The Three Keys to True Customer Loyalty

Building a loyal customer base is an essential part of growing a business. Applying the Pareto principal – that 80 per cent of revenue comes from 20 per cent of customers – highlights this. Every customer that doesn’t defect to a rival is one fewer that you have to go out and win back.

So what do companies need to do to secure the loyalty of their customers?

Firstly, it’s important to be clear on what it means for a customer to be loyal to your business. A truly loyal customer is one that knows how good your service is, would recommend it to their business contacts and has enough good will in the tank to continue working with you if something goes wrong. It’s not simply that they have been a long-standing customer, as this might be more a measure of their inertia than their satisfaction with your service.

Failure to understand the difference can be dangerous, as it might only take a small slip-up in customer service, or a proactive competitor, or for them to say goodbye.

In our experience, an effective strategy for developing this genuine loyalty is based on three key points. 

  1. Master the essentials

It’s impossible to foster true loyalty among your customers if they can’t rely on you to deliver your core offer well every single time. Customer satisfaction therefore, is built on a solid track-record of the basics done well. The quality of the product or service must be unquestioned, with deliveries always on-time and in-full.

Messing up an order or transaction doesn’t mean that you will definitely lose a customer, just that it’s likely to be remembered and if a strong recommendation of a stellar performance by a competitor reaches your customer, the relationship could be jeopardized.

In terms of pricing, it’s important for your customers to feel they receive good value, but that doesn’t necessarily translate to being the cheapest option on offer. In fact, because of the association between low prices and low service, typically the result will be low levels of loyalty.

  1. Make small above-and-beyond touches to build feel-good factor

Loyalty is not driven by the table stakes that every supplier must get right to stay in the market. In fact, it is achieved by the small, softer things that are difficult to measure and which, in isolation, might seem inconsequential.

To elaborate, there are some products and services where there is actually no appreciable difference in quality between alternative suppliers. Many of the items consumed by commercial and industrial businesses are made to a standard specification, with limited scope for innovations or alternatives. For these products, prices and quality of delivery between suppliers also tend to be broadly similar. So can suppliers of such products build loyalty?

Some of the most common loyalty drivers we see are sales and service staff that solve customers’ problems, are easy to get hold of, are pleasant to deal with, and that respond quickly. Put simply, if your customer likes dealing with you and you are doing a good job for them, they will find it hard to stop using your service.

From time to time, things will go wrong and small slips will occur. Where they do, it’s vital to be there quickly with a fix and a little something extra to make up for the failing. This might be something as simple as a follow up phone call a short time later to check that everything is now running smoothly.

  1. Monitor to manage

The final point is that the only way to improve your loyalty levels effectively is to understand where they are currently. This will allow an understanding of the degree of loyalty of your customers and allow you to prioritize those customers for whom you could be doing better.

You should measure everything you can about your client relationships. This includes customer churn, complaints, satisfaction levels, recommendation likelihood and the frequency with which new competitor suppliers are introduced.

Ultimately, loyalty is not something on which you can afford to compromise.

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