NOW is the time to…BUILD LOYALTY

BUILDING LOYALTY is a big bucket of money sitting there, waiting to be picked up!

It is also one of the most significant ways a company can leap ahead of their competitors. But these can only happen when you have a strategic focus on building Loyalty with your audience. Before I share how you can build massive Loyalty, let me clarify one thing. You can only earn Loyalty from your Customers. It should be the goal of every company to get all their desired customers to the status of Loyalty…it’s money in the bank.

Customer Lifetime Value (CLV)

Speaking of money in the bank, do you calculate a Customer Lifetime Value (CLV) for each of your customers and customer groups? If not, I highly recommend you start here. It is an excellent way for you to get some hard analysis on which customers make you the most profit. It is one tool I find many companies are not using (yet) but will open your eyes to some fantastic information when you go through the exercise of calculating it for each customer.

I talk about it extensively in my upcoming book (learn more about it at the end of this article), but suffice it to say, it should be on your required list when analyzing customers and their contribution to your organization's profitability. In essence, it calculates how much profit you get from each customer and customer group you serve. You essentially identify how much money you make from a given customer over their lifetime (or projected lifetime) minus the costs it takes to acquire them and service them. Let’s look at a straightforward example…

And Example...calculating CLV

Let’s say a customer of yours had an average purchase of $500, and they purchased from you four times a year. Their purchases would give you a total revenue of $2,000 each year. If this customer stayed with you for five years, their estimated revenue for your company would be $10,000. However, to calculate their Customer Lifetime Value (CLV) and profitability, you would need to subtract the costs it takes to acquire and maintain this customer. Let's say it cost you $1,000 to initially acquire the customer and $250 per year to maintain them as a customer (your internal cost to support them). It would cost you $2,000 over the same 5-year period. When you subtract these costs from the revenues, you end up netting $8,000 of gross profit for this particular customer…their VALUE over their LIFETIME. Their CLV is $8,000.  

When you change your mindset from “acquisition” to “retention and loyalty,” you will see amazing things happen in your business. Your profitability will go up, and your marketing will completely change…both of which are awesome things! I hope you can read my upcoming book on this topic. It represents an incredible opportunity for virtually every company on the planet. And, most importantly, it moves you one step closer to building Advocates, the Holy Grail for any business if they truly want to dominate their market!

As you can see in the Advocacy Architecture™ diagram below, there are a few stages your audience needs to go through before they can become Loyal to your business. Everything starts with building Trust. Without trust, there is no chance of building Loyalty. But once you have someone’s Trust, you can then begin to build a solid and “Trusted Relationship” with them, which leads to Loyalty.

If you do nothing more than improving the percentage of Promises you Keep, you will be on a much stronger path to building Trust, which can lead to creating Loyalty with your audience. Sounds simple, right? It isn’t. I have found it very hard for companies to keep their promises. First, most employees don’t understand they are making promises when they interact with their customers. Many promises are “implied,” where a Promise wasn’t actually made, but the audience believes a Promise was made. These are the most dangerous to an organization. The customer hears you promised something to them, but you don’t think you committed or promised. We have a disconnect. Other times, we make a commitment and then don’t keep it…breaking a promise. Both implied and not keeping promises kills the opportunity to build Trust.

Another way you can help build more Loyalty in your audience is to “help them improve their life and/or their business.” When someone sees you going out of your way to help them improve, they have more commitment to you. The more things you can do to help them out, the more sense of Loyalty they have to you. People are loyal to those who help them…period. Think about how you specifically help your audience improve their life and/or business.

These are all great questions to stop and ask yourself if you want to improve Loyalty. Take some time to think about the Advocacy Architecture™ and do a self-assessment on how well your company does at each stage to building Loyalty. If you feel you lack in these areas, it would be a great time to identify WHY you are and then develop some specific plans for HOW you can do more in this area. And not just tell your employees to keep more of their promises, for example, that never works. There have to be specific process changes and Customer Experience changes if you want to move the needle in any of these areas. It can be done, and relatively quickly…well within 30 days. You can see significant improvement in 30 days if you have a definite and targeted plan. If you want more guidance on this, shoot me a message, and I would be happy to talk with you and help you get started. Building more Customer Loyalty will definitely change your business significantly…and quickly.

My GOAL For YOU...

As with this series, my goal is always the same…help you be more CUSTOMER OBSESSED so you can become “REMARK”able™, where your customers (and others) are doing your marketing for you and acting as your “Advocates and Marketing Agents™.” Everything I share with you has this underlying purpose and goal attached…I want you to “light up” your audiences so they can become your Advocates and Marketing Agents™. That’s it. If you want the same, keep reading this series. Thank you…