15 Ways to Improve Customer Loyalty

Is the loyal customer a relic? Isn't customer loyalty dead?

Many think that the lowest price is the only thing that keeps a customer returning. But, take heart. Customer loyalty is alive and well. Look no further than Dell, Harrah's, Starbucks, USAA, Chick-fil-a or Harley-Davidson, to name a few, and you'll find companies that are consistently earning customer loyalty while their competitors struggle.

But, what is this thing called customer loyalty?

How can you recognize it?

Why is it so critical to every company's long-term success?

A loyal customer is one who...

• Makes regular repeat purchases
  
  
• Purchases across product and service lines
  
  
• Refers others
  
  
• Demonstrates immunity to the pull of the competition
  
  
• Can tolerate an occasional lapse in the company's support without defecting, owing to the goodwill established through regular, consistent service and provision of value

A common denominator runs through all these behaviors and helps explain why loyalty and profitability are so inextricably linked: Each behavior, either directly or indirectly, contributes to sales and profitability.

The financial rewards of loyalty run deep. Bain & Co. research shows that a decrease in customer defection of only 5% can improve a firm's bottom line profits 25-85%, depending on industry. Likewise, in some sectors, an increase in customer loyalty of just 1% is equivalent to a 10% cost reduction, Bain says. The bottom line is this: Loyalty pays.

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Jill Griffin (jill@loyaltysolutions.com) is president of Griffin Group (www.loyaltysolutions.com), a loyalty research, seminar, and consulting firm founded in 1988. She is author of Customer Loyalty: How to Earn It, How to Keep It and co-author of Customer Winback: How to Recapture Lost Customers and Keep Them Loyal.