Focus on Increasing Customer Loyalty to Increase Small Business Revenue
Generating brand, product and service advocates is paramount for small businesses seeking to grow company revenue and meet long-term growth goals.
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by Anna Hutson
April 29, 2011
Anna Hutson has been with Formic Media since the company's inception,
managing and executing search engine optimization (SEO), pay-per-click
(PPC) and social media marketing initiatives for a variety of clients,
including Microsoft, Prometheus Real Estate Group, Continental Van
Lines, Oregon Humane Society, Rasmussen BMW & MINI, thinkProducts
and the Heathman Lodge. Leveraging her attention to detail and desire to
provide top-notch customer service, Anna develops overall search engine
marketing strategies and manages tactical implementation and
measurement. She has been a guest speaker at conferences such as the Software Association of Oregon (SAO) and the Oregon Association of Nurseries (OAN), and regularly contributes to Formic's blog and monthly Seminar Series.
Hutson also supports the company's overall marketing efforts, including
attending local SEMpdx and PdxMindShare industry events. Hutson's
background includes developing, executing, and measuring integrated
marketing campaigns using traditional media avenues for clients at
Datamark, Inc., a direct response, lead acquisition management agency in
Spokane, WA. Hutson earned her Bachelor of Arts degree in Public
Relations from Gonzaga University and is a proud "Zag for life". Also a
Seattle native, Anna brings a Pacific Northwest love for the outdoors
and can be found cheering on the Zags, playing with her dog, downhill
skiing or volunteering her time with Start Making a Reader Today (SMART).
| Anna Hutson
has written 3 articles for PromotionWorld.
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Generating brand, product and service advocates is paramount for
small businesses seeking to grow company revenue and meet long-term
growth goals. Working with small businesses on a daily basis has given
me a deep appreciation for the impact that loyal customers and brand
advocates can have on a business. It is important for small businesses
to use their resources and time to keep their loyal customers loyal.
A study conducted by Fred Reicheld of Bain & Company, Inc. stated that “a 5% increase in customer
retention produces more than a 25% increase in profit”. For many
companies, this correlation between customer retention and profit could
result in hundreds of thousands of dollars in annual revenue gained.
And, not only do loyal customers mean continual revenue, but they can
become a powerful source of word-of-mouth marketing and promotion for a
company or brand.
3 ways loyal customers help increase revenue for SMBs:
- Gaining New Customers (and revenue) – Happy
customers turned brand advocates can become a source of word-of-mouth
advertising for a business. These brand evangelists are essentially a
free field marketing/promotion team, singing a company or brand’s
praises to friends, family, co-workers and connections.
- Cutting Costs – Loyal customers tend to be lower
maintenance, reducing the need to spend time and resources “selling”
them on products or services. Instead, continue to delight these
customers and deliver results and they will stay with you forever.
- Saving Time – Brand advocates are also happy to
defend and promote your brand to that one discontented customer who just
posted a scathing review on your Yelp or Google Place page. Instead of
having to spend additional time mitigating with an unhappy customer,
your community of advocates will come to your defense, often sending and
even more powerful message to prospects and potential customers.
So, how do you create a loyal customer?
- Make a Good First Impression – It all starts with
the first time a customer interacts with your brand or company. This
may be before they even walk through your doors. A great example of this is the AVIA Long Beach Hotel whose guest services team proactively
created a positive and welcoming guest experience before their guests
even arrived at their hotel. First impressions don’t necessarily make
or break a deal, but they can certainly aid in securing loyalty and
brand advocacy from your customers.
- Listen to your Customers – First, create and provide social media outlets for customers to provide their feedback (claim profiles on Yelp, Google
Places, Twitter, Facebook, etc. to ensure you as the business owner has
full Admin control over them). Next, ensure that customers can find
these profile pages by sending links via social media and email
newsletters, and proactively monitoring what customers are saying about
your company or brand.
- Take Action – The last thing you want to do is make
your customers feel ignored or undervalued. If you’ve provided the
feedback outlets and social media/review profiles (and even if you
haven’t) you need to respond and act on what they are saying. Don’t
ignore what’s being said. If the feedback is positive (terrific), the
comments should still be acknowledged, just as negative feedback needs
to be addressed in a timely and professional manner.
- Know When to Walk Away – While negative customer
reviews can be a major set-back to the success or credibility of a
company, small businesses need to be wary of casting too wide of a net
trying to please everyone (you can’t please everybody). The idea that
every single person should be converted into a brand evangelist may seem
ideal, but is not a realistic goal for a small business with limited
funds and resources. Focus on catering to your target market, and
deliver world class products, service and results to those in that core
- Tap Your Employees – A small businesses’ employees
are typically the ones engaging with customers on a daily basis.
Incentivize those in customer service to keep customers happy. This
will help to generate reviews and referrals, which will help to elevate
the credibility of a company or brand. Delighted customers won’t
hesitate to post a review or recommendation if you ask.
When limited resources are a factor, small businesses need to make a
decision regarding which customers are the most likely to become brand
advocates. It’s important to decide where customer service efforts will
be most effective and where to allocate time and money. A terrific
post by Hugo Guzman,
proposes that businesses should focus on marketing to (and servicing)
their brand advocates and not their brand “malcontents” who are never
going to become fans (or at least not without significant time and
resources being drained in the process).
It’s not an ideal situation for small businesses to reinvent the
wheel marketing and selling to customers who may never be a good fit for
their product, brand or services. Small businesses can cut costs and
save time by instead keeping their current customers happy, instilling
loyalty and securing that brand evangelism. In the end, it is more
cost-effective for small businesses to retain happy customers and
thereby expand opportunities to cost-effectively grow revenue.