Building a Loyal Customer Base
Encouraging Customers to Stay Longer and Buy More
The more existing customers buy, the less you have to spend on finding new customers. This article shows you how to develop more loyalty.
Loyal customers are more likely to stay with you longer and buy more from you. However, many companies spend much of their time and effort always trying to attract new customers. One of the reasons for this might be a lack of knowledge about how to create a loyal customer base.
The Principles of Building Loyalty
There’s lots of academic literature on how to build loyalty but it’s not always aimed at the smallest of businesses. For a general introduction to the subject of customer loyalty and a useful framework, read Existing Customer Management.
Follow these six principles to help build a more loyal customer base;
- You can’t buy a customer’s loyalty. But they’ll gladly give it to you if you keep giving them what they want. Once you stop, they’re gone.
- An existing customer is easier and cheaper to sell to than a new one so split your activities accordingly.
- Look at your customer service. ‘Moments of truth’ are what happens when a customer speaks to you (e.g. to change details or ask for more information) and they are what will determine whether a customer stays and buys more, or leaves.
- Make the customer want to stay and buy from you - get them to bond with you. Why would they want to risk going anywhere else when they can rely on you to meet their needs?
- Use what you know about them. This means more than just personalisation, it means tailoring your product or service offering to what they want.
- Don’t mistake a Reward Scheme (points for purchases or sales promotions) for a loyalty scheme (creating bonds). Reward schemes generate loyalty to the points, not to you.
Loyalty Initiatives
A list of principles is useful, but it’s also useful to look at potential initiatives to demonstrate what the principles might mean in practise.
- “Thank you” is the language of retention. Compare to these for trying to attract new customers; New !!! Free !!! Improved !!!
- Set up accounts and regular payment schemes by direct debit. Can you offer a Retainer Scheme?
- Offer a discount or gift programme giving something of genuine value to the customer but inexpensive to you or that cannot be copied by competitors.
- Arrange clubs with members’ evenings and seminars but make these exclusive to members, do not advertise them publicly. That way your customers feel more privileged to have been invited.
- Fill out customer and purchase details in advance for regular orders.
- Use the database to remember and use their details, e.g. caller identification, triggered communications, offers based on their purchase patterns etc.
Following the principles and looking at some of the examples to create potential initiatives of your own will build a more loyal customer base which should lead to more sales. However, you also need to make sure the results of any initiatives you do are measured. Read Measuring Advertising Results for advice on how to ensure your activities are effective.
