Customer Loyalty Definition
By: Ellen Goodwright
The True Meaning of Loyalty and Customer Service
Although customer loyalty is often achieved through offers, discount coupons, rebates and other kinds of rewards, long-term customer loyalty can only be created by making your customers feel that they are your number one priority.
My Definition of Customer Loyalty
If I were asked to define customer loyalty, my definition would look
something like this:
"Customer loyalty is when an organization receives the ultimate reward
for the way it interacts with its customers. Loyal customers buy more,
buy longer and tell more people - that's true customer
loyalty."
Competitive advantage can be achieved through customer loyalty.
This is the way to gain the best kind of customers, repeat customers.
Repeat customers tend to spend more money and provide the best
word-of-mouth advertising.
Organisations that use loyalty schemes such as Staples and American
Airlines are constantly looking at the customer lifetime value (LTV) and
other customer data. This information combined with providing customer
service excellence can lead to long term loyalty.
One of the latest schools of thought is concerning Net Promoter. NPS is
calculated by subtracting the percentage of customers who are detractors
from those that are considered promoters. This simple concept is now
being used across many companies both large and small.
Another way to create customer loyalty is through branding. One of the
world's largest retailers, Carrefour, uses a far reaching customer loyalty program in order to
help it achieve competitive advantage by focusing on high customer
experience standards.
An entire industry has evolved to help others achieve your customers.
Ipsos generates millions of dollars in revenues, helping companies
achieve customer and employee loyalty and satisfaction.
One important thing to remember is that not all loyal customers are
profitable. Complex loyalty schemes, discount coupons and offers can
sometimes cut into the bottom line. Careful analysis of profitability is
advised.
It is often thought that the 80/20 rule applies to customer loyalty and
customer profitability. For example 20% of your customers can quite
often provide 80% of your profits.
Call centres have a part to play in building customer loyalty. The
better rapport call center advisers have with customers, the more likely
customers are going to be loyal to that organisation and its brand.
In summary, customer loyalty can be achieved by communicating well and
caring for your customers on a consistent basis, and putting them at the
heart of everything that you do.
