Customer Loyalty Can Be a Startup Competitive Edge

You hear a lot of talk these days about the importance of customer satisfaction, but customer loyalty is the real win. A satisfied customer is necessary, but not sufficient, to be a loyal customer who will come back repeatedly, refer their friends and family to you, and be faithful even when your price is not the lowest. Herein lies an opportunity for startups to beat the big guys.

Not too long ago, everybody thought customer loyalty was dead. Price was everything, and customers would switch suppliers for pennies. I think these tough economic times and social networks have re-awakened consumers to the fact that there is more to a business transaction than price. People are tired of being serviced like a commodity by a faceless computer robot.

Whatever the reasons for the change, and there are many, it represents a big opportunity to the small businesses and startups who recognize it. Building customer loyalty means a first priority on keeping the customers you already have, rather than focusing always on getting new ones.

From my own research, here is a collection of seven top tips on how a startup or any company can build and maintain real customer loyalty:

1. Communicate more personally more often. Get to know your customers, and actually call them by name, or even remember their likes and dislikes. With today’s technology, make sure they get a monthly newsletter, a reminder care for a tune-up, or a holiday greeting card personalized just for them.

2. Educate your customers on your business. Today you have the tools, like blogging, videos, and new web technologies, to explain and make your customers appreciate what you do, and how you do it better than anyone else. They haven’t lost interest in cutting costs, so help them understand how you are a leader in this regard.

3. Customer loyalty begins with employee loyalty. Loyalty works from the top down. If you are loyal to your team, they will pass that loyalty to their team, and to their customers. Employee loyalty starts with good communication and training on their role, as well as how to better interact with customers.

4. Don’t take existing customers for granted. Many businesses will do anything to win the business of a new customer, but tend to ignore existing ones. Spend as much time thinking of special ways to reward existing customers as you do rewarding that first-time new customer. Don’t ever give better deals to new customers than existing ones.

5. Provide stability in terms and prices. Most customers tend to question their own loyalty only when prices go up, or their favorite option (like challenge-free returns) goes away. Do everything you can to show your customers how they can cut their own costs and yours too, like online service. Ask your suppliers for help in maintaining margins.

6. Be reliable and flexible. If you say an item will be back in stock by Monday, make it happen. If something does go wrong, be proactive in letting customers know and compensate them for the inconvenience. Be flexible in solving your customer’s problem. The phrase “That’s our policy” should be eliminated from your lexicon.

7. Don’t let customer service slip. As your business grows, it’s easy to lose your focus on customer service, or take away the empowerment and accountability of key personnel. Customers say it takes ten good experiences to make up for one bad one. If their experiences are all good, they will tell eight other people.

Statistics also show that building loyalty and retaining current customers is 3 to 10 times cheaper than acquiring new customers. Successful businesses realize that 80 percent of their business actually comes from a stable 20 percent of their customer base. You will grow faster and more profitably by nurturing this solid base of loyal customers, who then do the best job of selling to new customers, at no cost to you.

Marty Zwilling