Ellen Hopkins was the first to observe that we ignore those who adore us and adore those who ignore us. (Kanye may have said it too but Hopkins said it first). This statement is painfully true, and no more evident than in the realm of customer loyalty, where business owners often find themselves frustrated by regulars who visit daily and make small purchases. Quite often business owners focus their efforts on appealing to new customers at the expense of their most loyal customers who drive 80% of their revenue, in hopes of expanding their customer base to new face with potentially deeper pockets. I don’t mean to diminish the importance of new customer acquisition, but I would like to share some insights on why it’s important to reward your business’s most loyal customers.
“But My Customers Are Already Loyal!”
This is a refrain I hear often from business owners. It seems counterintuitive to offer specials to the people you see every day. Why would you offer a deal to someone who is already regularly paying full price for your services? For starters, your regulars may not be as happy as their buying habits might suggest. A recent study by Kitewheel revealed 25% of consumers are frustrated by a company’s inability to recognize them as a past or current customer. Nobody likes being taken for granted, and this frustration can intensify when regular customers see businesses offering deals and promotions to new customers only. Couple this with the fact that when asked, a third of shoppers in a 2015 study say the ability to earn points for extra savings is an important feature for them, and it becomes clear that businesses who don’t prioritize customer loyalty are putting themselves at a serious disadvantage.
Ask “Why Are Your Customers Loyal?”
Loyalty is a funny thing. It’s difficult to figure out what exactly makes a customer loyal. Every business likes to believe that their customers are loyal because they have superior service and quality products, but that’s not always the case. As best we can tell loyalty is some sort of cross section that involves quality of experience, convenience, and price. For a personal example, I’ve lived in the city of Chicago now for about 6 years and despite the fact that there are over 15,000 restaurants I eat at, there are only about 3-5 places I go to regularly. Even in my own neighborhood, I have a seemingly endless list of highly recommended restaurants, cafes, and shops to patronize. So why do I walk to the same pizza place several times a week? The answer seems simple on its surface: they’re right down the block from me.
This is not to diminish the quality of their pizza. The pepperoni there is fantastic and the slices are big and generous. I recognize all the employees and most of them recognize me whenever I come in. They’re open late and their food is top notch, but right now convenience is my primary motivator for returning. And convenience, while powerful, can also be fickle. Sure you’re the most convenient option right now, but can you always count on that?
Your Loyal Customers Are Being Relentlessly Pursued by Your Competitors
The sobering reality is that all your customers are constantly being targeted by your competitors with free items, aggressive discounts, and loyalty programs. Web advertising is omnipresent and your customers are being bombarded with offers every time they check their smartphones. Fortunately customers acquired through daily deals can be notoriously flighty. Just because a rival business offers your customer a freebie does not mean they are gone forever. But let’s go back to my previous example of my neighborhood pizza joint. If I were to be targeted by a rival pizza joint 1-2 blocks away with free pizza I wouldn’t be able to resist. I would have to at least check the place out, and if I discover they have a program that rewards customers for repeat visits, my local joint may just be in trouble.
Customer loyalty is a long-term relationship, and like any relationship, little gestures can go a long way. Your regulars are the lifeblood of your business. An extra discount or a free slice here and there for the customers who know you best is always appreciated, even when they’d normally pay full price without a fuss. Leverage your loyalty program to help long term customers feel the magic of the first time and they will keep coming back happy!
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