The importance of building customer loyalty

"Customer satisfaction is worthless. Customer loyalty is priceless."

~ Jeffrey Gitomer

Many firms spend a lot of money advertising and networking to try to bring new customers through the door, but best practices say only 10% of sales should come from new customers. The other 90% should come from the firm’s existing customer base, which takes loyalty and trust – neither of which can be achieved with advertising. To keep customers coming back, a business must be focused on meeting their needs.

So how do you build loyalty and keep existing customers coming back? A well-structured loyalty rewards program is a must. And by this, I am not talking about the simple variety that says if you get your dog washed 10 times, you can get the eleventh free. These methods are okay, but the key to an effective loyalty rewards program is rewarding the customer with something they really value.

For example, at the AMC theater here in Tallahassee, there is a special line in the concession area that only serves customers in their Stubs program. This line is always shorter and quicker than the “normal” lines, which rewards their loyal customers with something everyone values: speedier service and less time spent waiting in line. 

Likewise, an HVAC dealer puts customers who have purchased an AC system from them on a priority list so they get service ahead of other customers needing repair work done. Furthermore, they offer free labor on emergency repairs for customers who have their systems checked by them every year. 

Then there is Delta Airlines. Delta rewards its loyalty program members with free luggage, priority boarding and baggage priority. With these perks Delta’s loyal customers are able to get on the plane first, find a place for all their things in the storage compartments and get settled before other passengers are let on board. Then, their luggage comes off the plane first so they can retrieve it before the majority of the other passengers. 

What is important to note about all these rewards is that they are virtually free to the company but invaluable to the customer. These are the kinds of things that build loyalty and trust, and because they are not costly to offer, even small businesses can offer rewards that have tremendous value to their customers. For example:

• I was dealing with a very small assembly business. They figured out that if they could guarantee two-day turnaround for their most loyal customers, it would make a difference. And it did.
• Then there was a restaurant that offered reservations only to its loyal customers. The customers who were rewards program members loved that perk, and the exclusivity made other customers want to belong.

Now go out and identify services you can offer your loyal customers that do not cost much but bring tremendous value. When you do, you will build and reward loyalty, which will turn your customers into raving fans.

You can do this.

Dr. Osteryoung has directly has assisted over 3,000 firms. He is the Jim Moran Professor of Entrepreneurship (Emeritus) and Professor of Finance (Emeritus) at Florida State University. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book co-authored with Tim O'Brien, "If You Have Employees, You Really Need This Book," is a bestseller on Amazon.com. He can be reached by e-mail at jerry.osteryoung@gmail.com.

Tags: Florida Small Business