InsightIQ Blog

Are you building customer loyalty?

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Oct 28 2009

That may be one of the toughest questions your organization has to answer.  A consumer might be completely satisfied with a brand, but does that mean she won't jump at a chance to save money, become more efficient, etc?  It can be hard to stay loyal when there are many options available, and simply providing world class customer satisfaction is no longer enough.

Walker Information Inc. recently polled consumers on the topic of loyalty.   Their research indicated "there's still a yawning gap between the percentage of people who say they're satisfied with a business and those who consider themselves 'loyal' to that business-intent on maintaining the relationship and continuing it into the future."  Jeff Marr, Vice President at Walker offered this, "Many companies have figured out how to deliver satisfaction, but they've not yet figured out how to earn loyalty anywhere near those levels."

With increased competition, and focuses on cost, all companies must continually exceed their client's expectations and focus on building long-term, profitable relationships.  Delivering results, at a fair price and with the right level of attention has never been more important or challenging.

Every company spends huge amount of time and resources on retention.  While working for a credit card issuer, I saw this first hand.  Every month, we implemented new strategies to 'save' customers from switching to other banks, all while trying to balance profitability and customer satisfaction.   The one thing we failed to do was to prepare for our customers' future needs.  Most of the time, when we were at the point of trying to retain them, it was already too late.

Anticipating those customers' needs lets them know that you care about their business, and you want them to reach their goal.  Instead of focusing on how to simply retain, companies need to think about building rock-solid relationships that have customers wanting to do business with them over their competitors.

In his book, High Performance Marketing: Bringing Method to the Madness of Marketing, Naras Eechambadi states that "although RFM is a standard measure among most direct marketers and is very good for generating incremental sales through existing customers and others like them... it is somewhat akin to driving with a focus on the rear-view mirror.  Understanding potential future lifetime value can be [critical] in unearthing new and emerging segments and developing new products.  It takes effort and investment, but the payoff can be significant."

Is your company focused on meeting customers' future needs?

 

While you're thinking, take a look at this excellent article by my colleague Niall Budds.  In it, Niall offers up valuable suggestions for not only building valuable customer relationships, but preserving them [link to Niall's blog].

 

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