How to Develop Brand Loyalty through Customer Relationships - dummies

How to Develop Brand Loyalty through Customer Relationships

By Bill Chiaravalle, Barbara Findlay Schenck

Great brands generate sky-high customer enthusiasm that results in nothing short of brand passion. For good examples of the power of customer enthusiasm, consider the brands whose logos you see displayed on car windshields or whose labels are worn on the outside of clothes as badges of association and pride of ownership. They’re the brands that win allegiance and reap the incalculable value of customer affection, word-of-mouth, online sharing, and loyalty.

Passionate employees and passionate customers (in that order) power great brands. You can’t put the cart before the horse. You can’t create passionate customers without first creating passionate employees and the kind of brand experience they’re proud to deliver.

When your organization’s ready to deliver awe-inspiring service that fulfills your brand promise at every customer encounter point, you’re on your way to developing not just customers but customer relationships and brand passion.

Why customer relationships matter

It costs a lot to attract a first-time customer. If that person buys once and heads out the door never to be seen again, the one-time purchase represents the only revenue you’ll realize from your customer-attraction investment.

On the other hand, if the customer buys again and again, your marketing investment gets amortized and the profitability you enjoy from your initial investment grows higher and higher. Researchers have even quantified the value you reap, finding that by winning repeat business from just 5 percent more customers, a business can improve profitability by 75 to 100 percent.

Unquestionably, profitability is a major reason that customer relationships matter. Additionally, customers who develop a relationship with your business contribute so much more:

  • Loyal customers account for higher purchase volume and lower costs than other customers because they’re easier to reach and require lower sales and service assistance.

  • Loyal customers involve fewer problems because you know their credit status, purchase preferences, and buying patterns.

  • Loyal customers are a good source of positive reviews, favorable word-of-mouth, and qualified referrals. They’re most apt to spread their brand affection to others.

  • Loyal customers help develop loyal staff — and loyal staff help develop loyal customers — because lasting, positive relationships enhance your brand and your business environment for employees and customers alike.

  • Loyal customers who are treated well and who receive consistently good brand experiences are most apt to make repeat purchases, even when promotions and discounts aren’t involved. What’s more, loyal customers who are treated like insiders and who gain a feeling of brand ownership turn into passionate customers.

  • Passionate customers who are treated well and who receive consistently good brand experiences become brand ambassadors.

  • Brand ambassadors spread good words on the brand’s behalf, increasing marketplace awareness, positive perceptions, and brand value. Even more valuable, they become so engaged and so associated with the brand and what it stands for that it becomes an expression of how they see themselves.

    A BusinessWeek/Interbrand report concluded that “a sense of ownership in near-fanatical customers” was a key contributor to the success of the most valuable global brands.

Spark customer relationships

The first step in developing brand allegiance is sparking a customer relationship. Most customers fit into one of two categories:

  • Transaction customers help build your bottom line. They approach your business seeking a good deal, and their expectations usually are based on price coupled with outstanding features or convenience. Transaction customers’ primary interest is in the deal rather than the relationship. Although they may be happy enough to pass along positive word-of-mouth comments and even to make repeat purchases, in most cases they’ll leave you in a heartbeat if a deeper discount comes along.

    Most transaction customers remain in that category. But sometimes, if you ignite their interest, enthusiasm, and trust, they surprise you (and themselves) by becoming entranced by your brand experience and moving into the relationship customer category. The moral of the story: Never assume a price-shopper is there only for the deal. Deliver your brand story and experience, and you may convert the one-time interaction into a valuable lasting relationship.

  • Relationship customers help build your brand. They value loyalty, commitment, and trust even more than they value good deals. They prefer to do business with those whose reputations they know and trust and whose promises they believe in.

    When relationship customers choose a brand, they’re inclined to stick with it if — and this is a big if — you give them the kind of brand experience that turns them into spread-the-word ambassadors for your brand.

All customers are important because all customers represent revenue and the potential for good or bad word-of-mouth. But relationship customers deliver a more powerful benefit. Through their commitment to your brand, loyal, long-term customers become brand ambassadors and even brand zealots who create awareness and develop positive perceptions for your brand in the minds of others, which is where brands live and thrive.