The ladder of loyalty

Paul Fagan examines the secret to turning one time shoppers into repeat customers, and creating raving fans for your business.

Did you know that businesses typically spend six times more money attempting to attract new customers than on caring for and retaining existing customers? You may also be surprised to hear that 68% of customers who stop buying from an organisation do so simply because of a perceived indifference. The business didn’t actually do anything wrong; the customer just thought the organisation didn’t care enough.

In a world where the modern consumer is bombarded by choice, it’s never been more important to stand out from your competitors and create an experience that keeps customers coming back to you time and again.

The ‘wow’ factor is that unique aspect of certain businesses with service that overwhelmingly surprises customers by continually exceeding their expectations. Like most winning business strategies it starts with getting the fundamentals right, and progresses toward service mastery. The key to begin with is consistency, one aspect of service a lot of businesses fail to focus on – or take for granted.

The objective of excellent customer service is to profitably create ‘raving fans’ for your business. The first step in doing so is being systemised and consistent in your current level of service. Have you ever visited a restaurant and left raving about the great food and excellent service, only to return for a second time and be disappointed? “A different chef must be on tonight” might be a thought that comes to mind. However, that’s simply not good enough.

A shadow of doubt has now been cast in your mind, and you may or may not decide to give that particular restaurant another chance to impress. Consistency of service is vital. There’s simply too much choice in the market for any business to able to afford to be inconsistent in the quality of their product or service.

SECRET SERVICES

A business should look at its target market as a pool of ‘suspects’. This is the bottom rung on what we call the ‘ladder of loyalty’. These are potential leads based on your ideal customer profile. Once the suspect becomes interested in your product or service, they become a ‘prospect’.

At the prospect level, the target audience has taken action at some level. Now it’s up to the business to start compiling a database of information and details, like names, contact information, and a reference for how that prospect heard about your company. This database can then be used in a variety of ways to invite prospects to do business with you.

FROM SHOPPER TO CUSTOMER

The next rung on the ladder is a ‘shopper’ – a person who buys something from your business for the first time but they have not yet determined that you are a vendor they want to do business with again. The key for the business is to confirm buyer details, and add those details to the company database so you can start building trust and a relationship with them – and, most importantly, invite them to do business with you again.

People will give information if there is something in it for them. Perhaps it’s a frequent buyers’ club or loyalty card scheme, or they get a gift for making a purchase that day. There are unlimited ways to create win-win where your company gets the information you need, and the buyer feels valued for providing that information.

If a competitor comes along with a better proposal, customers are more than likely to give them a try, and you may never see that customer again

A shopper becomes a ‘customer’ only when they buy a second time. A second purchase is an important step in building a long-term customer relationship, because studies have shown it is six times easier to sell to a shopper, and 10 times easier to sell to a customer than to make an initial sale to a suspect.

Rewards need not be money off; in fact you can be really creative and fun with this – the important thing is to show perceived value. One example I recently came across of exceptional customer service is a British retail chain,  Charles Tyrwhit Shirts. Upon collecting first-time shopper details, they send a letter by traditional post from the company founder after the first purchase, an extract of which reads: “… please accept my thanks for giving a humble but passionate shirt company a chance. Quality menswear is my life and I am delighted to have you as a customer, you are fantastic…. As the bearer of the enclosed voucher you will be recognised instantly as one of our most important customers, and you are assured of the very best ‘red carpet’ treatment. Do visit soon…”

I’m just after being told I’m fantastic! And if I purchase again I get to use a voucher and receive ‘red carpet’ treatment! Why wouldn’t I visit soon? This is an excellent example of making a customer feel truly valued, in a quirky and innovative way, while also inviting them to do business with you again and move them up the ladder of loyalty.

REAP THE AWARDS

On the lower levels of the ladder there is very little customer loyalty. If a competitor comes along with a better proposal, customers are more than likely to give them a try, and you may never see that customer again. The art of achieving a high level of customer loyalty is to move them further up the ladder, so that they become loyal clients, and eventually, raving fans.

So what do you do to upgrade and maintain your clients at the appropriate level? The answer is simple. You keep in contact with them and reward them for their loyalty.

There’s simply too much choice in the market for any business to able to afford to be inconsistent

With the advent of email, blogging and social media, you can remain in contact with your customers as regularly as you like for the minimum of investment. The more traditional method of keeping in touch with your customers includes telephone calls, newsletters, direct mail and entertaining. Whichever method you use, you must bear in mind the appropriateness of the medium, its effectiveness and its value to the customer.

INCENTIVES

Once the customer becomes a consistent buyer of your products and services, you may begin offering incentives and privileges so that they become ‘members’, the fifth rung on the ladder, and no longer look elsewhere for competitive products or services. Members do business with you because of the relationship and trust that you have developed.

A member, for example, might be given membership cards which entitle them to extras such as ‘members only’ evenings where they get the first viewing of new products at specially discounted prices. This feeling of exclusivity helps to cement customer loyalty and move your customers towards the top of the ladder.

Members will also tell others about your product or service if asked. Ideally it will be positive word-of-mouth. We all know the saying that a satisfied customer will tell three friends, while a dissatisfied customer will tell everybody. People trust their peers. Good word-of-mouth (and mouse) is far more valuable than even the best advertising. That’s why consistency in every service touchpoint is so important.

ADVOCATES

Paul Fagan, Business Coaching Ireland

An advocate, the sixth rung on the ladder, is a member who tells others about your company, product or service without being prompted. Advocates can be true business-builders for companies, because they get businesses real results through referrals and testimonials.

Advocates turn into fans by literally selling your business for you by their word-of-mouth recommendations. Getting to raving fan status is the result of always putting your customers first and having excellent relationships with them from the very beginning. A lot of that involves getting every detail right, and empowering your frontline team to go the extra mile.

Now it’s all about maintaining the relationship. Once they become a raving fan, not only can you guarantee they will always buy from you, but they will go a stage further and start actively recommending other people to come to you, thus helping to fill your sales pipeline.

So, how many raving fans do you have in your customer base? And what would happen to your business if you implemented some new customer service innovations to move everyone in your database up one level?

Massive profits do not occur by bringing more suspects or prospects into your database, but rather moving one-time shoppers to customers, to members, to advocates and then to raving fans. You will create a world of opportunity once you begin to implement strategies for each level on the ladder of loyalty.