Repeat customers, raving fans, angry backlashers, commodity shoppers. Oh boy, what a range of loyalty these represent. And in your years, you may have experienced all of these.

Here’s another way to look at the ladder to an ideal customer loyalty relationship. But first, let’s examine the three kinds of loyalty you don’t want to engender…

How about forced loyalty, if you happen to have a monopoly in your niche? Customers hate this, especially when they have a complaint. I am not suggesting that you create a competitor, only that if this is the case, you should find a way to exceed customer expectations greatly. Often.

Loyalty by habit works, until it doesn’t. Think of the supermarket you use regularly. You know the layout well, are comfortable with the selection, and even recognize the checkers, sometimes by name. That’s habit-shopping. A competitor could find easy pickings here, with direct marketing to habit shoppers with coupons, special prices, and exciting promotions. You don’t want your customers to buy strictly because you have become their “habit of comfort.”

Then, you can buy your customers, usually an expensive and very tenuous proposition. Consider this attempt to be a bribe at best. Your discount coupons, use of Groupon or other third party source, predatory pricing, or the high cost of ad word purchases is rarely sustainable. Worse yet, customers attained through these sources are rarely loyal at all.

So how do we create real, emotional, easily measured loyalty?

We engage the customer at the time and place most appealing to that person. We under-promise and over-deliver—every time. We react positively to suggestions, reward their loyalty with recognition, and make this important cohort not just seem to be, but actually be the ideal example of our mission personified.

It takes work.

And the reward will surprise you. Engaged customers spend more, generate higher margins, and become passionate influencers. Free advertising. High margins. What’s more to like?

Well, how about the satisfaction that, at least for some of our customers, we have achieved that lofty mission we set out to create way back when all this started. And that has to be priceless.

SOURCEBerkonomics
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Dave Berkus
Dave Berkus is a noted speaker, author and early stage private equity investor. He is acknowledged as one of the most active angel investors in the country, having made and actively participated in over 87 technology investments during the past decade. He currently manages two angel VC funds (Berkus Technology Ventures, LLC and Kodiak Ventures, L.P.) Dave is past Chairman of the Tech Coast Angels, one of the largest angel networks in the United States. Dave is author of “Basic Berkonomics,” “Berkonomics,” “Advanced Berkonomics,” “Extending the Runway,” and the Small Business Success Collection. Find out more at Berkus.com or contact Dave at dberkus@berkus.com

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