2016-12-01 00:00:00 Growing a Business English Get an in-depth look at customer psychology and what small businesses can do to build customer loyalty. https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/03/Retail-store-employee-talking-with-loyal-customer-at-checkout.jpg https://quickbooks.intuit.com/ca/resources/growing-business/the-psychology-of-customer-loyalty-how-to-give-customers-what-they-want/ The Psychology of Customer Loyalty: How to Give Customers What They Want

The Psychology of Customer Loyalty: How to Give Customers What They Want

3 min read

It has long been held by the services industry, especially retail merchants, that the customer is always right. The philosophy and general business model of striving to please customers above all has remained a key profitability technique — keeping the customers you have by giving them what they need and attracting new prospective buyers with the things they desire. However, throughout the years, the strategies of accomplishing this have changed and grown as the psychology of customer loyalty becomes more and more understood.

The Importance of Customer Loyalty

The concept of customer loyalty seems fairly self-explanatory, yet there are many layers that run much deeper. At its core, customer loyalty is intrinsically and inextricably tied to experience and the emotions that a customer feels. Customers remain loyal to a brand, store, or company after consistently experiencing positive interactions and positive emotions with them. This includes not only actual interactions with customer service agents or salespeople, but with the physical and emotional attributes that customers come to associate with products or services, as well as the value they perceive an experience or interaction has.

It is essential to build a strong and lasting emotional bond with customers to keep them loyal. Large corporations strive to do this on a regular basis, but your small business can employ many of the same tactics as larger companies. The key thing to remember is that you must intertwine the three elements — physical attributes, emotional attributes, and value — into a comprehensive, positive experience for your customers. Statistically speaking, it costs a company somewhere between four and ten times more to acquire a new customer than it does to maintain the loyalty of existing customers, thus revealing the bottom-line price-point importance of customer loyalty.

Managing Customer Experience

Keeping customers loyal means managing their experiences, and working to tailor their emotions and perceived value in your favour. To accomplish this, many large chains and big-label brands develop a type of loyalty program, a rewards club that offers regular customers discounted prices and free goods or services for spending a certain amount of money or for the length of their patronization. As a small business owner or manager, you possess the unique benefit of bolstering this process further. In most cases, as a smaller merchant, you are more likely to know the names and faces of regular or repeat customers. Make it your mission to remember and acknowledge each of your customers. A customer who walks into your store and receives a greeting by name will, at minimum, obtain at least one over-arching message from this — that they are inherently valuable to you — because you have taken the time and care to remember who they are and to extend a personal greeting their way.

As well, you could further this process by keeping in mind the goods or services that each customer tends to purchase. Ask them how the product suited them, suggest new products or services in the same line, or recommend complimentary elements for a more satisfying experience. Again, this extends the customer’s positive physical and emotional experience, which makes them more likely to attach greater perceived value to the interaction.

Getting Customer Feedback

If you open the door to feedback from customers, do not take it lightly. Continuing to push a good or service that created a negative experience for your customer will generally lead to resentment and tends to push customers away. For this reason, asking for feedback — whether positive or negative — is a good step in the direction of giving customers what they want and need. But don’t drop the ball. Consider the feedback carefully. If a customer enjoys something, they are more likely to buy it from you again, especially if you’ve asked them how well it met their needs.

However, negative feedback can be just as critical. Determine why the customer had a negative experience and what elements might need to be changed in order to fix this. More importantly, ask the customer for specifics and give them the time and space to recommend changes. Ultimately, the goal is to the give customer what they want and need, so make them a key player in helping you achieve this end. If you make some changes in line with a customer’s suggestions, be sure to let them know about it.

The Bottom Line

Customers repeatedly support businesses that meet their needs and make them feel valuable. As long as you strive to maintain a personalized and positive experience for your customers, they will feel a loyalty to your business and may even be willing to a bit spend more to buy from you than from one of your competitors.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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