Building Customer Loyalty

Building Customer Loyalty

Written by Jez Hunt

Grow Your Business

4th June 2018

In a previous post, I went through the importance of understanding the TRUE customer lifetime value of customers and clients to your business, and how to calculate it.

This time I want to look at WHY it’s important to use this information to focus on building customer loyalty, and retaining your clients for longer.

As I mentioned in the previous article (The Importance Of Customer Lifetime Value), it is between 5 and 8 times more expensive to attract a NEW customer to your business than it is to sell more of your products and services to an EXISTING customer.

But when you realise that the majority of the cost of servicing a customer is in attracting them in the first place, why then do the majority of business owners – and many of the “experts” advising them – STILL focus on lead generation?

Let me ask you…

… what are YOU doing to tap into this profit centre already in your business, in building customer loyalty and retaining your clients longer?

Studies Show That “Making A Difference” Matters To Your Customers

A recent DTI and CBI survey found that the real things which make a difference in marketing are innovative and customised products, as well as customer support.

Customised offerings are something online bookseller Amazon tracks and uses very well indeed – they are masters at building customer loyalty. By using the purchase histories of individuals they offer a bespoke service to each customer which feels personalised and targeted.

You’ll know precisely what I mean if you have ever bought anything from them.

Chances are you will have received an email from them which says how they noticed that you bought a particular item, and how other people who bought that item also bought another item, and that they happen to behaving an offer on that item right now… you get the idea.

This is EXACTLY what great customer service it is about – understanding your clients and customers the best you can and offering them products and services which can make things better for them in some way.

But great customer service is not just about that – it’s also about being innovative.

Let’s take a look at Chubb Insurance Group for a moment.

It processes its claims on the spot; Chubb representatives visit a customer’s premises, input data via a laptop computer and print out a cheque there and then.

No delays, no waiting, no fuss.

They simply looked at what frustrations people had when dealing with insurance companies, and then offered a solution which resolved it – in this case it was the fact that many people get frustrated with the hassle involved trying to get an agreed payout from some insurance companies and the length of time the whole process takes.

But it’s not that difficult to do if you keep in touch with your customers and clients regularly – you simply have to put them first.

What Can You Do Right Now To Improve The Experience Your Clients Have When Dealing With YOUR Business?

You could easily go back through your customers’ purchase history and then work out and offer associated products or services which will be of benefit to them – it takes a little time, but it will be time well spent.

Or you could ASK your clients what frustrates them about your industry, or the products and services they receive and then address those problems and really make your business stand out.

And this is important because when you are building customer loyalty, the key to customer retention is customer satisfaction!

A more common approach that businesses take – especially in highly competitive markets – is customer loyalty (points) programmes.

According to Customer Loyalty Today, 51 per cent of all British shoppers possess at least one loyalty card and of those who shop at supermarkets which offer them, nearly 71 per cent have a card.

But are loyalty programmes REALLY as effective as they once were?

Just recently I was looking for a particular book and searched for it through a loyalty programme and was amazed to find that it “cost” 4,150 points.

The book in question is the hardback version of “Rick Stein’s Far Eastern Odyssey,” so I searched Amazon and found the exact same book for £11.25.

Now when you consider that most participating stores give 2 points for every £1 spent or 1 point for every litre of fuel, that means you have to either have spent £2,075 or bought 4,150 litres of fuel (easily more than £4,150 in fuel) or a combination of both to receive an £11.25 book for free.

That’s one SERIOUS amount of loyalty! (“but that’s all right… the book was free…”)

How many people do YOU think would respond to a headline which said:

“Spend £2,075 here and receive your £11.25 book for free!”

Not that many.

Personally I would rather pay the £11.25 and not have the hassle of driving around trying to find a petrol station chain which participates in the scheme and carrying a multitude of loyalty cards in my already-overstuffed wallet… but then that’s just me.

But even though they are not being used as effectively as they could be, the loyalty principle DOES work – I just wish that more of them would focus on creating one which has some actual benefit to the client!

Should You Create Your Own Loyalty Programme?

It is well documented that the majority of businesses lose around 30 per cent of their customers either before, or at the time of a repurchase decision. The reason many people change supplier is because of poor service.

But it is also well known that loyal customers tend to spend more and cost less to service and that satisfied customers are likely to recommend your products and services to others.

People are getting wise to what they consider to be a fair return, and if you have weak offering, it doesn’t take a lot for your competitors to offer them something which may well persuade them to change.

As business owners, we know (or should know) that customers respond to experiences, not things.

So doesn’t that mean we should be creating better experiences for our clients so they remain loyal, and come back again and again as well as recommending our products and services to others?

And if that’s true – as I believe it is – then WHY do so few businesses put their clients and customers first???

If you would like to share any of your personal experiences, observations or the results you’ve achieved using these or similar tips, please leave your comments and/or thoughts below. I always love to hear from you:

Featured Photo by Rob Bye on

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