If you stop and think about it, there are probably many companies you deal with automatically. You don’t stop to think about price, quality, service, or convenience – you just instinctively make your purchasing decision.
We might be talking about your printer, your doctor, your real estate agent or your computer supplier. But then we might also be referring to the brand of breakfast cereal, the brand of cola or the brand of laundry detergent you instinctively choose when you shop.
In these cases you are obviously loyal to a particular company or a particular brand. If you can discover why that loyalty exists, you may be able to purposefully encourage similar loyalty from your customers.
Marketers refer to the ladder of loyalty – a device that allows you to describe the degree of loyalty felt for you by your customers. At the two extremes of loyalty are: the suspect – a nameless face (someone who hasn’t even heard of your organisation) and the advocate – a person who likes your organisation so much they generate word-of-mouth advertising for you. In between these extremes we have the prospect (a member of your target market), the customer (someone who makes a one-off purchase), and the client (a customer who comes back).
Obviously, your organisation should aim to move customers up that ladder of loyalty. Just imagine what would happen if all of your customers were to become advocates: You could spend less money on advertising (your advocates would do your advertising for you). You would never have to take part in price wars And, I’m sure you agree, business would be a lot more rewarding.
Most companies devote most of their marketing resources to customer acquisition, and then never bother to turn those customers into clients or advocates. Because a customer is someone who makes a one-off purchase, it costs about the same to get them to buy the second and third time as it did to motivate them to make that initial purchase.
So, how should you go about moving your customers up the ladder of loyalty?
First, let’s stop thinking in marketing terms. Let’s replace the word loyalty with the word relationship. (I hope you’ll agree that there’s a strong connection between these words.) If you work on building relationships with your customers they will naturally reward you with loyalty.
When it comes to creating relationships, this is something we’re all qualified to do. Consider the characteristics of a traditional friendship:
A friend is someone who is interested in you. Someone who understands you and someone who tempers their actions based on this understanding of you as an individual.
A friend gives willingly, without expecting an immediate return. A friend has faith in you and realises that people care for those who care for them.
A friend is open and honest with you, sharing both good news and bad, communicating both strengths and weaknesses.
A friend doesn’t make promises. A friend simply takes action.
A friend doesn’t instruct you to do something. A friend makes an offer or a suggestion and allows you to stay in control of your decisions.
A friend stays in touch.
Of course you could expand on this list, but I’m sure you can see that if you take these qualities and build your organisation around them you will develop an extremely successful business.
It is important to stop thinking about making sales and start thinking about creating and nurturing relationships.
If you would like to shift your organisation’s focus, your first challenges are strategic ones.
How well do you understand your customers? Who are they, what do they want, what type of people are they and where are they currently spending their money.
Now, look carefully at every element of your business and ensure that you really are market focused. The best way to build loyalty is to provide customers with a product or service that is closely aligned with their needs. It’s imperative that you provide value, but remember that it is your customer’s perception of value that is important (not yours).
Now that you understand your customers you can build relationships more proactively.
Sadly, you are unlikely to build a real friendship with a customer the first time they buy from you. And if you wait for them to return – that might never happen. A friendship is like an investment account – you need to make a lot of small deposits before you can expect to see a return. This is why it is so important to keep an accurate record of your customers. Every time a prospect either contacts or buys from you, put their details on your data-base. (If you are not computerised, a card index will work almost as well.)
Once you know the names and addresses of your customers you can build a relationship with them quite deliberately.
Start to communicate with your customers the way you would communicate with your friends. Write to them often, share interesting and helpful information with them, and develop a genuine interest in their challenges.
If you focus primarily on building relationships, you will turn your customers into a group of loyal advocates. But if your primary focus is on making immediate sales, your business will never amount to more than a non-stop promotion.
I am not suggesting that you forget profitability – an unprofitable enterprise is not a business, it’s sheer lunacy! But I am suggesting that you adopt a longer term business perspective.
If you can build a business that systematically creates, maintains and nutures relationships, you have built a highly effective marketing machine.
Customer acquisition will become a one-off expense as customers naturally climb the ladder of loyalty. As your customers turn into clients and then advocates they will become less price sensitive and more inclined to recommend your services to others.
Fortunately, you don’t need a lot of marketing theory to accomplish this. You just need to apply a basic understanding of human nature.