I recently had an interesting experience when renewing my home insurance. Now like many I watch the programmes on television which advise you to shop around and over the last few years I had been lazy. Being busy running a business and home I had not taken the time to review my home insurance. Well this year was my year. I spent a dull Saturday afternoon on the website comparison sites looking for the best deal for my home insurance provision, it was actually quite painless. The surprising thing was that within about 30 minutes I had managed to cut my home insurance bill by nearly 60%! A huge annual saving, this experience got me thinking.
Is customer loyalty and retention worth so little to businesses these days that they are prepared to over charge so considerably. If I refer back to my corporate days there was always the focus on trying to retain our existing clients and give them the best deal or service, so that they stay with you and become your advocates. Many organisations do customer loyalty really well – thinking of Boots, Tesco, Sainsburys, Costa, Waterstones, Starbucks, etc.
It is estimated that it costs 5 times as much to acquire a new customer vs retaining your current ones. It is also noted that 44% of companies have a far greater focus on acquisition than retention. So with this in mind why would you not focus most of your energies on retaining and servicing your existing customer?
Can this be relevant for a small business? I would argue that it is vital for a small business and very important for them to build a good local reputation, creating strong advocates for their brand. Before we look at ways you could do that let’s define customer loyalty. The CIM defines customer loyalty as “Feelings or attitudes that include a customer either to return to a company, shop or outlet to purchase there again, or else to re-purchase a particular product, service or brand.”
There are many different media channels out there, the channels which focus on encouraging customer retention are mainly your internal channels, such as email marketing, social media and direct mail. So how could we encourage strong customer loyalty for a small business:
- Start with your Why? What is the story behind your brand, why do you do what you do and what are your brand values? Defining and living these will help your ideal client to connect with you and therefore choose you over another. Here is our brand story. An example of this would be why do you spend more on an Apple iPhone vs an alternative phone provider? In many cases now the technology is just as good but the brand perceptions around Apple make you choose that device over another CLICK HERE to read the 7 core values which make Apple the most valuable global brand.
- The Best Service: For me this goes without saying, giving your existing customers great service in their buyer experience or service is key and makes them feel special – do a good job and they may come back, exceed expectations and they will become your brand advocates.
- Value Add: Give your valued customers first opportunity or exclusive offers, this will be a big hook and also encourage them to share information about your business.
- Make it personal: As individuals we are bombarded with messages wether it is via social media, email, the radio, billboard advertising, the list goes on. If you can cut through all of this, personalise and make your communications relevant your ideal client is more likely to connect with you. Even though as a small business you may not have large media budgets you can still achieve this via your email marketing or social media channels.
Customer loyalty and retention is key to today’s small business success. What have you successfully implemented to encourage customer loyalty? We would love to hear your ideas!