17 Ways to Build Customer Loyalty

Updated: April 30, 2009

Introduction

 

Customer loyalty is the holy grail of CRM. It is not just a matter of how many products customers buy from your company; real loyalty is measured in terms of how often customers return and how frequently they refer new customers. The following best practices can help build the kind of loyalty that every company strives for.

 

Analysis

 

1. Bond with the customer early. First impressions create expectations, and expectations die hard. Prospects making their first contact with your company should immediately decide that they are in the right place. A few glitches later on in the relationship will be brushed aside as exceptions to the rule that the customer has invented.

2. All customers are not created equal. Some customers value relationships and personal interactions. They want to be known and valued on a personal level. Others value efficiency, cost and time savings. Still others value comfort and avoiding pain at all costs. The sooner you can discover what a customer values, the sooner you can deliver it and build loyalty.

3. Convey your company's value proposition in everything you do. All of your interactions with customers must answer two questions: What do they really buy from my company, and why should they buy it from my company instead of a competitor? Customers who are reminded of your business's value remain loyal.

4. Do more than make your point. You must also communicate in ways to which your customer is receptive. Some customers like phone calls, while others don't want to be bothered. Some customers prefer email, while others are drowning in it. Some customers want just the facts, while others enjoy some entertainment, too. Don't forget that communication is a two-way street. Provide multiple channels for customers to deliver their feedback.

5. Know why customers leave. Good CRM shines a spotlight on customer departures, searching for ways to improve and problems to fix.

6. Measure everything. If your company measures something, chances are it can improve it. Measure customer-contact frequency, referrals, contact-to-sale conversion rates, contacts per month, customer satisfaction as revealed by surveys, and every metric that you can think of that has a bearing on your business.

7. Always ask for referrals. Companies are supposed to manage the relationship with the customer. But too often, companies let customers manage it by leaving the timing of referrals up to them.

8. Make loyalty-building a team effort. Everyone from the receptionist to the delivery person is responsible for nurturing customer loyalty. It is important to convey that message to everyone in your organization and teach them how to contribute.

9. Meet customers' expectations. Failed expectations lead to customer dissatisfaction. Most often, customers feel let down in the area of customer service , not product quality. You must know your customers' expectations and improve your business's processes in order to meet them.

10. Go beyond rewards programs. A discount may buy sales as long as it is in effect, but it won't buy loyalty. The same is true of rewards programs. Customers remain loyal to a company that is always improving and growing.

11. Turn complaints into opportunities as quickly as possible. Studies show that customers tend to become more loyal when their complaints are handled immediately and effectively.

12. Engage customers in a two-way dialogue. Create a peer relationship with customers by admitting where your company needs to improve and enlisting their help to solve the problems. A customer who makes such investments in a company is more loyal than one who does not.

13. Build opportunities for repeat business. That sounds simple, but many businesses are based upon occasional sales and lack other products that can generate additional revenue.

14. Survey customers, and pay attention to the responses. Survey research can be used to identify or solve problems. Keep surveys simple, unbiased and short. Questions with simple answer choices such as "agree/disagree" or "satisfied/unsatisfied" deliver quantitative responses that your business can measure. You may want to consult with a professional survey designer in order to craft an effective survey .

15. Create a system for collecting, analyzing and acting upon all customer feedback. EFM (Enterprise Feedback Management) is more than just collecting data; its aim is to build a dialogue with customers. Technology exists to systematize the collection, analysis and use of customer feedback.

16. Tie customer loyalty to expected business outcomes. Determine whether to measure your engagement program's outcome in terms of customer satisfaction, likelihood to purchase again or another metric.

17. Use analytics to predict future loyalty. The measurements taken in your company's surveys and engagement program can be analyzed statistically to predict the likelihood that a customer will continue to buy or refer new customers. Predictive analysis can also correlate customer loyalty to profitability and other expected business outcomes.

 

Conclusion

 

Measuring, analyzing and building customer loyalty is no simple task. Your CRM technology provider should able to guide you through this complex process.

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