Customer loyalty is a hugely important topic for Hong Kong businesses, yet it is often overshadowed by other, more high profile issues. But think about it for a moment: loyalty is the most accurate tool to determine whether your business is ‘doing it right’.
Do your customers come back to you time and again, or do they move to your competitors instead?
Let’s start with some statistics. According to Marketing Metrics, the probability of selling to a new prospect lies somewhere between five and 20 percent, while the probability of selling to an existing customer is much greater - between 60 and 70 percent.
What’s more, a generally accepted rule of thumb is that it is 600-700% more expensive to acquire a new customer than it is to keep a current one.
So having a loyal base of repeat customers both saves and generates money. This is about much more than your bottom line, though. Customer loyalty implies that your brand is trustworthy and worth returning to; and for my brand activation company, it is critical that our customers feel this way.
There are strategies to deepen and improve customer loyalty, and I’ll get to those shortly, but before that let’s look at ‘what not to do’.
I feel that any business practice which results in a stressful or irritating experience for a company’s customers is something that should probably be avoided. Such experiences are, unfortunately, a feature of daily life for all of us.
The overly-long and complex automated banking hotline. The sudden unavailability of a flight when you try to redeem your frequent flyer miles. The enormous supermarket lines that spring up when only two checkout lanes are open. The late-night marketing calls from telecom companies. The list goes on.
Common to all these poor customer experiences is the fact companies profit from each of these practices. On paper, they are ‘sensible’ business practices: they save labour, they save money, they save time.
The reality however, according to Forbes, is that 71% of customers that end a business relationship do so because of a poor customer experience. Make no mistake - those money-saving tactics do not engender loyalty.
So how do you create loyal customers? Simply, it starts with the old saying of ‘putting the customer first’. I’m not just repeating a cliché, I mean you actually have to place the needs of the customer before the needs of your business.
Of course, loyalty is a complex concept and there is no one-size-fits-all solution that works for every company, but that’s a start.
The solutions that do exist fall into the domain of Customer Relationship Management. CRM is key to maintaining a business’s interactions with its customers. Covering sales, marketing, customer service, support and increasingly social media; CRM tools and theories are growing more sophisticated by the day.
Technology can be extremely helpful for tracking and understanding customer behaviour. Web-based software applications can help a business connect with contacts and learn more about their needs via Facebook, LinkedIn and Twitter; while cloud computing is making it easier to share customer data and statistics almost instantly.
In the end though, developing loyalty is not something that software can accomplish on its own - it is a long-term process, and these relationships demand care and attention.
First, communication with your customers is key - keeping in close contact, really listening to them, learning about their needs and keeping their interests high on your list…and remaining in contact with them after the transaction has been completed.
Second, remember these needs and interests and next time an opportunity arises, anticipate what they might want and offer it to them; even if they haven’t asked for it.
Third, remember that a positive, motivated team will provide the best customer experience. Set an example by ensuring that your frontline and back end teams are working cohesively and inclusively, and remember that ideas flow up as well as down.
Finally, don’t forget that the little things matter. Loyal customers provide us with the lifeblood that keeps our businesses moving forward.
While it’s important to reach for the stars by and win new business; it’s vital that you do not forget the customers who put you were you are today. Make sure you are nurturing and taking care of these relationships!
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Hongkong Business. The author was not remunerated for this article.
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Lawrence Chia is the Chairman and CEO of the Hong Kong-listed Pico Far East Holdings (Pico Group) (SEHK: 752).