Who is your best salesperson? Your loyal customer.
A customer is more than an individual who buys a product or service. Customers include consumers, business partners, suppliers, distributors, business collaborators, and employees. Business owners should consider each of these players as important as the primary customer. Each plays an important role in increasing your sales, and your bottom line, by serving as a business advocate. The key for any business success is to focus on the loyalty of each of these players. Loyal customers make for a sound business model.
Customer loyalty can be defined in terms of buying behavior. A loyal customer is someone who:
- Makes regular repeat purchases
- Purchases across product and service lines
- Refers others
- Demonstrates an immunity to the pull of the competition
- Can tolerate an occasional lapse in support without defecting, owing to the goodwill established through regular, consistent service
Customer satisfaction is an attitude; customer loyalty, however, is a behavior.
Satisfied customers feel something good emotionally; loyal customers will act on that feeling with certain behaviors — perhaps by referring others to your company. They become your advocates.
Customer loyalty doesn’t happen overnight. It’s built and earned one customer experience at a time. In keeping your customers safe from defection, it’s important to recognize that customers typically evolve through loyalty stages.
For online customers, those stages are: (1) surfer, (2) first-time site visitor, (3) repeat visitor, (4) first-time buyer, (5) repeat buyer, (6) client, and (7) advocate.
For offline customers, those stages can be defined as (1) suspect, (2) prospect, (3) first-time customer, (4) repeat customer, (5) client, and (6) advocate.
Sometimes a stage is skipped. For example, in the online world, a customer could move from surfer to first-time site visitor to first-time buyer in one site visit. Now, the goal becomes keeping that customer, because it costs more money to acquire new customers than to keep existing ones. Smart companies focus their marketing and customer relationship efforts on moving each customer into an advocacy role.
The average company loses 20 to 40 percent of its customers over a year. When a customer defects, the negative effect on profit is substantial. When a customer is on the brink of defection, typically it is because something has shaken the customer’s trust. Sadly, however, most companies do not address lost customers and therefore miss the untapped revenues that their lost or inactive customers could provide.
Your employees are your first customers. When building a company, consider how you will create a culture where employees feel served so that they in turn can serve customers. For example, look at the Chick-Fil-A store chain. They have established a remarkably loyal staff in an industry (fast food) known for triple digit turnover. Again and again, their executives test themselves and their decisions by asking, “Is this a place in which I would want my son or daughter to work?”
Consistency remains key. Customers are comfortable with consistency — consistency in performance, product, service, delivery, price, and so on. Consistency is imperative that you present.
Successful Customer Relationship Management, or CRM, does those things — the right marketing, selling, customer care — that will successfully transition customers to continually higher levels of loyalty. Success can be measured by whether the customer moves forward through these stages.
Not only can small enterprises do CRM, small enterprises must do CRM. They must do those things that move customers to increasingly higher loyalty levels. Otherwise, the business will never reach its potential. And customers, too, will not reach their highest level of potential, as an advocate for your company.
Make customer loyalty and advocacy part of your marketing and business plans. Those loyal consumers, business partners, suppliers, distributors, business collaborators, and employees will serve you well.
Carol Parenzan Smalley is an educator, innovator, and entrepreneur. She is the creator of and instructor for Creating a Successful Business Plan, an online course offered by colleges and universities around the world.