What are you doing to ensure customer loyalty? In case you think loyalty is not an issue, consider these customer facts:
- Customers are defecting at an unprecedented rate of ten to 30% a year.
- More than 70% of Americans question the value of giving loyalty to any company.
- Although 65% of business-to-business customers surveyed reported being either satisfied or very satisfied with the companies they have done business with, the customers switched companies anyway.
- 20% of American customers say they are often annoyed with service; only 4% express delight.
- 68% of the customers who defect do so because of the attitude of indifference by an employee of the company.
- Customers feel that "new customers" get the best deals and they are not rewarded for longevity and loyalty.
Without customer loyalty it is difficult, if not impossible, to maintain a competitive edge and achieve long-term success. But, there is a resolve-establishing an emotional connection with your customers. In order to do this there are four important predictors of success:
- Length of patronage
- Overall satisfaction
While all four predictors are important, caring was found to be twice as important as any of the other three variables when it comes to predicting the potential of customer loyalty. So, not only who cares is important, how you show that you care is equally important. Considering that it costs as least five times more to attract a new customer than keep an existing one, it just makes good business sense to do everything possible to enhance customer loyalty. Add to this the fact that when customers are truly happy they will not only do repeat business with you, they will often be anxious to give you referrals as well.
There are two components in all aspects of marketing: Rational and Emotional. Far too many salespeople focus on the rational components which include the product or service you provide and it's pricing. These rational aspects are irrelevant value drivers to customers and of even less value to you. They are far too easy for competitors to replicate and generally result in ever-shrinking margins. When the rational components are the focus, on you risk the danger of turning your product or service into a mere commodity and the value to your customer declines.
The emotional component, however, provides ample opportunities to clearly differentiate you from your competition and drive the majority of decisions to purchase. There are three aspects of the emotional component: Equity, Experience and Energy.
Equity is a combination of the trust a brand earns and an identity that lets the customer feel emotionally connected to it. Even if your organization hasn't heavily promoted your brand, you have one; your customers have established your brand in their mind. So, in order to ensure high equity value it is critical to establish on-going relationships that will build the brand. This is different than merely creating high awareness with high-impact advertising. It's more about establishing strong relationships with your customers and prospects. When you think of brands that have high equity value (trust), here are a few outside of your industry that come to mind: Hallmark Cards, Southwest Airlines, Home Depot and S. C. Johnson, the family company. When you think of each of these companies and the level of their products or service, you trust that you'll get quality. That's brand equity.
Experience has to do with the customer's interaction with your brand. In every customer encounter there is an opportunity to meet a need and make an emotional connection. That's why it's so important for your entire organization to be marketing-minded. If the customer calls about billing and has a negative experience, that's a missed opportunity to make a positive emotional connection.
Energy deals with the customer's investment of time and effort in dealing with you and your company. Are you easily accessible? Is it convenient to do business with you? Will it save time to use your product or service?
Sure, it's important to be knowledgeable about your products and services and to be prudent about your pricing, but when you truly care about your customers you'll find that equity and experience and energy will do far more to give you a competitive edge and achieve long-term success.