The Strategic Approach to Building Customer Loyalty

While all the glamour is around building new business opportunities with fresh prospects, businesses should not be too busy with new sales at the expense of their existing customer base. This is often the case - especially around the beginning of the New Year - and businesses who are not actively building loyalty with their existing customer base will face losing them.
 
When embarking on building loyalty campaigns with their customers, businesses should ask themselves the following questions:
 
Are the benefits of other brands or products sometimes more important to the consumer? Are there associated negatives with the businesses brand or products? Is there a range of brands or products that could provide benefit to the consumer?
 
In answering these questions businesses will soon realise that they have a number of strategic opportunities to the challenges that arise, including:
 
Getting serious about managing customer relationships: are you interacting with each customer or group of similar customers with unique needs in a unique way?
 
Being focused on value creation: is there a company wide effort in improving the life-time value of customers? By increasing the revenue per customer and delivering customer value you will keep the relationship engaged for a longer period of time.
 
Avoiding cannibalisation: this is where it is important to avoid offerings that will shift consumers from one product or service stream into another without increasing overall revenue for the business. This can go undetected for months or sometimes years and correcting its impact on revenue can be very difficult in the short-term.
 
There are also tactical marketing options to consider in building customer retention and loyalty initiatives. Business owners should include one or more of the following tactics:
 
Offer loyalty incentives such as: discounts, VIP programs, referral rewards Encourage larger volume or frequency of purchases Special reminders to the current database of customers to take action Develop product line extensions to engage a deeper or broader connection Develop new offers, events and promotional activities to current customers on the database Encourage new uses, tie-ins with complementary products and/or services through special customer promotions  

Case Studies in Customer Loyalty

We've heard that it is easier to sell to an existing customer than it is to acquire a new customer, yet it’s amazing how many businesses don't develop customer loyalty or retention programs. This leads them into a constant drive for new customers, and this type of activity is not sustainable or scalable for most business owners.
 
Many iconic businesses have grown their success and reputation through customer loyalty. Apple have developed a loyal following through creating an emotional attachment between their customers and their products. Developing trusting relationships over time has led to an almost cult-like following of the Apple brand, where their commitment to providing cutting edge technology to people usurps their business need to make sales, at least, in the eyes of their customers.
 
Apple have also built up a network of line extensions and a huge sense of excitement with each new release. As the range is designed to connect and work symbiotically, Apple have created more than loyalty - they have also created a need for other products in their catalogue.
 
Just as Apple have successfully honed in on the customer experience in order to create sales growth, businesses such as Starbucks and Harley Davidson have built their names on their own reputation within an existing client base.
 
Starbucks created a first-class customer loyalty program, which revolutionised the coffee industry. Their star-based app has built a need in customers to engage, make purchases, and remain loyal due to the rewards provided through the program. They have expanded their rewards system to include purchases outside of their cafes, and even introduced a gold member’s card, with the look and feel of a top-level credit card. The perks experienced by a card holder and app user encourage customers to remain loyal, while Starbucks benefit from repeat business.
 
Harley Davidson isn’t just a motorcycle brand - it’s an institution. Using branding, they have built themselves up to be a hugely successful company. Like Apple, they have focussed on a niche market and sold an experience, where their customers aren’t just purchasing a motorbike, but rather a sense of freedom, power and adventure.
 
Harley Davidson have a couple of other tricks up their leather-clad sleeves. By restricting the supply of their products and forming a “family” through their loyalty program, “Harley Owners Group”, they have simultaneously increased the perceived value of their products and the emotional connection associated with them. In other words, they have built a brand which people connect with, and will return to regardless of price.
 
Customer loyalty is the bloodline of many service based businesses too. There is a huge deal of trust building required in service based business models. For example, many recruitment agencies know that once the client relationship is established, it’s a natural progression for clients to return. Recruitment and outsourcing agencies like Marketing Temps, who have recognised a need for on-demand marketing skills, have taken the time to learn exactly what each business needs before advising and supporting them through one-off projects, temporary scaling, and expert recruitment guidance.
 
Director of Marketing Temps Kam Ozonaran says, “…flexible staffing and outsourcing isn’t just a money-saver, it’s the solution for a business need and the beginning of a new, ongoing relationship. 50 per cent of our revenue targets are set to come from existing customers”.
 
Going for Market Leadership
 
Achieving market leadership is not something that happens by hustle alone; it takes effective planning and intelligent execution.
 
No matter what stage a business is at, it is obvious and essential that owners grow their businesses strategically by forecasting expansion, acquisition and loyalty into their business supported by sound marketing plans and sales targets.
 
Understand that customer satisfaction is the key to repeat business, as well as new possibilities through their recommendations to others. Where a customer feels valued and experiences their transactions with a business as being of value too, loyalty develops.
 
Businesses such as Harley Davidson, Apple, Starbucks and Marketing Temps have built their success not on what they offer customers, but on the value associated with that offer. Whether a sense of freedom, the excitement of cutting-edge technology, VIP treatment or individual care for another’s business success, it is the emotional connection and satisfaction which develops a loyal customer base.
 
Happy customers mean return customers, and the impact this can have on the long-term success of a business is not to be underestimated.
 
Also see Part I - The Strategic Ways of Expanding into new Market Segments and Part II - Mastering the art of new Customer Acquisition of this series.
 
Kam Ozonaran is Managing Director of Marketing Temps an on-demand marketing recruitment firm specialising in flexible resourcing solutions. Kam helps organisations to build their strategic mechanisms for better marketing capability, flexible recruitment; competency based training and marketing operations design.