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How to build shopper loyalty (it’s cheaper than earning new customers)

(BUSINESS) If it’s less expensive to hang on to a current customer, how exactly does one go about building shopper loyalty?

shopper loyalty

Entrepreneurs and new business owners often fail to appreciate the difficulty of attracting new customers. Entrepreneur magazine refers to this as “field of dreams marketing.” It is assumed that unlocking the shop or advertising a service will result in customers coming through the door or ringing the phone. In reality, however, getting new customers is an expensive and lengthy endeavor.
This is why experienced businesspeople will do all they can to hang onto a customer once they have one. It is significantly cheaper and more effective to keep an existing customer than get a new one. That does not mean it is easy to keep them though. What are some best practices for building shopper loyalty?

First, great companies know what their customers want. This does not mean successful entrepreneurs must be telepathic. Nor do they need to give every customer a survey at the cash register (please no more). In retail, most customers are signaling what they expect when they walk into a store. If it is a clothing store, they just might be there for some clothes. If it is a coffee shop, guess what? They want coffee.

Businesses occasionally spend far too much time and money on the assumption customers might want something other than the items already on the shelf. Nobody proves this point better that Google. One of the most successful companies of our time still rolls out their flagship product as a simple search field in the center of a big white space. They know people who go to a search engine just want to search.

Second, great companies give their customers what they want. If a customer enters an electronics store to purchase a phone and the clerk spends 20 minutes trying to sell her a tablet, selfie-stick, or camera, then the customer’s satisfaction level will be low. Perhaps she will purchase the phone, but she will not be eager for a return trip. Had the clerk simply sold a great phone, the customer just might have popped back in sometime for that tablet.

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Today’s shoppers value their time, are well informed about products, and typically know what they want when they enter a shop. Major American cable companies are learning this the hard way as customers leave them in droves for smaller, nimbler streaming services that will simply give them what they want without pressing them to pay for many channels they have no interest in.

Third, successful businesses give customers more than they want. This is not the same as selling them more than they want to buy. For example, if you walk into the Asian coffee retailer J.Co and order a cup of coffee they will give you a donut too. Surprise! No one complains about a free donut. Even customers who refuse it for health reasons will be impressed that it was offered. That extra benefit, although small, draws people back. Giving away donuts is much cheaper than advertising for new customers and it eventually increases sales.

How to apply this principle will depend on the particular business. A cleaning company can refill the bathroom soaps, a bakery can include a serving knife, and a dress shop can give away a nice garment bag. To be most effective, these should be unadvertised surprises. They are not a benefit the customer is paying for; rather they are examples of going above a beyond. These little extras increase customer loyalty and will improve sales.

Fourth, the best companies give customers an excellent value on what they want. There are few shoppers in this world with truly unlimited budgets. In reality, most people are motivated by good prices. Walmart climbed to the top of the retail world with its motto, “Always the lowest price. Always.” This does not mean a business should strive to be the cheapest option every time. However, it does mean that customers should never be overcharged and pricing schemes should be clear.

Start-up companies are sometimes tempted to overprice goods and services because they are desperately trying to build good income streams. This is a temptation that must be avoided. Customers who feel they are getting what they want at a reasonable price will likely return for more. If they do, it will not take long for new businesses to grow a healthy income.

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Knowing what a customer wants, giving it to them (with a little extra), and at a good price will draw them back again and again. Implementing these ideas is not rocket science. New business people can find inspiration by imagining themselves on the other side of the counter. What would they want if they were doing the shopping?

“Do unto others as you would want them to do unto you” is a great rule for building customer loyalty. The results can be truly golden.

The American Genius is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.

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  1. Pingback: Study: No one wants to deal with customer service reps anymore - The American Genius

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