When you first attract a new prospect to your business and then cause them to buy something from you, do you then refer to them as a ‘customer’? If so, you could be jumping the gun…because, until that person has bought from you more than once, probably two or three times, it’s not yet their custom to use your products or services, and, more importantly, you’re unlikely to have made any profit from their purchases. Customer loyalty and profitability can be a fickle thing, so it helps to understand just where your customers stand on the loyalty ladder. This “ladder” is at the heart of building a great business and is a key to gaining referrals – the most powerful and cost-effective form of marketing most companies can employ.
Most of us have learned from experience that customers who receive exemplary service often tell others about their happy encounters, while disillusioned or mistreated customers warn plenty of other people not to patronise businesses that have given them less than exemplary service. Even more importantly, angry customers cancel orders and move their business elsewhere, while well-serviced customers enthusiastically will come back more often and spend more money…in other words, they move up the loyalty ladder.
Let’s look at the seven rungs this ladder portrays so you can build genuinely outstanding customer loyalty:
– SUSPECTS: On the bottom level is a suspect – essentially, anyone who might buy from you…in other words, your target market. This can be quite specific, or as general as anyone with money in their pocket and who will fog a mirror if it’s passed under their nose
– PROSPECTS: The next rung is a prospect – someone who at least knows about your business because of your marketing, and about whom you may also know something; their name and address, for example. Obtaining and recording the essential details about every contact you make with potential customers is the crucial starting point of building a thriving referral-based business. For virtually every type of business, a comprehensive database is invaluable in getting and sustaining repeat business. It’s here, on one of the lowest rungs of the loyalty ladder, the whole process begins.
– SHOPPERS: Once a person has bought a product or a service from you, they reach the next rung of the ladder, the shopper. Not yet a customer – they have only obtained from you once, and you don’t yet know whether you’ll ever see them again. It’s often at this point. Businesses lose customers because of their perceived lack of interest (indifference) in the person who just gave them money. Converting a shopper to the next rung on the ladder takes more than just ringing up a sale…
– CUSTOMERS: Finally, if a shopper has returned to your business and bought from you again (and again, etc.), you can now begin to think of them as a customer. These are people worth cultivating – they’re the lifeblood of every successful business. Until you get to this rung of the loyalty ladder, you’re probably not making much if any profit from the relationships you have with your customers. In most businesses, all of the activities engaged in on the first three rungs of the ladder will cost more than the money taken it – and this is where far too many businesses spend most of their effort! The accurate measure of customer worth is their ‘lifetime value’ to your business…and this begins only after several purchases. A key to keeping customers – and, more importantly, moving them further up the ladder – is to make them very happy they’ve bought from you. Once customers begin to feel special, they will start to move up the ladder of loyalty.
– MEMBERS: Once you begin making your customers feel like they belong to a club where they expect and receive exceptional service, or are invited to exclusive events, they move still further up the ladder to become a member. They might be given cards which entitle them to extras such as ‘Members Only’ evenings where they get the first viewing of new products at specially-discounted prices, or merely a regular newsletter that keeps them informed of the range of products/services your business offers. This feeling of exclusivity helps to cement customer loyalty and move some of the better ones towards the top of the ladder.
– ADVOCATES: Near the top of the loyalty ladder will find customers who are so pleased with your service that they actively market your business for you. They tell their friends about the quality of the products/services that you provide, and about how you go out of your way to look after them. They endorse your business and insist on coming back to you, again and again. And, they generally don’t worry nearly as much about price as do those people just beginning to climb the loyalty ladder in your business.
– RAVING FANS: The top rung of the ladder is reserved for those extraordinary customers who not only market your business but actively sell for you. They are better than any advertisement for your products or services and are much like a valued member of your team. You don’t need many of these to have a business that virtually ‘sells itself’. The good that raving fans can do for a business is priceless, so they need careful nurturing.
So, remember, the more customers you help to climb the loyalty ladder, the more your business will benefit. Don’t be like so many other businesses, spending enormous amounts of time and money trying to gain the attention of suspects, attracting new prospects and shoppers – losing money all the while. Instead become smarter by putting renewed, increased effort into winning repeat business from existing customers, and making some of them so happy that they take on the role of a ‘super sales and marketing team’. Customers on the top four rungs of the loyalty ladder earn you money – look after them well.
And That’s Worth Thinking About…
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by Simon Buck