Janna's Blog Article

Jun 5, 2014

Developing the Ideal Customer Experience:The Customer Ladder of Loyalty


Category:General 
Posted by: actionjanna

Lose a customer and you will spend 6 – 10 times more to replace him than it would have cost you to keep him! Loyal customers represent the lifeblood of business. Is keeping and maintaining loyal customers a high priority for your business? Do you have a well designed ongoing strategy for building an ever increasing number of loyal customers? Is good customer service enough?

Think about this scenario. One business provides average customer service and the other prides itself in its good customer service. However, the first business systematically writes a follow-up letter to its customers inviting them to buy again while the second business, with arguably better customer service, does not. If an individual purchases from both establishments, from where do you think they will most likely make their next purchase?

How does one build loyal customers? – By moving them up the Customer Ladder of Loyalty. Just like a normal ladder, we move up one rung at a time. And, just like a normal ladder, when we step on the first rung we don’t hang around there for a while before doing something. We want to climb up right away or get off the ladder. Conceptually the Customer Ladder of Loyalty looks like this:

Raving Fan

Advocate

Member

Customer

Shopper

Prospect

Suspect

 

 The rungs on the Loyalty Ladder are:
  1. Suspect: potential customers within your target market with whom you have had no contact.
  2. Prospect: Suspects who have made contact with you, or you with them, enabling you to gather contact details for further communication and entering into your database. This provides the owner with a picture of the type of buyers the business is attracting.
  3. Shopper: Someone who has purchased once from you. On average it takes 2.5 purchases for a customer to cover the advertising costs that attracted him to your business. At this point the shoppers’ contact details should be verified to insure the accuracy and completeness of your database entry.
  4. Customer: Someone who has purchased more than once from you. A second purchase is an important step in building a long term relationship. Studies have shown that it is 6 times easier to sell to a customer than to make an initial sale to a suspect.
  5. Member: Someone who has a sense of loyalty and belonging. A frequent buyers club with some unique benefits and/or value will help build that sense of belonging. Usually, members will tell others about your product or service if asked.
  6. Advocate: Someone who sells you to others. They will give referrals or promote you, and they remain a loyal buyer. They are one of your most valuable assets.
  7. Raving Fan: Someone who can’t stop selling for you. They have had such a great experience in doing business with you that they continually promote that Wow experience. Raving fans are created only by consistantly delivering over-the-top customer experiences. They are virtual sales people for you, and more valuable than your sales team, because their message has more credibility.

“Getting to Raving Fan status is the result of putting your customers first and having exceptonal relationships with them from the beginning.” Says ActionCOACH Ikonomou. Remember “Fan” is short for fanatic. The question for your business is: How can my business create a fanatical following from its customers? What businesses come to mind when you think of companies who have created and successfully implemented strategies on a national scale for creating Raving Fans – Starbucks, Apple, and Toyota? Imagine the impact on your business if you continually add Raving Fans to your customer base!

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Janna Hoiberg
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