Amidst the frenzy of courting new customers, it’s easy to forget about the loyal customers you’ve already won over. In business, as in love, the old adage is true: a bird in the hand is worth two in the bush. Most sources estimate that it costs between four and ten times as much to attract new customers as it does to keep existing ones. Plus, loyal customers spend more than new ones.

As Fred Reichheld writes in a report for Bain, “Across a wide range of businesses, customers generate increasing profits each year they stay with a company. In financial services, for example, a 5% increase in customer retention produces more than a 25% increase in profit. Why? Return customers tend to buy more from a company over time. As they do, your operating costs to serve them decline. What’s more, return customers refer others to your company. And they’ll often pay a premium to continue to do business with you rather than switch to a competitor with whom they’re neither familiar nor comfortable.”

If loyalty, like old friends, is gold, then what’s a great way to maintain loyalty? Customer appreciation.

Today’s consumer is a finicky creature. Influenced by social trends and empowered by technology and new channels (such as social media), buyers are better informed, less patient, and more demanding than ever before. High customer service standards established by one company influence the level of service consumers expect from all. The same holds true for customer appreciation. Consumers today see right through gimmicky marketing attempts to flatter them. Instead, they want true expressions of your gratitude.

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So, what’s the best way to show customers what they mean to your business? Loyalty programs are a good start, and these exist in many forms. From a punch card from the local coffee shop to Thank You coupons from major retailers, an offer for return customers goods and services at a discount keeps them coming back. Events are another popular way for bricks and mortar businesses to thank customers for their patronage. These can be simple or lavish, depending on the brand.

Memberships and credit cards can lock in customers who value the perks associated with certain programs. Whether it’s free in-flight WiFi or fifteen percent savings on snacks from airlines like Virgin America, or special members-only sale event hours that gives customers the run of Nordstrom’s, there’s no doubt membership has its privileges.
The only problem with these perks is how universal they are and how easily they can be duplicated (read: one-upped). As customers get increasingly savvy about chasing the best deals, loyalty programs are under constant scrutiny. Sure, if you’ve built up 500,000 miles on one airline you’re likely to keep flying them, but a coffee punch card only works until the café down the street comes up with something better. Customer appreciation 1

One way companies can maintain a more proprietary relationship with their customers is by opening the channels of communication to encourage feedback. It’s a simple truth that customers who feel heard feel appreciated. Even better than finding multiple ways to solicit feedback is actually using that feedback to make changes. Smart companies understand the feedback is a gift from their customers, especially the ones who have been with them for the long haul. Whether it’s asking about a recent experience with a product or service, or requesting information about what changes they’d suggest to improve the customer experience, soliciting and then acting upon customer feedback is a powerful relationship-builder.

Despite these, and other tactics, keeping customer relationships real increasingly demands that companies do more. These days, customers yearn for more than membership discounts or rewards points. They’re seeking out more authentic experiences from their brand relationships. This new reality is partly a function of the Millennial mindset. Millennials as a cohort approach brands in a very different way than do Boomers and Gen Xers. Personal attention is high on their list, and if a company can find a way to show that they “get” them, so much the better.

Translation? Companies that are creating lasting relationships with their customers–and nailing the appreciation game–are to offer them experiences and opportunities that reflect strong values. They’re creating a connection that goes beyond the product or service they’re selling. Frequently, they offer customers a shortcut to a lifestyle or value system they seek but can’t or won’t attain on their own. This form of customer connection is powerful. It’s not simple to create, it’s hard for competitors to replicate, and, it’s not something customers walk away from easily.

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Patagonia sets the standard when it comes to tapping into a strong understanding of its customer values. Introduced in 2011, Patagonia’s Common Threads Initiative allows customers to reduce their environmental footprint by participating in a program that supports repairing reducing, reusing, repairing and recycling Patagonia clothing. In the process, the company allows its customers to join them in reimagining “a world where we take only what the planet can replace.”

What works so well about Patagonia’s approach to customer appreciation is its strong values, point of view, and belief that its customers share that vision.

Chiaki Nishino, senior partner of the branding consultancy Prophet, has advice for companies who want to invest in their existing customers, and keep them for the long haul:

“First, stop thinking ‘programs.’ Think experiences instead,” advises Nishino. “That will help you with the second imperative: go beyond the transaction to find the emotional hook with your customers.” Nishino echoes a fact about today’s consumer: “Customers want to be recognized, not necessarily rewarded.” He goes on to make a case for ensuring that a company’s loyalty approach is “tied to the brand“ noting that “Too many are not positioned or communicated in a way that aligns with the brand and its positioning, blunting their effectiveness.”

“Fourth, while there are business frameworks for loyalty programs, don’t let their use confine your thinking as to how yours should be designed. Innovate! Get as much feedback from customers and practices of other businesses that are setting new standards. Learn what people think about what drives loyalty, and use those findings to help guide new ways to engage with customers’ hearts and minds. And look outside of your category to get these ideas.”

While looking outside of one’s category may lead to some unintuitive match-ups, the most relevant alignment from a company’s perspective is with their customers’ values. Truly understanding their customers and where they’re coming from increases the likelihood that a company can tap into a movement or rallying cry that attracts a loyal following. But that’s not all – those core beliefs need to be an authentic part of the company’s mission and business model, if it’s going to resonate with consumers.

Clif Bar is another example of a company that successfully taps into the core passions of their customers. The energy bar company does more than sell energy bars—it builds communities of like-minded athletes who share a passion for outdoor adventures. No matter where on the continuum their customers sit (from nationally recognized ultra-runners to weekend warriors) they find a place in the Clif Bar community. With programs for pace runners, nationwide events, and athlete sponsorships, Clif puts its money where its mouth is. Their corporate brand values are reflected in the high bar they set for responsible sourcing, fair trade and sustainability. Most importantly, those messages are communicated quietly, not as a marketing gimmick, but as a core company philosophy that their customers can feel good about supporting.

Of the many options available to companies to thank customers for their loyalty, the most powerful ones sidestep the quid pro quo dance (purchase/reward) and deliver an experience rooted in shared values. In this way, customer appreciation ceases to be transactional and becomes something far richer. Companies win by attracting and retaining customers who can’t get the same experience anywhere else, and consumers win by finding a community or movement that speaks to them as people, not just customers.

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