You can have the best product on the market, but it won’t do you any good without a base of loyal customers. Why is customer loyalty so important?
The answer lies in the value of customer retention and the cost of acquiring new customers. According to research by Bain & Co., increasing customer loyalty by 5% leads to a 25% to 95% increase in profits.
Unfortunately, creating loyal customers is far easier said than done. Too many companies rely on loyalty programs and other schemes, but new research shows these are not very effective, particularly among U.K. consumers. One survey showed that half of U.K. customers felt these programs take too long to earn, so they don’t tend to be very effective.
So how do savvy U.K. businesses build customer loyalty? Here are some tips successful companies use.
Make Decisions Based on Customer Feedback
Never make assumptions about your customers’ perceptions. You need to continually collect feedback from them and incorporate it into your marketing and service delivery campaigns.
In the old days, brands had a very difficult time getting input from their customers. They would have to conduct in-person marketing surveys, which could be very biased, since they couldn’t get a large number of random participants.
Today, brands have an easier time getting feedback from their users. Lease Van, one of the top van leasing companies in the U.K., uses tools like Trust Pilot to collect customer feedback. They use their feedback to make better informed decisions and publish testimonials on their site.
Deliver Exceptional Service
It should go without saying, but if you want to earn highly loyal customers, you need to put in the effort to deliver exceptional service first. According to the 2015 Global Customer Service Barometer, 58% of U.K. customers would be willing to spend a month with a brand that consistently delivered excellent service.
Unfortunately, delivering excellent service is easier said than done. You can’t deliver great customer value simply by making it part of your company policy. You have to invest in the resources need to make it happen. You must:
- Hire promising employees. They should either have the skills needed to deliver on expectations or be easily trainable.
- Have enough staff to do the job. You may need to scale your workforce if you lack manpower.
- Continually upgrade your infrastructure and invest in new capital.
- Have clear benchmark that employees must meet to deliver quality service. These can include answering phone calls within three rings, having turnaround times 25% lower than the industry average and passing a 10-point quality assurance checklist from every customer before a job is considered complete.
Excellent customer service isn’t just a philosophy that you put on a poster board or your company’s website. It is a goal that you need to work hard to reach every single day. Remind yourself that the moment you stop delivering great value to your customers, their loyalty will begin to erode and your profit margin will fall shortly thereafter.
Have Contingency Plans for Potential Disasters
No matter how committed and careful you are, problems are inevitable. The property customers trusted you with may break or you may miss delivery deadlines due to circumstances outside your control. It’s important to have a small inventory surplus, have backup employees, a reasonable refund policy and a plan to deal with any disasters that come your way.
Provide Expertise, Not Just Services
Alex Hunte, a London Entrepreneur that co-founded LyteSpark, told the Telegraph that companies with the best customer loyalty track records have to do more than provide great service. They must consistently provide wisdom, even if they don’t charge for it. Customers will appreciate free insights and be more confident about working with your brand.
“Be knowledgeable about your product and be sure to understand your industry,” Hunte said. “When my customers ask for suggestions on which service or product they should purchase, they feel a sense of security if you can offer insight into a sector in general.”