What drives customer loyalty? I believe customers are loyal to businesses when their expectations are met time and time again. In my opinion, the execution doesn’t even need to be exceptional – it just needs to consistently deliver on the promises made. The biggest challenge faced by business owners is how to deliver consistently every time.
A marketing colleague of mine, Harry Thomas of Marketing Hat, laid this out plainly for me in the context of restaurants. People are generally risk averse. As a small business, you’ve got to first get them in the door with promises you make. You must then deliver on those promises, so they come back again. When the customer returns, you must deliver again in exactly the same way. If the experience changes each time, the aversion to risk will kick back in and make them hesitate to come back. To perform consistently time after time is incredibly difficult for smaller businesses. Larger businesses have infrastructure and processes built to drive the same experience. Customers know exactly what to expect every single visit. This is exactly what makes a franchise worth the money paid for it. So, how can a small company create customer loyalty?
Promises Made. First, the company must understand what promises it wants to make to customers in its messaging, effectively communicating those promises, and delivering on those promises. In many cases, businesses don’t even realize that their messaging is setting customer expectations that they cannot satisfy. Our guest speaker this month, Maria Ross of Red Slice and author of “Branding Basics for Small Business” will dive deeply into this in her blog post later this month and in our September 22 seminar.
Processes Created. The organization as a whole must deliver on the promises made. The delivery is executed by the team. A constant struggle, though, is how to deliver results consistently. Consistency is created through well-defined processes. These processes become core elements of the company’s existence and, therefore, build value for the company and its owners.
Intellectual Property Protected. To execute consistently, the processes in a business must be shared throughout the organization. Remember, though, if there’s a “secret sauce” in what you do, something that keeps the wheels well oiled that only you do, make sure you either keep it under wraps or ensure your employees understand that it is proprietary to the company and cannot be used or leveraged by the employee should he or she leave the company. Companies should have agreements in place with employees that ensure confidentiality of certain information, restrictions on contacting or soliciting customers or employees following termination, and damages for breaching these “restrictive covenants.” The damages element should be as specific as possible and include a dollar figure for monies owed if the employee discloses confidential information or steals an employee or customer of the company. In addition, the agreement should ensure that any processes or inventions created by the employee while working for the company belong to the company. These terms can be a part of the offer of employment or contained in a company’s employment manual. I want to emphasize that such restrictions are highly scrutinized by courts and are extremely situation specific. They must be carefully crafted as enforceability differs from state to state. The key factor, though, is to make it clear to employees and third parties that the company values its intellectual property and will enforce its rights.
Customer loyalty is about delivering consistently to your customers. How you do this comes from processes executed within your business. To the extent you can leverage well documented, well managed processes in your business, you will outperform your competition and keep your customers coming back for more.