Customer Loyalty on the Decline? Not For Your Small Business!

As I was perusing around the interwebs today, I came across an article with the headline Why Customer Loyalty is Declining. Considering customer loyalty is our bread and butter here at Fivestars, and we have proven that a focus on customer loyalty can drive up to 10x more revenue per customer, my gut reaction is “no way Jose, stop being so dramatic.” But I gave it a fair read and the author had some good points.

Steve Van Belleghem’s list of why customer loyalty is declining:

  1. Businesses can’t keep up with the needs and expectations customers, so customers leave without a second thought
  2. Customer rewards programs don’t create loyalty, they just take away from your profits
  3. The internet lets people easily compare prices, and if your business doesn’t provide clear value, you’re in trouble
  4. Businesses focus on individual experiences with customers instead of the overall experience over time
  5. Consumers want you to stand out from the competition, not just rationally but emotionally as well

Talk about being a Debbie Downer!

The customer loyalty landscape for your small business isn’t that bad! Steve goes into more detail on each point in the article, so if you want his full explanation, head to Business2Community. While all of these points have some bit of truth to them, it doesn’t give the full customer loyalty picture.

Outlook Sunny for Your Small Business

Here is my take on each point and why the outlook for your small business isn’t so grim:

1.  Regularly getting feedback from your customers will ensure you’re fulfilling their changing needs and wants

Yes, customers expectations change or can even rise over time. And yes, some companies are not keeping up with their customers needs and expectations. But the issue stems from not talking to their customers! By regularly getting feedback from customers, you can stay up to date on what they enjoy and things they wish your small business would offer to make their experience even better.

Get feedback from customers

How do you get feedback from customers? If you have an email or text message marketing program (or use Fivestars, which combines the two) you can send your customers questions or a survey they can fill out (use Survey Monkey or Google Forms to make a survey). But honestly, the absolute best way to get feedback from your customers is to just talk to them directly when they are visiting your business. Introduce yourself, thank them for visiting, and ask them about their experiences, how can you improve, what is something that you could offer that would make them a customer for life, what would make them choose a competitor, etc.

2.  A customer rewards or loyalty  program is a cost effective platform to build relationships and connect with your customers

Considering I work for a company that offers small businesses a loyalty and rewards program for their customers, I can give it to you straight. Steve is right, offering a loyalty card doesn’t create customer loyalty. However, the right rewards program is a platform in which you can connect with your customers on a deeper level. Simply offering a rewards card won’t do much more than offer an incentive to come back sooner.

To build real connections with your customers, that cause them to be loyal customers for life, requires you to not only give them a great experience in your store, but also when they are outside of it. A digital loyalty program will give you the tools to collect your customers’ emails, phone numbers, addresses, birthdays, etc. Then you use that information to send them messages that they will enjoy, messages that they can relate to, and to thank them for their loyalty to your business you offer them special deals and discounts.

Will offering deals or discounts cut into your profits? Maybe a bit, but if you are rewarding the best customers for their continual business with you, then they will continue to visit you overtime, drive their friends to visit you, and in the end, considering loyal customers spend 10X more than average customers, you end up making more money than without the rewards program.

3.  When you are transparent and provide answers to customers questions online, the internet allows for your customer purchasing cycle to shorten

The digital world has provided customers the means to compare prices and information online. Yes, this could go terribly wrong for you if you offer terrible products or services, or your customer experience and service is terrible. But this also provides you an opportunity to one up your competitors. Because there is so much information available online, right at our fingertips, the business with the most helpful, transparent, honest, detailed, and relevant information to help a customer make a buying decision wins. There are customers out there who will just pay for the cheapest option out there, but for everyone else in the world, they want to know what they are getting. When a customer can get all the information they need, they can make the decision to buy from you faster. And that is money in your pocket in a shorter time frame.

4.  Connecting with customers via email, text, or social media allows for relationships with customers to grow outside your store front

Like I mentioned earlier, to foster customer loyalty you need to extend the customer experience with your outside your doors. Like Steve mentions, many make the mistake of focusing on just one touch point with the customers, or don’t work as a team with your staff to ensure the experience at multiple touch points is consistent. I’ve found this with my team here at Fivestars as well, it’s better to over communicate in general and collectively our messages become more consistent as time passes.

Once you are on the same page with your staff or anyone who helps you with your marketing, send a unified message across your various marketing mediums: Facebook, point-of-purchase displays, coupons, your website, Twitter, etc.

Here is a great example of one of our clients who does this really well. CREAM is a local ice cream chain here in the Bay Area. The experience in their stores, on their Facebook pages, and website are all pretty consistent.

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CREAM Home Page

5.  Providing above and beyond customer service and products, food, or services that meet the customers real needs will always win in the long run over novelty or flashiness

Your business definitely needs to stay relevant to your customers, but don’t mistake relevancy for novelty, flashiness, or trendy. Those things come and go, but incredible customer service and exceeding customers expectations never goes out of style.

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1 Comment

  • To gain true customer loyalty it takes more than coupons and incentives. It’s about the whole experience and many times it comes down to how they feel when interacting with your brand. Is your website easy to navigate? Is your store clean? Are employees friendly?

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