Friday, September 2, 2011

Customer Loyalty

Author Margaret Ross, an education and workplace relationship expert and President of the Kamaron Institute, is our special featured guest today. Margaret is an award winning business consultant, expert communications strategist and management consultant. Her business, The Kamaron Institute, Inc.,  provides proactive, solution-oriented business management consulting, executive training, and custom research programs that produce measurable outcomes that increase productivity and profit. Find her at:

How To Keep Customers Coming Back In Four Steps


In this competitive economy, customer loyalty (retention) is a necessity to keep your business growing. So how to you keep your customers and keep them coming back?
During my two decades as a business marketing strategist, I’ve observed that top performing companies focus on attracting and keeping customers. Why? Loyal customers provide greater profitability. Profits are powerful. Loyal customers spend 80 percent more than other customers. Eighty percent of a company’s sales come from 20 percent of their customers. Loyalty can’t be purchased by the pound nor can it be stocked on shelves in colorful ‘new and improved’ packaging. It is earned. One interaction at a time.

Customer loyalty should be a corporate strategy and requires corporate ongoing commitment. The ongoing value propositions created for the top 20% key customers should be regularly refreshed and have a superior perceived value in relation to competitive offerings. Remember: Your best customers are highly intelligent and shopping savvy. Just like you.

Customer loyalty is built over time and in stages. In the consumer goods and services industries, it takes 12-18 months to build and earn a customer’s loyalty. Each customer loyalty stage has a number, a name and a cost.

Stages of Customer Loyalty:

1. TRY
2. BUY
3. ASK
(Ask for product by brand name)
(Tell others about product or service. This a major social media win for small business. )

Customer loyalty is built over time and in stages. In the consumer goods and services industries, it takes 12-18 months to build and earn a customer’s loyalty. Each customer loyalty stage has a number, a name and a cost.

To get a customer to the “Try” stage, she must first become aware of the product and sample it. Across most consumer goods industries the average cost to get someone to ‘try’ or "sample" something new is between $60 and $220. That can be a lot.
So, it should be worth a lot to keep these customers and build customer loyalty. Many companies replace nearly their entire customer base every few years. They still haven’t grasped the dollars and cents of this tactic. It costs six to eight times more to acquire a new customer than it does to keep a customer and build loyalty. If the customer doesn’t continue to buy the product, the money spent to get them to TRY your product or service the first time was wasted.
Customer loyalty when it is wise spending and must be a fiscal priority. Too many companies continue to spend 75% of their sales and marketing budgets to get non-customers to try their products while spending relatively little on the 20% of their customer group who provides them with 80% of their revenues.
Many services companies (credit cards, telecommunications, financial services) pay to acquire the same customer over and over again. They’ve been known to write checks to get people to switch to their service or offer large incentives over a short time period. Then they take such poor care of those same customers that they drive customers away again.

As a consultant, I’ve observed that for a company to break free of their “customer churn and burn cycle” requires a giant amount of long-term cultural and corporate change. Here’s the secret of why it is so hard for them. Spending money to acquire new customers doesn’t require change, just cash.

Loyalty’s Impact on Information Sharing:

A recent Kamaron Institute business marketing research study found that customers participating in loyalty programs offering specific benefits are more willing to share personal information such as name, address, cell phone, permission to market and competitive order history. They remain unlikely to share real age, weight, or income.


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