Essential guide to building customer loyalty

Building customer loyalty gives you a high return on the time, effort and money you invest in providing good customer service. Loyal customers buy more, more regularly, and the cost of selling to them is low. And they will frequently recommend your business to others.

Understanding customer needs, providing good service, handling customer complaints well and staying in regular touch all help improve customer loyalty.

Making customer service a priority

Essentials of customer care

Encouraging customer feedback

Customer communications

Customer loyalty schemes

Employees and customer service

Customer relationship managment

1. Making customer service a priority

Make customer care a key part of your business strategy

• Effective customer relationship management means organising your business to focus on the needs of customers.
• Set out the levels of service you plan to offer different customer types. For example, you might assign key account managers to your most profitable customers.
• Make sure customer-facing employees have all the information they need to effectively serve your customers. Empower them to act independently, where possible.
• Draw up procedures for handling customer contact. For example, standards for speed and courtesy when answering phone calls.

Learn as much about your different customer segments as you can

• Find out what, when and how customers buy, and use this information to improve your service.
• Use CRM software to record information about buying habits so you can tailor your service and send relevant marketing emails prompting customers to buy again.
• Create opportunities for customers to tell you what they think of your products and services by asking for feedback and sending out customer surveys.

Develop a consistent brand identity

• If customers can identify with your company and feel good about it, they will be more likely to remain loyal.
• Create a consistent, clearly defined identity for your business or product. Use marketing, email newsletters, social media engagement and online advertising to build brand awareness.
• Make sure all social media communications are in line with your brand values.
• Provide consistently high levels of customer service.

Design and deliver a customer experience

• Customer service is how you handle customers whenever they contact your business.
• For example, do you address customers by their first name, or use a more formal tone?
• Follow up any queries with a thank you.

2. Essentials of customer care

Think of ways to make life easier for your customers

• Try to save the customer time and inconvenience at every stage of the buying experience. For example, provide a simple procedure for returning unwanted goods.
• Concentrate on providing quality service in key areas. For example, customers often complain that deliveries fail to arrive on time so it pays to prioritise prompt deliveries.

Identify and address weaknesses that could affect customer service

For example:

• Choose reliable suppliers. Build good relationships so they will help you out in a crisis.
• Set up a production process that minimises defects, rather than relying on inspection of the finished product.
• Establish systems and cross-checks to ensure that every order is correctly executed (the right product delivered to the right address on the right date).
• Make sure you have the capacity to fulfil orders and provide quality service. If necessary, take on extra staff or equipment.

Communicate effectively with customers

• Plan your communications to keep customers informed.
• Make it easy for them to contact you. Encourage customer feedback.
• Keep your promises and exceed expectations. For example, promising delivery in ten days, but delivering in seven.

Provide a personalised service

• Personalise all communications and the email addresses of customer-facing employees.
• If you use automated telephone systems, give customers the option of talking to an operator at any time.
• You may want to give high-value customers more. For example, giving each customer a named account manager.
• Use cookies on your website to improve the online experience for visitors by recognising them and recalling log-ins, previously viewed items and buying preferences.
• Try using chatbots on your website; these virtual shopping assistants can handle one-to-one conversations with customers and give them quick answers to simple queries.

Measure customer service levels

• Identify key performance indicators (KPIs). For example, the number of complaints you get, how many faulty goods are returned, order completion times, and how regularly you contact each customer.
• Monitor KPIs regularly and make changes if necessary. For example, if the proportion of on-time deliveries falls, you need to find out why.
• Benchmark your service against your competitors. Ask your customers who they think your competitors are, and how your service compares.
• You could use mystery shoppers to check standards of service at every point where customers interact with your business.

3. Encouraging customer feedback

The more you know about customers, the better you can meet their needs.

Provide opportunities for customers to give feedback

• Ask new customers why they chose you over the competition, and ask existing customers what you could do better.
• Make it easy for customers to get in touch by publishing your contact details on every piece of communication you send out.
• Actively encourage customers to engage with you on social media.
• Include a contact form on your website.
• Encourage customers with a concern to contact you directly. You may then have a chance to rectify an issue before it has escalated to a complaint.
• Thank customers for their feedback, and let them know if you make changes as a result.

Find out more about your customers

• Carry out customer satisfaction surveys. Keep the questions brief and specific, and offer an incentive for returning the form (for example, entry into a prize draw).
• Join the mailing list of any business customer newsletters or other marketing communications, so that you are aware of changes to their business, possible threats and new opportunities.
• Go to events and exhibitions that your customers are likely to attend.
• Regularly visit major customers if this is cost-effective, to demonstrate that they are a priority. Getting to know your customers will help to develop a loyal and trusting relationship.
• Think about involving customers in the development of new products or services.

Contact customers who have stopped buying, and find out why

• Assign a skilled person to this task. Otherwise lapsed customers tend to give easy answers, such as "you are too expensive", which may hide the real reasons.

Monitor and analyse the contact you have with customers

• Keep a record of customer feedback to help you identify common problem areas.

4. Customer communications

Plan your communications

• Regular interaction helps build trust and loyalty.
• Be clear about your aims. For example, you might want to turn your best customers into advocates who recommend you. Your communications might aim to keep your business in their minds, rather than sell products.

Focus on customer needs

• Give unbiased advice, even if it means no immediate sale for you. Nothing builds trust more effectively.
• Suggest products which will complement what they have already bought.
• Ideally, you should anticipate when they need to re-order.

Use every channel available to talk to your customers

• You might email customers regularly with useful news and updates. Make sure you have permission to contact them in this way.
• Use social media such as Facebook, Instagram and Twitter to provide updates on business developments, new product launches, achievements and awards.
• If your customers give you permission, keep in touch with them using SMS and WhatsApp.
• Respond to customer contact quickly and efficiently. This will demonstrate that their feedback is appreciated and acted upon.

Use positive body language with customers

• Show your customers you are pleased to see them. Learn their names, and use them.
• Be polite, friendly and positive. Smile, make eye contact and look and sound enthusiastic.
• Speak clearly.
• Show a personal interest. There is almost always time to discuss non-business matters. Be a good listener.

Make customer communication part of your after-sales service

• Explain what level of service is provided free of charge, and what is available at additional cost, at the time of the sale.
• Follow up with a courtesy email or call to check that everything is all right.

Comply with your legal obligations to keep customers informed

• Consumers are entitled to clear and honest information before they buy.
• Additional regulations apply if you sell at a distance (eg online) or offer consumer credit.

5. Customer loyalty schemes

A successful loyalty scheme can pay for itself by encouraging more frequent purchases. The most common loyalty schemes are based on offering rewards to loyal customers.

You can offer cumulative discounts

• A cumulative (or retrospective) discount gives customers money back when they reach a specified spending target.
• Retail businesses can offer loyalty cards which work this way.
• You may need to track customers' purchasing activity to flag discounts as they are earned. If customers have to ask for the discount, the scheme will be less effective.

Some schemes offer customers a discount off their next purchase

• Encourage prompt action by making the discount valid for a limited time only.
• Discounts may cheapen your product in the eyes of the customer. For this reason, businesses often prefer to make offers such as "20% extra free".
• If the customer would have made the purchase anyway, you may be wasting money.

You can relate your marketing to a local or national cause

• For example, offering to donate part of your profits to a local charity.

6. Employees and customer service

Make sure everyone gets customer care training

• Staff who have regular contact with customers should receive training on customer care. They are at the front line of your business and need to give an efficient, professional image at all times.
• Salespeople should be trained to listen carefully to the customer and address their specific needs.
• Everyone in the company should be taught how to handle customer calls and take basic enquiries.
• Make sure all staff understand how it will affect customers if they do not do their job properly. For example, production errors could delay a time-sensitive order.

Lead by example and care for your employees

• If you do not, you cannot expect them to care for your customers.
• Reward excellent customer service.

Encourage staff to work together to meet customer needs

• Avoid a blame culture where employees argue or blame one another in front of customers.
• Ask employees for ideas on how your customer service could be improved. Reward good ideas.

Keep employees informed about your customer strategy

• Involving everyone in the business helps them to understand your aims and objectives, as does keeping them up to date with changing customer needs.

7. Customer relationship management

Develop an effective customer relationship management system

• A good database or CRM system can help you to record, plan and manage contact with your customers.
• A central system allows all staff to access the same details and customer records.
• CRM allows you to analyse your customer base and identify the characteristics of the most profitable ones. You can plan marketing campaigns to target these and other potential clients - and track their success.
• Remember that your system is only as good as the information on it - your data must be kept up to date.

Examine other ways to use technology to boost customer service

• Integrating IT systems could provide tighter stock control, allowing more efficient ordering and delivery for your customers while reducing your costs.
• You could set up a secure extranet to allow customers to access key information such as pricing and stock levels, make repeat orders, give feedback or access manuals or other documents.
• Social media and website analytics can help you understand more about your customers; by using cookies on your website you can learn more about customer browsing and buying behavior.
• It may be possible to link your technology to that of both your customers and suppliers. Bringing the supply chain together in this way can produce more efficient order processing and financial administration.

Make sure you comply with relevant legislation

• If you hold information about your customers, you must comply with the General Data Protection Regulation. You may need to notify the Information Commissioner's Office of the information you are collecting, and for what purpose.
• If you send marketing emails, you must make sure recipients have opted in to receiving them.