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How to Foster Customer Loyalty

Written by on May 19, 2016

Fostering the loyalty of your customers is something that many businesses don’t pay enough attention to. In fact, many business relax their efforts (or simply don’t put as much effort into keeping their customers happy) once they have acquired them. That becomes their biggest Achilles heel and a major threat to the sustainability of their businesses.

This is supported by research conducted by Econsultancy in 2014. They found that:

  1. 40% of companies are more focused on customer acquisition than retention;
  2. 15% are more focused on customer retention; and
  3. 45% have an equal focus on acquisition and retention.

Given these results, the first question we have to ask ourselves when thinking about fostering the loyalty of customers is …..Where’s your focus?

Now, if you claim that your focus is on retention and loyalty (or is equally split between retention and acquisition) then the next thing to ask is, “Why are our customers leaving and what can we do about it?”

The Challenges of Customer Loyalty

The challenge is that, when faced with this problem, the first thing many firms do is to put a loyalty program in place.

But, research from people like fast.MAP, the Logic Group, and Ipsos MORI  have reported that most loyalty schemes don’t work:

  1. 96% of consumers would be tempted to switch by a good price promotion;
  2. 20% of consumers would switch if offered a better loyalty programme; and
  3. Whilst 68% of customers said they were members of supermarket loyalty schemes but only 47% of them said they were loyal.

Customer Loyalty Solutions

So, if loyalty programs have little effect on customer loyalty, what should firms be doing to foster loyalty?

Well, a Pitney Bowes study in 2010 offers some clues. They looked into the reasons why customers leave and found a range of issues (in order of descending importance):

  1. Slow customer service
  2. Late delivery of service
  3. Doesn’t ask about customer needs
  4. Not in touch
  5. Not told about updates and developments
  6. Call center can’t answer questions
  7. Doesn’t recognise my value
  8. Irrelevant marketing
  9. Only email queries allowed
  10. No online self-service
  11. Low marketing, low visibility

So, based on the Pitney Bowes list,  here are three things that you can do to immediately foster more loyalty with your customers:

Keep Customers Informed — Loyalty Is Psychological

Keep your customers informed of progress and developments at all times — even if you have nothing new to report or can only report that everything is going smoothly and on track.

This is important because it recognizes human psychology. When we have no new information our minds make stuff up as a result of our anxieties, fears, stresses, and all sorts of other negative emotions. Just because you might think that you have nothing to report doesn’t automatically mean that your customer doesn’t want to hear from you or that you shouldn’t be in touch with them.

Equip Your Team to Inspire Customer Loyalty

Make sure that your customer service team is equipped to answer every customer question the first time and every time. The sixth most important reason for why customers leave on Pitney Bowes’ list was that the “Call center can’t answer questions.”  This is unforgivable and is a basic rationale to enable customer service teams with the knowledge, skills, and tools to be able to provide answers to their customers’ questions when they have them.

Up Your Game on Self Service

Many customers want access to online self service tools so make it a part of your customer service strategy.

A 2010 study by the Corporate Executive Board in 2010 found that 57% of all inbound calls to a contact center could be attributed to a customer not being able to find what they were looking for on a company’s website.

Firms need to recognize that their website and how they offer and deliver an online self-service option is an increasingly important part of customer service strategy. Not recognizing this ignores what customers want.

Photo credit: Yoninah under Creative Commons License (via Wikimedia)

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