, what's missing? Are they getting what they want? Is the message you're sending the right one? If you have developed a brand promise, is it really what your customers want? And since things change, you need to stay abreast of changes in what your customers want.
Look for the Amazing Service Gap. This is the difference between what you promise your customers and what you're actually delivering. Their feedback is how you know what your gap is. So listen for ideas on how to do better. Find ways to close the gap.
In addition to listening to your customers, you need to gather and store what they tell you. Most companies have plenty of contact with customers. But they never keep track of what their customers say. And if they do keep track, it's often hard to access because it's in a file drawer somewhere or buried in a database that nobody knows how to use.
Make sure the feedback you gather is stored in a way that people can get to. In fact, you should publish it. Make it available to everyone in your company. The more people who see it the more ideas you can generate to use it (Step 5). By having a lot of people look at it and talk about it, you'll be able to see your customers more clearly.
Conduct regular and frequent meetings to talk about the feedback and draw conclusions about what it means. Look for trends and patterns. Also, look for what's not there. Are there things you think are issues or concerns but they do not appear in any customer feedback? If so, what does that tell you? If it's not important to your customers, should it be important to your company?
5. Act on what your customers tell you
Information is no good if ignored. Beyond listening to your customers and considering what they say, you have to use it. This doesn't mean you act on everything. Remember, Step 2, you can't do everything everyone wants. So you need to pick and choose what feedback to act on. Focus on what will help your company do what you do best. Choose ideas that will help you close the gap (Step 4).
You might find feedback that takes your company in a different direction. Your brand promise (Step 2) might be missing the mark. Maybe you have a changing customer base or a changing market. If your feedback suggests this you need to consider how it affects your business. Then either act on it or make an informed decision to not act on it.
The bottom line in Step 5 is to do something with your customer feedback. It's a gift from your customers, so treat it as such. Make sure you thank every customer every time they offer feedback. And, let customers know what you do with the feedback. If they know it gets used they're more likely to keep offering it. Help them get involved and stay involved as your partners.
Like the shampoo bottle says, "lather, rinse, repeat." But in this case you should be repeating forever. This is a never-ending process of learning, sharing, and working together.
Managing your company is no different than practicing a sport or hobby. The more you do something, the better you get. And since people and situations change constantly, this process needs to keep repeating so you don't miss these changes. Keep cycling through again and again. You'll get better at knowing what your customers want and at giving it to them. Your customers will see you are truly focused on helping them get what they want. They'll have little incentive to go elsewhere.
You'll never please every customer every time. But if you follow these steps you're much more likely to please most of them most of the time. That will keep your customers coming back again and again.