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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

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).

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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:

  1. 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.
  2. 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.
  3. 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?

  1. 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.
  2. 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.
  3. 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.
  4. 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 audience.
  5. 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.



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