Treat Loyal Customers Like VIPs09/16/19
We all love getting the VIP treatment from businesses, especially if we are loyal customers. It makes us feel like we’re valued customers. Businesses treat us like VIPs when they are trying to win our business. Unfortunately, that treatment fades pretty quickly once we become a customer.
I’ve been a long-time customer of my cable company and recently contacted them three times over the course of a couple of months to talk about ways to reduce my monthly bill. I even told them I had a better offer from a competitor and if we couldn’t get close to that offer, I would switch services. The best offer they made was to reduce my services. The day I called to cancel, they offered a special deal, which was again to reduce my services, to keep me as a “valued customer.”
What really surprised me was what happened after I canceled. I got emails saying how sad they were to see me go and offering special deals to come back! They were great deals! I would have taken one of those deals to stay with them. Why didn’t they offer them to me earlier?
I see this happen not only with the cable company but with many other businesses I interact with. As a long-time, loyal customer, I’m taken for granted and I don’t feel appreciated.
What is Customer Loyalty
Customer loyalty is when your customers are invested in the relationship they have with you and give you the first chance to earn additional business. Loyal customers not only prefer to do business with you, but they also become advocates and will tell others about how awesome you are.
Developing Customer Loyalty
Customer loyalty develops when you deliver on your promises, build trust, and consistently engage with customers. 80% of customers gradually gained loyalty over time, due to experiences with excellent products, service, reviews, advice, etc. (InMoment)
The cumulative effect of these interactions develops loyalty. In my case, I had expanded my services with my cable company over time and I had experienced pretty good customer service interactions with them. They had earned my loyalty.
Losing Loyal Customers
When you lose a loyal customer, you lose more than their current purchases, you lose out on their future buying potential as well. I spoke with a sales leader who had lost a loyal customer he had for 20 years. As he talked, it was clear that he had neglected to take care of the relationship and his competitor swooped in to develop a relationship and give them the VIP treatment. The account was worth $300K annually!
It can take years to develop relationships with new customers to replace revenue when you lose a customer. Just a 5% increase in customer retention can increase a company’s profitability by 75%.
Keeping Loyal Customers
It costs 5-25 times as much to acquire a new customer than to keep the current ones. Yet, businesses focus on chasing new customers and become complacent with their existing customers. This damages trust and loyalty which takes time and money to repair.
The Pareto Principle suggests that 20% of customers will account for 80% of revenue. On average, loyal customers are worth 10 times their first purchase.
A company’s top spenders and the most loyal customers need attention. They need to know that you care about their business. A Harvard Business School study suggests that the highest spending customers are also the most likely to check out multiple options. They are the quickest group to look elsewhere when they believe their relationship with a brand is beginning to deteriorate.
The current email offer from my cable company is below what I was asking them to do before I canceled. Now they have lost my trust and loyalty and it will take more than a special offer to win me back.
Tags: Customer loyalty