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Do You Have Brand Loyalty?

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Post Do You Have Brand Loyalty?   Sat Aug 13, 2011 11:56 am

Top performing companies focus on attracting and keeping potentially profitable customers. This is called building brand loyalty. Why do all this work? It is simply smart business. In my twenty years as a business marketing strategist, I've seen brilliant business owners be blind-sided when they miss the proven link between leveraged loyalty and fiscal profits.

Five Key Reasons for Customer Retention and Building Brand Loyalty

1. Loyal customers provide greater profitability at a lower investment.
2. Loyal customers spend about 80 percent more than other customer groups.
3. Eighty percent of a company's sales come from 20 percent of their customers.
4. When budgets are tight, needing to spend to reacquire customers reflects poor strategic thinking.
5. Happy customers are six times more likely to make positive comments about a company's products and services. Thus, happy customers can provide the positive social media connections that your company seeks.

Loyalty can't be purchased by the pound. Loyalty can't be stocked on shelves in colorful "new and improved" packaging. Customer loyalty is built over time. Loyalty is built in stages.

Customer Loyalty Takes Time

In the consumer goods and services industries such as food, health, beauty, telecommunications, it takes 12-18 months to build and earn a customer's loyalty.

Customer Loyalty is built in Stages

Each customer loyalty stage has a number, a name and a cost. The stages are: Try> Buy> Ask> Tell Others > Loyalty

Customer Loyalty Begins At the "Try It" Stage

To get a customer to the "Try" stage, she must first become aware of the product and sample it. Across most consumer goods industries the average cost to get someone to 'try' or "sample" something new is between $60 and $220. That can be a lot. This is known as the Customer Acquisition Cost (CPA).

Customer loyalty should be a corporate strategy and requires corporate ongoing commitment. The ongoing value propositions created for the top 20% key customers should be regularly refreshed and have a superior perceived value in relation to competitive offerings. Remember: Your best customers are highly intelligent and shopping savvy. Just like you.

Too many companies continue to spend 75% of their sales and marketing budgets to get non-customers to try their products while spending relatively little on the 20% of their customer group who provides them with 80% of their revenues.

As a consultant, I've observed that for a company to break free of their "customer churn and burn cycle" requires an enormous amount of long-term cultural and corporate change. Here's the secret of why it is so hard for them. Spending money to acquire new customers doesn't require change, just cash.

Cash can be a less painful choice for a corporate culture than asking for change.

© All worldwide rights reserved. Margaret Ross Making Business Work

Margaret Ross is president of Visible Strategies Communications a Internet Business Marketing Consultancy specializing in a online reputation management and Founder of the Kamaron Institute, a premier management consulting and educational consulting firm, advising leading companies and educational organizations on issues of market strategy, organizational dynamics, personal development, communications, and bullying prevention.

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