At a recent event for Enterprise Week, Dawn Gibbins MBE, who sold commercial seamless flooring company Flowcrete for a reported £35m, revealed some details of her new venture. The Feng Shui enthusiast is now taking seamless flooring into the home with Barefoot Living. She’ll be putting a coin in the south-east corner of every floor laid (a prosperity zone) and giving away rose quartz hearts. “People do buy through emotions,” she says. “You’ve got to think of quirky ways of driving people to want to deal with you.”
Caroline Dennett, associate director at loyalty specialists, Harris Interactive, agrees. She says the way we assess loyalty has shifted from a focus on product or service quality to the relationship between your customers and your brand. “Within all relationships, and that goes for relationships with brands as well, there is a rational and an emotional element, and that differs greatly.”
Loyal customers will spend more money, be more profitable and tell others how great you are. Here’s our guide to making sure they’ll never want to stray.
Establish the drivers
The first step to an enduring relationship is learning what influences customers’ decisions. Historically, marketing and research focused on the rational side, such as satisfaction on price, “but having a satisfied customer doesn’t necessarily mean they will be loyal,” says Dennett.
The results are often surprising.“We think of financial services as very rational, but the drivers are more emotional than we think,” she says. “One of the biggest drivers of an emotional relationship is trust, which is crucial when it comes to the security of your finances.” Recent research on service expectations highlighted that another of her clients, a service provider, was focusing too much on speed of delivery, such as answering the phone in three rings. While often important to businesses, it was not high on consumers’ priorities, who were far more swayed by empathetic customer service.
Price doesn’t always drive satisfaction with the overall relationship as much as we think it does either. Richard Woods, co-founder of DIY Kyoto, which makes a product called the Wattson to measure energy usage, confirms this. “There are three others doing the same thing and they’re significantly cheaper,” he says. “But we still attract by far the largest media coverage because we offer something different. There’s an emotional attachment with the way it reacts, it’s got a personality.”
Once you understand these drivers, shift your focus to improve things customers really care about.
It’s the best way to find out how to push the right buttons. Michael Welch, founder of tyre reseller Black Circles, insists customer feedback drives his business.
“We ask every customer how their experience went, by email and telephone surveys whenever we need to,” he says. New initiatives are customer based. “It has to be: ‘I think we should do this because 65% of feedback in June and July talk about this’, and we build our case from the bottom up.”
Around 70% of Black Circles’ customers rate their experience, and of those 98% are very satisfied. But this doesn’t stop them seeking more detailed feedback to continue improving. “We drill down, take out trends analysis and understand what’s recurring in terms of issues and positive feedback,” says Welch. In a recent development drive, he asked his six-figure database for ideas on how to develop the proposition. “We got outstanding feedback, and plenty of leads.”
How do you assess the drivers? There are two levels, says Dennett: understanding an individual customer’s needs and those of customers in the aggregate, who are segmented into groups with similar behaviours. Tesco often hails its Clubcard scheme, which offers information on everything card holders buy and uses it to send them highly targeted offers, as the backbone of its operation. Its dominance in the sector is a powerful testament to the benefits of customised marketing, and this is the way business is moving. Look for the segment most likely to spend and tailor your approach.
Welch acquires data through sales and uses his systems to store and analyse it. “We understand who they are and who’s going to be responsive, which leads to more sophisticated marketing and profitability, so we can invest back into the business and the cycle continues,” he says.
A strong set of values can be the clincher. “If people share the same values and have some kind of loyalty to them, they are less price sensitive and more forgiving of an error,” says Dennett. But trust plays a big part in this. If you set yourself up as an ethical business or one that delivers top service, don’t do anything to undermine that.
Brands which are unclear about their position will often suffer. “Without a clear, strong identity, people don’t feel a sense of security,” she adds. “Take Ryanair. Its brand values are no-frills, don’t expect lovely, fluffy service, but people will flock to that because they understand it.”
You can do all the fancy ads you like – it might lure people into buying from you once, but if the product or service you’re offering isn’t up to scratch you’ll be hard pushed to retain them.
What results are they looking for and are you delivering? If you can get an independent third party to attest to its greatness, all the better. Many people switched to Boot’s Protect and Perfect anti-wrinkle cream after Horizon said it actually reduces wrinkles.
ay Bregman, co-founder of eCourier, says the reputation of mediocre service in the same-day courier market means there’s not much brand loyalty – something he hopes to change. His advanced allocation system helps him do this. “We constantly monitor and build up a profile of booking habits and levels,” he says. “When an order comes in, it compares this to what the baseline ought to be for this customer. If things drop off or go above a certain threshold we’re alerted to it.”
Customers are then contacted to see what they can do to improve service levels. “It allows us to provide an individualised account management service by using technology rather than people,” adds Bregman.
Realise the value
Welch follows one simple principle: an existing customer will cost you far less than a new one. Still reeling from a recent meeting with a phone operator, who refused his team a deal reserved for new customers only, he said:“that sort of shortsightedness will see the end of brands. A new customer becomes an existing customer, so it’s a false economy”. At Black Circles, the cost of acquiring a new customer has fallen from £15.00 in 2001 to just 11p.“Not only is it a lot less expensive to service, you also create a marketing initiative through referrals from existing customers,” he says.
Be ethical with data
Only acquire the information you need, put it to good use, and never share it without permission. “If you offer something relevant and beneficial, no one will complain about being bombarded,” says Dennett, who insists this hinges on understanding their needs.
Welch concurs. “They respect that we don’t take advantage of them by sending rubbish emails and spamming. When we ask a question, they listen. We don’t create a cry wolf situation for a quick buck.”
YO! Sushi’s CEO Robin Rowland also uses his database wisely. “We have 250,000 people who opt into our database and when we do an offer the uptake is extraordinary – don’t discount very often, just selectively.”
Back to basics
“I don’t think there’s any such thing as loyalty anymore,” says Welch,“just an opportunity to be considered next time”. Whatever market you’re in, there will be priorities for making that purchasing decision. If you’re not delivering on any one of those key factors, you’ll lose business.