Customer care guru tells of 8 ways loyalty pays

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By: Wise Marketer Staff |

Posted on January 19, 2005

Customer care guru tells of 8 ways loyalty pays

JoAnna Brandi of US-based Customer Care Coach explains why customer loyalty - which has its roots in consistently outstanding customer experiences - is still the cornerstone of a sound business strategy.

According to Brandi, the customer experience makes or breaks customer loyalty. With so many choices today, it's the quality of the experience - how you repeatedly make your customers feel at each and every touch point - that will determine whether or not they'll come back, purchase more, and refer their colleagues and friends to you. She goes on to quote former Dell CIO Jerry Gregoire, who said "The customer experience is the next competitive battleground".

Loyalty or inertia? Brandi cautions that it's all about your customers' perception of the value you deliver, both tangible and intangible. She says: "You may think you know the kind of customer experience you're delivering, and that your customers share your views. You may think that because your customers stick around and don't complain they are loyal. But be careful not to mistake customer inertia for loyalty."

According to Brandi, it's easy to do: "Remember that loyalty is a genuine emotional attachment that occurs when your customers appreciate the value of your product or service, as well as way you deliver it. Because they repeatedly feel powerful, positive emotions in dealing with you they'll choose you above your competitors - even if they have to go out of their way or pay a bit more. Plus, loyal customers become your number one fans - they enjoy telling others about their experiences with your company, and are quick to encourage people to try your service or product."

Eight ways loyalty pays

  1. Loyal customers buy more - and are often willing to pay more. This creates a steadier cash flow.  
  2. Loyal customers refer others to your business - saving you the marketing and advertising costs of acquiring customers.  
  3. Loyal customers are more forgiving when you make mistakes - even big ones (especially if you have a system in place that empowers employees to correct errors on the spot. Then loyal customers become even more loyal!)  
  4. A loyal customer's endorsement can surpass the most extravagant marketing efforts. Proof of the pudding: A low-budget film can become a blockbuster hit thanks to positive word of mouth (like My Big Fat Greek Wedding). Mega stars and publicity blitzes sometimes can't prevent high-profile films from flopping; the word 'on the street' is more powerful.  
  5. Thriving companies with high customer loyalty usually have loyal employees who are genuinely engaged in their work - and loyal employees save you money in a variety of ways. You don't have to spend money attracting, hiring and training new employees, and you have knowledgeable people at all levels of the organisation serving the customers and each other. And those employees get very smart over time - in a culture that values them and their contributions they can be responsible for countless system improvements - and millions in savings.  
  6. Thriving companies with high customer and employee loyalty are generally known to outpace their competitors in innovation. Think of Gore-Tex, Southwest Airlines (the twenty minute turn-around), and Progressive Insurance in the USA. In addition, their cultures support continuous learning. Brandi comments, "In today's market, if you're not continuously learning and innovating, there's no question that you're falling behind."  
  7. Loyal customers understand your processes and can offer suggestions for improvement. Their feedback can help with research and development efforts as well as improvement efforts.  
  8. Profits, Profits, and did we say, Profits? An increase in your retention of customers can boost your bottom line profit 25-100% depending on your fixed costs.

During January 2005, Brandi is offering free copies of 'The Nine Foundation Principles of Exquisite Customer Care', a list of essential qualities for creating loyalty-building customer experiences and thriving organisations. To obtain a copy, e-mail with The Nine Foundation Principles in the subject line.

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