The (surprising) truth behind customer loyalty

Many people talk about the importance of customer loyalty, but fewer individuals can actually provide useful information about what this metric means or how to improve it. Instead of getting bogged down in generalities, many entrepreneurs and small-business owners crave specifics about how they can improve their customer loyalty and increase their chances of building a successful business.

Of course, there are no shortcuts to customer loyalty, but there are some proven techniques that can help businesses of all sizes and types. Any effort to improve devotion from your clients, however, starts with a firm understanding of what the phrase customer satisfaction truly means and exactly who you are trying to target.

Which customers need your attention?
Many businesses focus on creating a core group of loyal customers who will in turn promote your business to their friends and family. While this technique can create a strong cohort of reliable consumers, an effort aimed only at this group may be sacrificing a larger number of more tenuous customers. Focusing on this group, while more difficult, can ultimately have a much larger impact on your company’s customer loyalty success.

Reversal of fortune
A recent article from the Financial Post demonstrates why a strategy that aims to convert unhappy customers into ardent supporters can play a huge role in your company’s success. According to the source, customers who have “one foot out the door” due to an unpleasant experience can be turned into satisfied shoppers if you counteract that experience with prompt service and a palatable correction.

In fact, if you handle a complaint satisfactorily and in a timely fashion, the displeased customer’s loyalty typically returns to a higher level than before the negative encounter occurred. In other words, putting the effort into bolstering customer loyalty at the lower end of the spectrum can have a much bigger impact than focusing on customers who are already happy. This difference isn’t negligible, either. According to the source, the difference in loyalty scores is a whopping 45 percent.

Changing your strategy
With this information in mind, it is clear that  marketing your business to shoppers who are at risk of deserting your brand is crucial for long-term customer loyalty. Knowing this and understanding how to change it are not the same thing, however. The key to pleasing this segment of your customer base is by making it a priority not only in your own mind but for your employees as well. Explaining the importance of customer loyalty – especially among less-than-please shoppers – to your staff can help you initiate a company-wide plan.

What tactics have you tried to bolster customer loyalty for your business? Describe some of your hits – and misses – in the comments below!

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