Loyalty is the cumulative result and response to specific interpersonal activities. Immediate benefits can be demonstrated from the application of any of these specific activities, but the best results come from your customers' long-term continuing relationship with you. This relationship is based in part on your customers' belief of their importance to you. When your activities move from your loyal customers to acquiring new customers, your focus has shifted. Your loyal customers are no longer your most important asset. Your focus is on new customers. Everything you do to acquire new customers will be suspect by your current loyal customers.
Every business wants new customers because new customers are how a business grows. However, the best path to acquiring new customers is through your focus on current customers.
When businesses offer first-time buyer incentives or special deals for new customers, they are defining their priority. Their number one priority is getting new customers. They are focused on new customers. Prospects are more important than loyal customers and loyal customers are aware of the business's focus.
I mentioned in an earlier chapter that Comcast is my Internet service provider. I have subscribed to Comcast's service for a couple of years. I pay Comcast about $50 a month for the high-speed cable service. Comcast solicits new customers by offering the same service I subscribe to for only $19.95 a month for the first three months. Comcast is more focused on new customers than they are on me, a long-time customer. I am still using the service, but if a competitor comes to town, I don't feel any commitment to staying with Comcast. Why should I? Comcast isn't committed to me.
Banks are notorious for offering new customers a better deal than they offer their existing customers. Many banks offer stadium blankets, digital cameras, or other incentives to new customers. In some cases they offer free banking services, such as traveler's checks, to new customers while they charge their existing customers for this same service. Recognizing this preferential treatment for new customers, many people are forever changing where they do their banking.
Several businesses have used special offers to attract first-time customers. These schemes invariably send a message to loyal customers that new customers are more important. In addition, new customers who are attracted by the special offer are less likely to return after they have received the one-time benefit.
Businesses that want to create customer loyalty must focus on loyal customers. Focus is the object of your current attention. The conscious mind can only process one thought at a time. You can't be focused on loyal customers if you are spending your time and resources on trying to attract new customers. Your focus determines how you think and how your customers think of you.
World Class Catamarans is a privately owned company in Tarboro, North Carolina. The company is relatively small in comparison to the marine industry in general. World Class Catamarans builds boats by the hundreds while marine giants such as Genmar build boats by the thousands.
World Class Catamarans prides itself on building great boats that exceed its customers' expectations. It claims that building a long-term family relationship with its customers is its ambition, and creating and nurturing an organization that will prosper and grow for the benefit of its customers and employees is its vision.
The only way World Class Catamaran makes any money is by selling new boats. New customers are their only source of revenue. Boat owners are not like car buyers who trade their old car in for a new model every couple of years. Unless a boat owner is trading for a larger or smaller boat, they typically keep their boats for several years. Even still, World Class isn't focused on new customers; it is focused on its existing customers.
World Class Catamarans sponsors Owner Rendezvous, where its customers can meet and vacation together. Customers of World Class are notified and invited to boat shows and other events whenever they are held near the customer's home. World Class Catamarans uses every opportunity to invite customers to stay in touch with their local dealers and the company. The company is truly living up to their claimed desire of building a long-term family relationship with its customers.
Mike O'Connell, World Class Catamaran's CEO, is committed to his customers. Rather than spending $10,000 on an advertisement in a boating magazine, Mike offered World Class boat owners a free polo shirt and ball cap displaying the company's logo. I recently visited with Mike and he told me, "Our loyal customers are our best advertising. We want to grow the company through our customers." The company is seeing substantial growth coming from its customers who introduce their friends and families to its unique line of boats and way of doing business.
Belknap Hardware first set up shop on the banks of the Ohio River in Louisville, Kentucky, in 1840. The company started humbly in a small shop that produced iron products such as horse and mule shoes, nails, spikes, and other forged items.
When Belknap Hardware celebrated its 100th anniversary in 1940, it had grown to a complex of 37 buildings, including a network of connecting underground passageways and covered bridges throughout the property. Belknap Hardware was among the nation's largest wholesale enterprises with nationally recognized quality brands. The company was built on providing quality, affordable tools, with brand names such as Belknap, King of the Bluegrass and Thoroughbred, reflecting Kentucky's pride in its unique topography and its love of fine thoroughbred horses.
The company philosophy was that whether customers needed builder's hardware, housewares, mechanics' tools, farming tools, or even pocketknives, Belknap would fill that order with quality merchandise.
In 1880, Belknap's inventory was a mere 100 items. By 1940, the company's catalog had grown into a 3000-page tome, containing more than 75,000 items. In 1985, Belknap's inventory had reached more than 117,000 items.
Belknap, similar to other major hardware houses, faced many challenges and underwent many changes over the course of more than a century of operation. However, the company retained a "family" approach with its employees and their dependents, providing picnics, parties, and offering promotions from within the company rather than recruiting from outside. Belknap was a career for most of its employees.
The business changed over the years and was no longer just a retailer of hardware and supplies, but instead had become a wholesaler and distributor to other retail hardware stores throughout the country. The company grew and thrived on providing its loyal customers with household hardware, repair parts, tools, fasteners, and the thousands of other items shoppers expect to find in their neighborhood hardware store. Belknap differentiated itself by its huge inventory of thousands of items.
Belknap was sold to an investor in the mid-1980s. New ownership brought new management and new ideas. Almost immediately after taking charge of the historic hardware company, new management declared the huge number of items in Belknap's inventory to be a waste. Employees who had spent their entire careers at Belknap knew the company's strength came from its loyal customers who depended on the company's broad and deep inventory. Rather than serving its loyal clientele, management forged a new path for Belknap. The new Belknap scrapped thousands of items from its inventory and issued a new streamlined catalog. Within a few months Belknap had lost most of its loyal customers and was forced into bankruptcy. The company closed its doors forever in 1986. Belknap lost its loyal customer base becaused it failed to stay focused on the people who had made the company successful for so many years.
A final thought about focus: The businesses you compete against should not enter your thinking as you focus on creating loyalty. Focusing your attention on the competition diverts you from accomplishment.
Professional golfers provide insight into this phenomenon. Golfers play with other golfers, but they do not necessarily play against other golfers on the professional tour. For example, it's a suddendeath play-off and only Tiger Woods and Phil Mickelson are left in the tournament. Tiger isn't thinking about Phil. Tiger's total focus is on his own game—and only that. This focus allows Tiger to play his best.
You dilute and divert your energy when you focus on the competition. Remember, you control your focus and your focus determines your success.