“Satisfaction is a rating. Loyalty is a brand.” -Shep Hyken
Customer loyalty can be easily misunderstood as customer satisfaction. If your business is doing a good job, it should be satisfying nearly every customer. But realistically, only some of those customers will become loyal to your business.
Customer loyalty raises a lot of questions for small business owners, so in this post we’ll talk about why customer loyalty is important to your business and how you can change your plan of action to better build it.
Why is customer loyalty important to your business?
Did you know that loyal customers spend an average of $6,000-$8,000 more each year than other segments of customers? Additionally, loyal customer segments have been shown to raise annual profit margins.
Here’s what you can expect a loyal customer to do for your business:
- Spend more money
- Buy more types of your products
- Buy value add/bonus services
- Doesn’t need product instruction
- Don’t require sales support
- Find your products on their own
- Refer others to your business
As you can see, the case for gathering more loyal customers to grow your business is strong. Loyal customers spend more, market your business for you, cost less for you to get and keep, and become valuable brand ambassadors.
How can you manage customer loyalty?
Your business can manage customer loyalty by observing, analyzing, and testing/experimenting. A plan of action is important when you plan to manage customer loyalty because not every customer is of equal value to your business. That’s what a customer loyalty migration plan is for.
To create a customer loyalty migration plan, you will:
- Ask for customer input (through surveys, questionnaires, contests, etc.)
- Identify the most valuable customers
- Set goals for getting more of these customers
- Make improvements based on input from your valuable customers
Creating surveys and questionnaires for your business is simple and free in many cases. It’s one great and economical way to get opinions and input from your customers. Here’s an example of a survey we’re doing (and we’d love it if you’d answer the 10 quick questions).
You should be keeping track of how much each customer costs you to acquire. What’s your ROI? How much do you spend to get customers in different segments?
And most importantly, what can you do to start moving–migrating–those customers into the most valuable, or loyal, customer segment without upsetting or changing what your current loyal customers like about your business?
You can add more resources that are optional but available to customers who want them, like downloadable guides or eBooks, to appeal to a different segment of customer. Be careful to provide the right amount of resources and not go overboard. Losing money to get more loyal customers won’t benefit your business.
Keep in touch
Above all, one of the most important things a business can do to track and manage customer loyalty is keep in touch with customers. Ask for their input on a regular but well-spaced basis, or offer special incentives to answer surveys to select customers.
By listening to the input your customers have, including the good and the bad, you will learn more about your business. And if you’re open to taking advice and making changes based on answers you receive from customers, you’ll reap the rewards.