Customer loyalty, best measured by customer retention, is built through consistently meeting expectations, providing value, and fostering positive experiences throughout the entire customer journey.
Primary Implication
If you find new customers don’t come back, you have the start of major problems. If you find your repeat customer sales to be diminishing year-over-year, you have a serious business problem that has your business at serious risk.
Don’t get blindsided by weak repeat customer sales. Monitor your sales by customer reports to see who is continuing to buy, who is slowing down, and who has stopped. Knowing this information is how you protect a crucial revenue stream for every business—the repeat customer revenue stream.
Overview
The classic definition of customer loyalty is the result of consistently positive emotional experience, physical attribute-based satisfaction, and perceived value of an experience, which includes the product or services. This is a lovely statement, yet it distracts from the primary business goal of customer loyalty. That is customer retention. The secondary goal is favorable word of mouth.
Customer retention represents the ability of a business to retain its new and repeat customers. High customer retention means customers of the business continue to buy from you rather than defect to another business or non-use entirely. Customer loyalty is beautiful to talk about, but it’s retained customers who continue to buy from you and have good things to say about you that matter.
A retained customer demonstrates through their purchases that they aren’t easily swayed by price or availability. They pay your price to ensure they get the same quality service and product they know and love.
The best way to build customer loyalty starts with the sales process that doesn’t over-promise. An over-promise, under-deliver will never lead to a loyal customer.
The next step is to have an operations team that works to a repeatable cycle time. Predictable lead times create loyalty. Continually being told of order delays creates disloyalty. Followed by a finance team that bills customers and ensures timely customer payments. Customers value businesses more that are on top of their invoicing and collections procedures.
All of this is enabled through a workforce that understands the why behind what they do. Employees who know why what they do matters to the customer provide customer service that keeps your customers coming back. The hard reality is that if your employees aren’t clear on the why behind what they do, they will waste resources and jeopardize your ability to produce your products cost-effectively. Do too much of this, and you won’t have any loyal customers.