Is customer loyalty real?

The idea of ‘customer loyalty’ implies a specific kind of customer behaviour, one that most customers, even good ones, won’t meet. Loyal customers are those willing to make sacrifices on behalf of the brand, for example, such as accepting a slightly higher price to support a long-term relationship, recommending the company to others or working with the company to develop new solutions.   

In each case, the customer makes an investment in the vendor. Apparently loyal customers may well have a high level of satisfaction with the company, but they may also be repeat customers for a number of other reasons: switching barriers, convenience (or just laziness), or economic (cost) imperatives. Loyal customers may be big purchasers, but these big purchases could be the result of their greater purchasing need and spending power that they use to drive prices down.

Most sales and marketing leaders would agree that a fast-growing company must develop loyal customers and leverage them as an extension of the sales and marketing effort. And they’d be right. Research by business strategist and loyalty guru Fred Reichheld showed that there’s a high correlation between corporate growth rates and customer loyalty. In industry after industry he showed that the companies with higher rates of customer loyalty grew fastest, no matter whether they were in consumer or B2B markets. 

Is loyalty achievable? That depends… on what you’re offering

- Is your product or service unique, or perceived as being unique?

- Do customers consider their interactions with your company and its products or services as meaningful?

- Would your competitors be able to deliver the same levels of value?

You must be able to deliver one or more of these in order to create loyal customers.

But how do you do this? Communicate and measure it:

- Create a case study about the customer experience.

- Initiate an executive forum, user forum or web log to allow customers to discuss their experience with the brand.

- Develop incentives to reward referrals.

- Leverage good customer experiences to develop new opportunities.

- Involve all levels of your staff- show them the results, invite their ideas, and talk to them.

Developing programmes like these will support behaviour that leads to growth. You must measure and communicate the results, so that everyone in the company understands the importance of creating highly positive customer experiences, and then relate these measures back to the performance objectives. And ensure that reward and promotion are based on a relative 'league table' of customer loyalty and their relative score on that table. 

I’m not saying it’s easy. But I AM saying it’s imperative. Don’t just measure the number of customers you have, but you must clearly understand the strength and value of each relationship. This is especially important in sophisticated ‘B2B’ markets, where long sales cycles are common and solid relationships are the cornerstone of ongoing business growth. Bring a customer loyalty focus to the entire business so that all staff understand its value and importance to their s future. 

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