Companies that fail to build customer loyalty are unlikely to thrive in the current market environment. Increasingly, in fact, firms that fail to earn the loyalty of their customers are unlikely to survive. The importance of customer loyalty to any organization has increased exponentially during the last few years. The firm that fails to treat customer loyalty as a business goal puts their firm at risk.
Loyalty, thy name is dog.
The traditional definition of customer loyalty can be found in the business dictionary: “likelihood of previous customers to continue to buy from a specific organization. Great attention is given to marketing and customer service to retain current customers by increasing their customer loyalty. Organizations employ loyalty programs which reward customers for repeat business.” [Retrieved 2/26/13]
Customer loyalty once referred to consumers and to programs and offers that would keep a consumer buying from a firm again, and again. Growing understanding of the power of word of mouth marketing and of the importance of repeat sales to business customers challenged many B2B organizations to think about customer loyalty and retention.
The Internet, and social media in particular, magnified the importance and the reach of peer-to-peer recommendations. The Internet also changed how people research purchase decisions, making it possible to find quickly the lowest price or the best deal on a product seconds before actually making the purchase. For complex purchases and high-value products, the Internet redefined the role of the sales person and the selling process. Customers now typically research purchases online and interact with a sales person only when they are ready (and knowledgeable enough) to buy.
Recommended for YouWebcast: Winning with Data: Drive Leads & Marketing ROI across All Channels & Campaigns
Concurrent with the rise of social networking online, an increasing distrust of marketing and sales messaging among consumers evolved. The old saying that “People want to buy from you; but they do not want you to sell to them,” has never been truer. Today, customers (consumers and businesses) want your company to answer their questions, earn their trust, and provide the information they need in order to make a purchase decision. Yet, regardless of the merits and benefits of your firm’s products and/or services, your customers rely heavily on the experiences and opinions of people in their social networks.
The definition of “customer loyalty” offered by the Customer Loyalty Institute is a step in the right direction: “customer loyalty is all about attracting the right customer, getting them to buy, buy often, buy in higher quantities and bring you even more customers.” [Retrieved 2/26/13] Yet, this definition fails to incorporate the power of social media influence or its reach.
WiseGeek offers the most relevant definition we found on the web in a recent search. According to WiseGeek, “The term customer loyalty is used to describe the behavior of repeat customers, as well as those that offer good ratings, reviews, or testimonials. Some customers do a particular company a great service by offering favorable word of mouth publicity regarding a product, telling friends and family, thus adding them to the number of loyal customers. However, customer loyalty includes much more. It is a process, a program, or a group of programs geared toward keeping a client happy so he or she will provide them more business.” [Retrieved 2/26/13]
If we can accept the latter definition of customer loyalty, it becomes apparent that in the current market environment, every business (B2C or B2B) must elevate customer loyalty to a level of importance justifying strategic planning and implementation throughout the organization and at every customer touch point. In the social media era, businesses that fail to build and nurture customer loyalty are not likely to thrive. Not only will the word “get out”; the word will be broadcast, and it will travel farther than you ever imagined possible.
Customer loyalty is about far more than a repeat purchase today. By elevating customer loyalty to a business goal, you are in a better position to ensure your entire team is alert to opportunities to build customer loyalty and you can support them with programs, processes, tools, and an appropriate range of loyalty rewards for customers. If you recognize the long-term importance of elevating customer loyalty to corporate goal status, you will quickly recognize that it takes the entire company to breed loyal customers who will guarantee the future of your firm.
Watch for our next post: How to Make Customer Loyalty an Achievable Business Goal.