Building a Loyal Customer Base
In this post and in a few forthcoming ones I intend to dwell upon key factors that builds a loyal customer base.
Clear customer focus and a customer centered/driven value-chain are hygiene factors to build loyalty in today’s cluttered market place. Customer centric processes are not only mandatory in CRM functions like Sales, Marketing and Service/after-sales support but also in the core functions like order processing, manufacturing and product development.
Some of the key parameters that I can think of which drive Customer Loyalty are as follows
1. Choice (product Assortment / Variety) : Having multiple options for customers to choose from your own brand ensures customer retention as this discourages the customer from looking for a better alternative. This , with a prudent strategy around the product line and categories can help build a loyal customer base. This helps draw more footfall and potential customers by inviting /catering to a wide and varied customer base.
2. Exclusivity : Although apparently contradictory to the above-said parameter, Exclusivity can be created by having select connoisseur or collectible or designer made goods or specialists delivered services available at a premium under the same brand (with perhaps an extension). This exclusivity need not only arise from price premium but also emerge from the relationship the customer shares with the organization , value the customer has contributed , influencing and bargaining power of the customer andany other factor that can be of mutual benefit to both the marketer and the customer. Promotion and offers that are targeted to not only reward the loyal customers by differentiated pricing /discounts but also to encourage others to keep choosing your brand are successful strategies.
3. Convenience : The traditional 4 Ps of marketing where Place/ location / accessibility was a criterion still holds good and is now broadened to indicate convenience in shopping (access). Having multiple channels to place orders, track them , minimizing customer dissonance through convenient return terms , guaranteed services or products and quick delivery are some of the key factors that makes shopping convenient for the customer encouraging repeat purchase. A classic example in this case is Amazon.com which has built an ever-growing loyal customer base with its customer centered process design.
4. Sense of Belonging: This can be developed by helping the customers not only buy into the core aspects of the corporate brand but are empowered to become co-owners of the brand . Social Media and Conventional Concept/product testing methods allow customers or prospects to act as co-creators in products or services. This is clearly a win-win proposition as the risk of failure for a product or new service launch in the intended segment is much averted through a carefully designed offering created and influenced by the customer who desires to use it. Firms in the hospitality industry or services , can also create a sense of belonging by having a genuine concern for customer service and proactively sensing and addressing articulated and unarticulated customer needs. Staff , Systems and Processes should all be built with this philosophy in mind to build a loyal customer base.
5. Heightened Exit Barriers : Drawing from Porter’s five forces, I believe creating a heightened exit barrier for the brand in the mind of customers is essential to build loyalty. These need not be restricted to financial gains but emotional/perceptive as the customer delight factor created by your enterprise should make it difficult for the customer to defer or look for alternatives.You have succeeded as a marketer if the customer is convinced that none and nowhere else she can get the value , both tangible and intangible that she receives from your organization.
6. Switching Costs : The substitutes available for your enterprise should be minimized as much as possible by creating a very compelling and unique value proposition . A keen eye to combat competition or preempt trends through innovation and best practices in the core operations will differentiate the firm as a leader in the cluttered market place.
7. Micro Segment or make a segment of 1 : In reality there is no segmentation that has purely homogeneous customers as each individual responds differently to varied cues. A marketer should ideally target for a segment of 1 and hence design the product or service offering to be flexible for personalization or any extent of customization that can delight the customer. Modularization and having multiple configurations are just a part of this strategy but giving importance to past purchase history and buying preferences of the specific customer would also be key.
8. A 24X7 listening ear to the customer through forums to receive customer feedback , concern, complaints or appreciation. Service channels would also play a key role in gathering this data . A quick resolution would encourage your customer to be more loyal than having a non-responsive or absent service channel.
9. Forming Intelligent Clusters is also a proven strategy to build loyal customer base. Looking at your customers also as households in a banking industry or family health care insurance plans to collective library membership and innovative tariff plans for friends/family/peer groups build more loyalty to the brand by increasing the value proposition.
10. Repeat the Customer Experience and Cement the Brand Image : Last but not the least , a marketer must take conscious efforts to include repeatability and predictability to the customer experience with the brand. You may want to read more on my thoughts on this at Customer Experience: The Foundation for Customer Retention and Loyalty.
As Customer Loyalty and Experience are broad topics, I intend to write more . I believe hearing your thoughts on this post would be enriching. Do write in.
