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Understanding Customer Loyalty

Aug 17, 2007
It is a well-known fact that it costs many times more to acquire a new customer than to keep doing business with your existing ones. For this reason, the best way to become profitable is to have loyal customers who keep coming back again and again. It's all about relationship building. So what can you do?

1. Track Your Customers

You should have at least two mailing lists: one for your prospects (people who might buy from you), and one for your customers (people who have bought from you). You should lavish attention on both lists, but especially on the existing customer one - and really lay it on thick for anyone who has bought from you more than once.

2. Be Crazy about Feedback

You need to phone up as many customers as you can to get their feedback after they deal with you. Make sure they were satisfied with what you provided, offer to fix anything that they're not happy with, and ask them if they can think of any way you could improve. Customers will appreciate this - and they'll like it even more if you actually implement their suggestions. Asking your customers what they want gives you an advantage over your competition. If you know exactly what your customers want, and you give it to them, they will keep coming back for more.

3. Customers Aren't As Loyal As They Used to Be

It used to be that customers would find one service that met their needs and stay with it for years. Now, though, customers are fickle, and can all-too-easily be tempted away by a competitors offer if they feel that it sounds cheaper or better than yours. So-called loyalty management has become more of a science than it ever used to be, and it's one that you need to make use of if you don't want to be constantly failing to retain your customers. It pays to test and to track your customers.

4. Offer Discounts For Repeat Business

You will see some businesses who give people a first-time discount, as a hook to get people to try their services. This is entirely the wrong way to do it. What you should be trying to do is reward loyalty by giving people a discount each time they use your services. Over time, this makes it so that moving to the competition looks like a ridiculous proposition for them - why would they when they get a 20% discount from you every time?
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