Think about your favorite truck. Imagine the company that makes it. They want you to keep loving them and always choose their truck. But sometimes, they try to trick you instead of just making awesome trucks. They might lower the price a little or add tiny improvements, but it’s not enough to delight you. Now, what if they focused on your needs and made you feel really good about driving their truck? What if they listened to what you liked, understood why you loved their trucks and made sure you were always satisfied? That would be nice, right? When companies do this, they build a strong connection with people. And when you feel that connection, you’ll want to stick with them. [Don’t miss the Pro Tip at the end of this article.]
1. Is Customer Loyalty Vanishing?
Today, when you want to buy something, you can easily check out all the different things for sale and compare prices online. If you don’t like what one seller is offering, you can just click away. Disturbingly, a study by Accenture found that 77% of customers now change their minds about being loyal faster than they did three years ago. However, profitable customer loyalty is a key driver of customer lifetime value. Profitable, loyal customers tend to:
- Make repeat purchases, spend more over time, and are willing to pay premium prices
- Cost less because they are familiar with your process (Some studies claim 5 times less)
- Forgive you if something goes wrong
- Buy brand extensions and new products
- Tell their friends (referrals are free marketing)
- Resist competitors’ offers and stick with you—they’re loyal
Some companies like Apple and Amazon have proven that customer loyalty has not vanished — it’s just more difficult to achieve and maintain. Most companies lose their loyal followers because of short-sighted choices that dramatically impact the long-term value of their relationship. In tough times, the reflex is to cut expenses with a machete when a scalpel is the better blade for long-term success. For instance, reducing staff with the strongest relationships would be unwise even though they have the highest salaries and would lower your payroll expense the most. Instead, always think about how cutting an expense will affect your customer’s loyalty and their lifetime value to you.
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