Growing Business: Is Customer Loyalty Dead?

by | Customer Experience, Growing Business

Building customer loyalty

A friendly face helps build customer loyalty, but much more is needed.

How does your business rate on the customer loyalty scale? And, how important do you think customer service is to your success at building customer loyalty?

According to a 2011 Consumer Reports survey65 percent of people are “tremendously annoyed” by rude salespeople and 64 percent of respondents said that they had left a store in the previous 12 months because of poor service.

If you think of a place that you give your business to on a regular basis – a favourite haunt  or other service provider, like a restaurant, gym, grocery store, financial institution, auto mechanic, drug store, hairdresser or barber, website and/or graphic designer, auto dealer – what is it that keeps you going back?

Better yet, what keeps your customers coming back to you? What stops them from taking their business elsewhere?

What stops your customers from taking their business elsewhere?

1. Is it because you serve a niche market?

Do you provide a great product or service that your customers can’t get anywhere else, at least at this time?

Chances are, that if the product and/or service they’re receiving isn’t worth, in their eyes, what they’re paying, their loyalty will vanish fast if and when a competitor enters the game. In fact, the game could be over for a niche business once a new player enters the market – especially if your service isn’t great and your competitor is able to take advantage of this.

2. Is it because you are near to where your customers live or work? Are you simply easiest to do business with?

In other words, is your service so-so, but you’re conveniently located to your customers?

When another business – new or existing – ups the quality of their product, reduces their prices and/or delivers superior customer service to you – and is just as close in proximity as you are – your customers may be making a move. In fact, customers may even make the move if they have to travel a bit further and pay a bit more – especially if customer service at the new place is great, and yours is only so-so.

3. Is it because of pricing?

Plain and simple pricing? Not great customer service or a better product? Not more convenient or a niche market? Just plain and simple pricing?

Chances are if your service isn’t at least average, and even if it is, your customers will consider switching to a competitor who has upped the ante with superior service, an equally good product and maybe even a bump in the price.

4. Is it because of great customer service?

Is the customer service you deliver high quality? Do you deliver on your promises? Is what you say about your products and services true?

The truth is, you don’t have to be the lowest price to keep your customers, assuming the way your deliver your products and services makes up for any extra bump in the price.

According to a 2011 American Express® Global Customer Service Barometer, “seven in ten Americans (70%) are willing to spend an average of 13% more with companies they believe provide excellent customer service.” The same survey found that Canadians would pay an average of 12% more.

For most of us, real loyalty to a business stems from dealing with one that we believe behaves in a manner that shows that we and our business are valued and important to them. It doesn’t matter whether the business thinks they’re dealing with customers well, what matters is whether the customers believes this or not.  If they don’t believe it, there won’t be loyalty. If they do, there generally will be.

The Basics For Fostering Customer Loyalty

The bare minimum requirements needed to foster customer loyalty, assuming you have competitors in your market that are hungry for your customers, are:

  • Delivering on your promises with regard to your products and your services.
  • A business environment (in-store and online) that is well taken care of. The type of business you run and your customers will determine what ‘well taken care of’ looks like for you.
  • Knowledgeable staff and management who care about customers, are helpful and empowered to make appropriate decisions when problems arise.
  • Prices that customers believe reasonably reflect the market you are in.
  • Having integrity in your advertising, marketing, customer and employee dealings.

For each of these, it’s all about the customer’s perspective.

Being A Customer Helps Us Understand What Customers Expect

Whether we are business owners or not, we are all customers of other businesses. As such, it can help to take a good look at what we expect and respond to when we are customers of other businesses.

How important is the quality of the products, services and customer service we receive when we’re ‘the customer’ and dealing with other service providers? This is an important question for both business owners and staff to consider, whether front-line employees, CEOs or those behind the scenes. It can help us evaluate our own attitudes and behaviours and that of our business as a whole when it comes to dealing with our customers. This awareness and insight may just help us take everything we do to a whole new level.

According to Jim Bush, Executive Vice President, World Service for American Express, “Getting service right is more than just a nice to do; it’s a must do,”

Great Service Drives Sales & Customer Loyalty

He says, “American consumers are willing to spend more with companies that provide outstanding service, and they will also tell, on average, twice as many people about bad service than they are about good service. Ultimately, great service can drive sales and customer loyalty.”

Is it possible for businesses we feel extremely connected to, loyal even, to lose our business? Absolutely! But it takes more than a reasonable increase in price.

A good product coupled with knowledgeable, pleasant and sincere staff and a business environment that communicates we care (like clean washrooms and tidy stores, and an attractive, functional and easy to navigate website) means a lot to consumers.

It is a combination of good products, good services, living up to our promises and all the other things mentioned so far that constitutes great customer service.

It’s Simple … And It’s Complex

Great customer service is both simple and complex. We can sometimes think that delivering “service with a smile” or never making a mistake constitutes great customer service, but it is so much more than either of these.

In fact, making mistakes and fixing them promptly and with a great attitude can strengthen customer loyalty! Delivering “service with a smile” and a bad attitude can completely undermine customer loyalty.

That said, customer loyalty isn’t dead! It may be on life support in some businesses but there is still hope.

Earning and re-earning customer loyalty can be done. It requires:

  • Ongoing effort and commitment to earn and maintain.
  • A clear understanding that everything we do and how we do it – including having clean washrooms and a mobile-friendly website – ultimately impacts customer loyalty.
  • The involvement and commitment of everyone on the team, including the head honcho and every other person at every level of the organization.

The Loyalty Challenge

Expecting customers to be loyal just because they’ve dealt with you for a long time, is unrealistic. Loyalty is earned and maintained through delivering a consistent experience that is at bare minimum equal to what a customer would receive elsewhere. The challenge for every business is that new businesses – we call them competitors – are regularly entering the market and working hard to pry loyal customers away from us.

It’s our job, as a business, to ensure our loyal customers have no reason to leave for what others may be telling them are greener pastures.

But hey, isn’t that what business is all about?

This article has been rewritten (extensively) from the original written by Sue in November 2011.