Customer Loyalty: Dos and Don'ts

Advice from the experts on cultivating customers who are advocates for your business

By Jeffrey Gangemi

Creating and nurturing loyal customers has always been a top priority for marketing teams within companies large and small. But today's most innovative firms are looking for ways to go beyond the frequent buyer program and transform the loyal customer into an essential extension of the company's sales, marketing, and product development teams. The question is how. In this tip sheet, five experts in facilitating customer loyalty offer dos and don'ts for small businesses attempting to develop a customer loyalty strategy and get it working.

Robert Schieffer, clinical associate professor of marketing at the Kellogg School of Management:

Do invite customers to participate in the new product development process. By that, I mean put them on advisory panels, constantly test new ideas against them to see whether they meet their needs, and get their input before launching a product.

Don't assume the customers are going to ask for the ability to participate in a company's activities.

Ben McConnell, co-author of Creating Customer Evangelists: How Loyal Customers Become a Volunteer Sales Force

Do find ways to bring customers together regularly, whether it's through a quarterly or yearly conference, party, or meeting. The ones who'll show up are probably the evangelists, and they love to meet other evangelists. Meeting one another under your party banner will help reinforce their feelings of emotional attachment. Plus, it gives them something new to tell others.

Don't allow even one employee to be grumpy or haughty toward customers. Evangelists are just as, if not more, loyal to your people than they are to your product, service, or brand. An employee with a bad attitude toward customers is like a virus that spreads bad word of mouth, and the years spent cultivating a good reputation can be lost in months or weeks.

Glen Urban, professor at MIT Sloan School of Management and author of Don't Just Relate—Advocate! A Blueprint for Profit in the Era of Customer Power

Do remember that loyalty is built over time through a collection of positive experiences.

Don't assume that the lack of complaints is equal to a satisfied customer base.

Frederick Reichheld, a fellow at Bain & Co., founder of that firm's Loyalty consulting practice, which strives to help clients improve customer, employee, and investor loyalty, and author of The Ultimate Question: Driving Good Profits and True Growth

Do keep the following in the mind: Customers who become promoters must first believe that a company offers superior value in terms of price, features, quality, functionality, ease of use, and all the other practical factors. Additionally, they must feel good about their relationship with the company—they must believe the company understands and values them, listens to them, and shares their underlying principles. A company able to combine these factors will create promoters, customers who eagerly recommend a company or service to family members, friends, and colleagues.

Don't treat your customers as if they were expendable. Companies that break the Golden Rule by misleading, coercing, and disrespecting their customers effectively turn them into detractors. Examples in today's world are countless, but they include nuisance fees and hidden charges, poor in-store service, and dreaded automated customer help lines. Such mistreatment causes customers to switch to competitors, cut back on their purchases, and, worst of all, warn others to stay away from the company.

 http://www.businessweek.com/smallbiz/tipsheet/06/29.htm