Chapter 8: How Do We Do It?

Overview

There are three truths that surround customer loyalty:

1. All profit comes from loyal customers. The cost of attracting and learning how to deal with a new customer is more than the profit you can earn on the first sale.

2. Customer loyalty is only an activity. All the goodwill and high emotions customers may have toward you is worthless unless they either buy from you or refer customers to you on a regular basis.

3. Customer satisfaction and customer loyalty are two different things. Customers may be satisfied with your products or services, but that doesn't mean they will repeatedly buy from you or refer people to you.

Your understanding of these three truths is important. If you do not agree with these three truths, you should reread the earlier chapters until you have an understanding. Learning how to apply the principles of loyalty will be meaningless to you until you agree with these three truths.

Businesses that create customer loyalty:

• Are made up of individual people recognizing customers as individual people.

• Are businesses that are pretty much like the other businesses they compete against, except for one or more differences that customers can see.

• Give value and assurances their customers understand and can substantiate.

• Communicate effectively with their customers before, during, and after they conduct business.

• Focus their full attention on existing customers and getting new customers to come back.

The principles that create loyalty are intuitive, but developing the specific activities that support them is critical. Practice doesn't make perfect; practice makes permanent. How you interact with your customers is a habit. You will continue to deal with your customers in the same way until you identify alternate activities and create new habits. The first step in making a change is making an assessment of your current activities.

You are already performing some activities that support each of the principles, but you may not be getting all the results you want. Throughout this chapter, we will identify your habitual activities and which principle these activities can be mapped to. This process should help to identify your weakest and strongest areas in creating loyalty. As you navigate through this process, you should notice that some activities support more than one principle. For example, if your business offers a product warranty that is substantially better than your competitor's, the warranty can be mapped to value and assurance, as well as to differentiation. The warranty is an activity that supports value and assurance, but because it is so far superior to what is offered elsewhere, it is also a differentiator. Every activity you perform has the possibility of serving more than one principle.