Someone said to me recently that in their industry there is no loyalty anymore. Customers are shopping around, chasing the best price. In some cases that is true, but I cannot help thinking how hard are we all working to earn loyalty?
A few years I went to a restaurant that completely surprised me. Halfway through the evening the owner came out of the kitchen carrying a bottle of vodka. A cheer went up across the room. Clearly the regulars knew what was coming. He poured free shots for everyone. It probably cost him no more than 30 or 40 dollars. I have never seen that before or since, but the place was packed and the customers clearly loved it. Apparently, the restaurant was busy every night as people kept coming back. I am sure it wasn’t the only way, but the restaurant had created a way (maybe against the rules slightly) to encourage customer loyalty.
Contrast that with a recent experience I had buying a couple of computers. The deal looked pretty good online, but the fine print was full of fishhooks. In the end it was too hard to claim the offer, so I gave up. I am pretty sure they knew that would be the case when they set it up. Yes, they got the sale from me once, but they lost my loyalty. I doubt I will ever go back. Loyalty is a tough one to maintain when trust is broken.
I have seen some research recently in the Harvard Business Review that highlighted that 5 years ago 76% of companies that had a need would go back to their same professional services provider. Today that number has dropped to 53% and that expectation is to drop to 37% in another 5 years. What this tells us is that generating loyalty is becoming harder to maintain.
So, what creates loyalty? You may not need to give out vodka shots, but you do need a reason for people to keep coming back. The restaurant had their “secret sauce”. What is yours?
A friend said to me all he wants from a mechanic is to be able to trust them, I would say the same for a lawyer. For a tradesperson you want them to do a good job, but you want them to turn up when they say they will. Airlines have done well with points and lounges, they create loyalty. Pak n Save focuses on providing the lowest prices, a few big box brands have followed that strategy.
Customers may be loyal for reasons you do not even recognise, or they may quietly walk away. If your only lever is price, that is a risky strategy, if your only lever is that your clients like you that is also a risky strategy. If your customers see you as a critical partner, if you are seriously adding value or taking pain away then that is a good strategy.
So how do you advance it?
- Build trust: Deliver consistently, be transparent, and keep your promises. Loyalty is tough to keep if trust is missing.
- Create experiences: do little things to leave lasting impressions. It does not have to cost much sometimes it is simply about making people feel valued.
- Personal touch: Remember names and past interactions. Customers notice when you treat them as individuals rather than transactions. Sorry to tell you but that is what your CRM should be doing for you.
- Reward loyalty: A simple thank you, exclusive offers, or early access can create a sense of belonging.
- Don’t forget about your customers: How many times have you seen offers to new clients that are better than what their long-term customers get?
- Educate and add value: Show customers how to get more from your product or service. If you help them achieve better outcomes, they will see you as a true partner.
- Build community: Whether online or in person, people want to feel part of something bigger. Community is gold!
- Be better than AI: Human touch is important for now, will it be important forever who knows but we do need to find our way to add more value than customers receive online.
The next 5 years is without doubt going to test us all in how we can continue to add value to customers. We can never take loyalty for granted.
If I ever end up owning a restaurant, the shots are on me!
