::: Why Loyalty

In Atlantic Canada, the available customer base is relatively small and it is just as important to keep existing customers as it is to acquire new ones. One of our favourite business authors, Frederick Reichheld, has done extensive research on loyal versus repeat customers. Loyal customers generate about 50% more profit than repeat customers.The effort required to change a casual customer to a repeat customer, or a repeat to a loyal is substantially less than the effort required to acquire a new customer.


So what is loyalty? To what most people, loyalty is a card that you take out along with your wallet at the cash register. Simply put, the merchant buys your repeat business with points that can be redeemed, or as a percent subtracted from the bill. You get a reward when you choose this merchant over another.

Yes, we all have the cards and make these choices every week. But, something is missing.

Take a moment and think of a place where you like to do business. It may be a coffee shop, a clothing store, a hardware store. Why did this place come to mind? Why is it different from others you could just as easily have chosen?

Every time we ask this question we are told of personalized service, being recognized, getting great value for money, reliably high quality, easy to find, and so on. The answers come quickly, with smiles and anecdotes. With prompting we found a deeper insight - what truly sets one business ahead of others was the memorable experience. Customers choose to return to a business because the sales people consistently listen to needs, match needs with product, give honest advice, or help you learn something. They help you become successful in your purchase.

Providing each customer with a meaningful experience creates loyalty. That customer's loyalty has a ripple effect; expanding through a growing number of people who respond to their recommendation. A loyal customer generates 50% more revenue and profit than a repeat customer. We are always asking ourselves, how many of your customers are loyal? How many could become loyal?

There are four basic strategies to start cultivating loyal customers: 

  1. Build a relationship with each customer; treat that customer as a life-long customer. 
  2. Treat employees as they are to treat customers; loyal employees are essential to your success. 
  3. Develop your website and each employee into an "information centre". 
  4. Be truthful with customers.

Each strategy is a double-edged sword, not a silver bullet. Cultivating loyalty takes time. Know your environment and your customers. Develop ways to measure loyalty, and ways to communicate with them. Work with your staff to ensure that each customer has a meaningful experience. Above all, remember that even loyal customers change and you can never stop listening or adapting.

Customer loyalty begins when you and your staff see your business through your customer's eyes. It grows when everyone in your company sets standards for a memorable experience. That's what gets people talking!