Generating and Increasing Loyalty

Making Customers More Loyal to Your Micro-Business

Many micro-business owners spend more time trying to attract new customers than looking after the ones they already have. However, an existing customer is more likely to buy from you again as they know you, so are often a more important source of additional sales than new customers.

Getting existing customers to repeat purchase needs two things; keeping them and selling more to them. This means increasing their loyalty.

The Loyalty Ladder

There isn’t really a single point where you can say; ‘loyalty now achieved’. It is a continuous spectrum ranging from complete disinterest through to a willingness to work closely with you, sharing both your successes and risks for mutual benefit.

A concept that describes this is process is the ‘loyalty ladder’ (explained in Relationship Marketing; Creating Stakeholder Value by Christopher et al, Elsevier, 2002). Customers move through the stages below, with a micro-business using marketing activities to move them to successfully higher stages – or degrees of loyalty.

Prospects – These people may not even have heard of you so the aim is to seek new customers. This is where ‘acquisition marketing’ activities are used, such as those explained in Types of Advertising.

Customer – The Prospect has now purchased from you, but only once. As it is an early stage in the relationship, you need to make sure they are happy with what they’ve purchased.

A ‘Welcome Programme’ often helps here, which means providing them with details of your company’s product offerings and encouraging them to try other products. They are likely to be favourably disposed to buying from you again at this point, providing the initial purchase experience was satisfactory.

Clients – If the Welcome Programme has been sucessful and they’ve made subsequent purchases, you could consider them as having a higher degree of loyalty than someone who has purchased only once from you. Now it might be time to think about implementing a ‘loyalty programme’. This involves keeping in touch regularly to remind them of the benefits of your micro-business and its products, always encouraging them to buy more from you. The more they buy, the more loyal they become.

Supporter – By this stage they like and trust your micro-business. They feel comfortable that you have their interests at heart and will look after their needs. They’re still vulnerable though. If a competitor comes along with a better offer or you fail to deliver, they may consider using someone else. You need to maintain the loyalty activities.

Think of a Supporter as someone who would recommend you to a friend or colleague if asked for a good supplier of your product or service. They can be good targets for Recommend-a-Friend schemes.

Advocates – Customers at this stage are likely to promote your company without being asked first. They may depend on you for a particular aspect of their lives or business, they rely on you as a trusted partner and wouldn’t want to lose you. Spend time with them, it would make a noticeable impact on your bottom line if they were lost.

They may also welcome the opportunity to help you develop your micro-business further as it makes them realise that you value, respect and appreciate them. Invite them to regular forums or focus groups to discuss new initiatives and perhaps even to the annual Christmas party.

It is likely that you will have few Advocates but slightly more Supporters. You’ll have more if you’ve been in business a long time, but most of your purchasers will probably be at the Customer or Client stage.

Don’t forget to devote some time and attention to Customers and Clients as they are more likely to buy than your prospects are. You can’t neglect Prospects as you need a regular flow of new customers, but they are a harder sale. Focus your resources on where you are likely to get the greatest returns, i.e. Customers and Clients.

For hints and tips on how to do this, read Managing Existing Customers.