The Customer Loyalty Loop
The Customer Loyalty Loop
The Customer Loyalty Loop
The Science Behind Creating Great Experiences and Lasting Impressions
By Noah Fleming
Copyright © 2017 by Noah Fleming
All rights reserved under the Pan-American and International Copyright Conventions. This book may not be reproduced, in whole or in part, in any form or by any means electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system now known or hereafter invented, without written permission from the publisher, The Career Press.
THE CUSTOMER LOYALTY LOOP
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Acknowledgments
When you write a book, there are so many people on the sidelines cheering you on. As you get closer to the finish line, the cheering gets louder and more intense, the crowd roars, and then you cross the line. The first time I ran a half marathon, I felt like doing nothing for days. My feet ached because I embraced the then-popular idea of running barefoot. I realized shortly after the run that it wasn’t such a great idea to try on the asphalt streets of downtown Toronto, and I paid for it for days. The point here is that there are so many people to thank during the process of writing a book and I can’t thank you all individually, so consider this your collective high-five! Thank you all.
Of course, you have to thank your family. They’re the ones who are there at the half-way mark with nourishment, brightly colored signs, and cheering the loudest—“Go, Daddy, Go!” Heather, Avalon, and Ella, thank you. I love you all so much.
Thank you to my clients who have worked with me over the past few years! Cheers to our continued success!
In particular, thanks to my agent, Esmond Harmsworth, who continues to support my work and ideas. And I can’t forget my incredibly talented cousin, Holly Barimah, who designed the fantastic-looking process visuals inside the book.
And thanks to the fine folks at Career Press for believing in this concept.
Contents
Introduction
1. The Science of Experience
2. Introducing the Customer Loyalty Loop
3. Stage One: Imagination Before Persuasion
4. Stage Two: Conversion Not Coercion
5. Stage Three: Experience Choreography
6. Stage Four: Happily Ever After
Notes
Index
Introduction
Let’s get this out of the way, right up front. I’m not a psychologist or a scientist, and I don’t play one on the Internet. Got it? Okay, good. Now that I’ve cleared the air, and you’re still here, let’s talk about what this book is all about.
This book is all about the work I do with my clients and how it can help you grow your organization, increase your revenus and profits, and keep your customers happily spending their money with you.
And while I don’t have a PhD in consumer psychology, what I do have is an enormous interest in helping my clients to bring their customers back, to get their customer to buy again, and to persuade them to buy even more after that. That’s what I’m good at; that’s what my clients would tell you I’m good at—maybe even one of the best.
Now you could throw a stone in any city, click any random Internet link, and check your inbox on most mornings and you’re almost guaranteed to find five “experts” promising to show you and your business how to get more new customers and close more business. The brutal reality is that not only is getting new customers fairly easy, it’s often quite harmful if done incorrectly.
The truth of almost every business is that creating, nurturing, and ultimately profiting from a long-term relationship with your customers is much harder, but also that much more valuable, and the process starts long before your prospects ever talk to someone at your company. Most companies don’t really understand what’s required to keep a customer, and most certainly don’t understand that something like customer retention and loyalty starts long before you have a customer in the first place. Consider, for example, a recent survey that found that 72 percent of small businesses planned to allocate the majority of their marketing budgets to customer acquisition efforts and only 23 percent to customer retention efforts. And of those, 30 percent of them believe their customers do business with them on a regular basis, but they’re only guessing.1 You can’t make this stuff up! They’re assuming their customers are coming back, but they don’t actually know if it’s true. This is the type of thing that surprises me. It shouldn’t, but it still does.
That said, the research doesn’t lie. And as I strongly argued in my first book, Evergreen,2 most companies I talk to are spending the bulk of their time chasing new customers at the expense of building deeper and more profitable relationships with their existing customers. Why? Please tell me why, Master Yoda.
Okay.
Quite frankly, it’s because it’s more fun. It’s sexier, and the feedback is near instantaneous. When you tell someone that they need to focus on their existing customers more, you’re just telling them something they’ve heard a million times before. They’ve heard it at a million conferences. They’ve hired consultants and experts to speak at their organizations about servicing customers. They’ve read about it in dozens of other books. It must be important. Let’s not forget the dusty, old chestnut that “it’s five times more valuable to keep an existing customer than it is to get a new one!” The reason it’s a big, dusty, old chestnut is that nobody has ever shown them how to make the existing customer five times more valuable. Don’t you think that’s a reasonable next question?
They’ve never been shown how to actually do the whole loyalty and retention thing in a systematic way that’s measurable but also creates a demonstrable return on investment—something the folks in the C-Suite always need to see. Before I wrote Evergreen, there had never been a decent “retention” process to follow-up, maintain, nurture, and build relationships with our existing customers. Even the word relationship is one that’s massively misunderstood in the business world. And in this book, I’m going to give you something even more powerful. While this book is certainly not a sequel to Evergreen, it builds on the fact that you’ve made the decision to focus more on maximizing the value of the clients and customers you’ve worked so hard to get. It’s all about the mind-set. We can concentrate on new clients. We can concentrate on existing customers. Or, we can do both—right.
So let’s get back to that psychology and science thing. What could a customer-retention guy possibly teach his readers and clients about human buying behavior and how to influence it—and more important, how the customer’s experience has such huge implications as to if the likelihood that the customer will ever do business with your company again? Well, it turns out, quite a lot! Since 2005, I’ve worked with hundreds of companies and thousands of individuals. I’ve read and studied everything I could get my hands on from the conventional theories of sales and marketing to the modern pop-psychology books, and loads of insanely fascinating neuromarketing material.
But so what...that means nothing.
There are a lot of neat ideas out there, but not nearly enough of them provide pragmatic, useful information for
when the rubber meets the road and the customer finally walks through your doors, visits your website, picks up the phone to call you, or finally pulls out her credit card and clicks “complete my order!” Yeah, just like all those other guys, I’ll talk about the latest study and tell you why it’s a neat insight, but what they don’t show you—and I will—is how to actually use the stuff.
None of that other neat psychology stuff matters unless we understand how to actually apply it to our day-to-day efforts and the workings of your business, today. For me, my best source of learning has come from working with my clients and watching them in action. It’s been about watching with a careful eye to see how the things we’ve put into place have worked (and sometimes not worked) and gauging the customer’s response. It’s been about watching the process of not just getting a customer, but understanding the importance of the entire experience every step of the way, and then paying careful attention to all the things we’ve done after business has been completed—to drive the customer back, or to generate referrals, or to create brand advocacy and positive word of mouth. These are all things that many of my clients practice and believe in because they’ve seen the results, and it’s an area where so many other organizations need desperate help.
Some of the things I’ve written about in this book have happened by accident or perhaps, umm, backward! For example, if there’s been an insight, a feeling, a moment, or a result where we’ve noticed something interesting, then quite often we’ve then gone looking for the science to back it up after the fact, and more often than not, we’ve found it. And after that, we’ve (me) has validated the learnings by applying them to the businesses of (my) various clients in different industries. Sometimes, we’ve found the science in peculiar places like the science of happiness or from psychologists engaged in bizarre activities like shocking dogs! So, what does this mean for you?
It means a lot. Most organizations become quickly entranced by this concept of “customers for life.” It’s a cliché phrase that’s been used in various books and by dozens of speakers who then continue to give you the top 50 or top 100 things you need to be doing to keep the customer happy. In reality, most of them come up way short in providing systematic (and replicable) processes you can actually use to acquire customers and then keep them buying for a period of time, or allow you to continue to extract value for that customer. Thankfully, I’m actually going to show you how it’s done.
Is Persuasion the Answer?
There’s also the age-old proverbial question, How do you persuade someone to buy?
More important, how do you persuade them to buy again, buy more, and buy more after that? You’ll find the answer in this book. I’ll show you exactly how it’s done without driving your customers crazy. In fact, much of my work over the past 10 years has revolved around answering those very questions for each and every one of my clients. As mentioned earlier, customer loyalty starts long before the sale is ever made.
What about the whole word of mouth thing? How do we create “loyal” customers who spread the word about you? This book cuts through the all the fluff and gimmicks, and shows you how it’s done in a simple, effective, and pragmatic way that you can actually implement. For example, I’ll show you the fallacy of word of mouth. And no, I don’t mean the negative word of mouth. I’ll show you why even word of mouth that drives new customers through your door can sometimes be a very negative thing. That’s just a few morsels of goodness we’ll cover in the following pages.
The best news of all is this: It doesn’t matter what type of business you’re in; you can make these concepts work for your organization. My clients have ranged from small-town businesses doing a million or two a year in annual sales to commercial property developers with over a billion in assets to janitorial supply companies, to online and offline retailers, to extremely expensive business-to-business (B2B) equipment manufacturers, to small contractors, and so much more.
I’ve worked with companies offline and online, big and small, and just about everyone else in between. They say in the world of marketing that it’s important to know your audience inside and out. I know mine—they have customers and want to learn better ways to engage those customers, to enhance those relationships, and to drive their revenue growth. They’ve spent time, energy, and money to get those customers in the first place, and they don’t want to squander them away. The majority of my clients are mid-market, privately held companies with revenues ranging anywhere from $5 million to $1 billion in sales. Now if you’re smaller than $5 million or larger than a billion, the good news is everything within this book is still applicable.
If you have a customer, then this book is for you.
Logic Makes People Think, but Their Emotions Make Them Act
If you’ve been in sales and marketing for any length of time, then you’ve likely heard that phrase before. It’s an old phrase that has been repeated over and over again by the clever sales and marketing experts who have been carefully tapping into our emotions since the Mad Men age. But even some 40 years after Don Draper’s Mad Men had people smoking because it might actually be considered healthy, we are still learning about why people say “yes,” or why people finally decide to buy, and what causes someone to finally pen their signature to the dotted line. I help my clients with those concerns, of course. But the far more important question (in my opinion), and the far more misunderstood question is how to make it happen over and over and over again. And that’s what I help my clients do.
In his classic book, Influence: The Psychology of Persuasion,3 Dr. Robert Cialdini explained the psychology behind the reasons that people say “yes,” or how to influence people to get them to say “yes.” Cialdini is considered the seminal expert on influence and persuasion. The book, originally written for the academic world, sold poorly, but it quietly brewed for many years within circles of sales and marketing executives as the cult handbook of persuasion. It wasn’t until almost 10 years after the book was released that it started selling like wildfire, raising Cialdini to a god-like status in the world of sales and marketing.
I had a chance to spend a few days with Cialdini, and even he was surprised by the book’s late success. Frankly, even he couldn’t really understand why it took so long to catch on and become a juggernaut of the business world, changing the way we interact with customers. One of my favorite aspects of Cialdini’s work is that he claimed that the principles of influence were so powerful that they could be used for evil in business and that readers should promise to only use the concepts for good. Cialdini claimed you could have customers opening their wallets for you by tapping deep into the psychological mystery of the brain, or you could build cult followings and persuade people to do remarkable things by wielding this newly found power over them. Those are all catchy and sexy claims that get all the sneaky marketing folks sweaty and excited, so I’ll make the same claim here.
The strategies and techniques found within this book are deadly. Used properly, you’ll drive revenue and growth beyond your wildest dreams, but you have to promise me you won’t use them for evil.... Promise, because they technically could be used for that. I’m just saying.... And if you do use this book for evil purposes,definitely don’t use the material in Chapter 5! Now excuse me while I raise my pinky finger to my mouth like Dr. Evil.
With that said, it is time to get serious. Let’s think back to Cialdini’s seminal work for a moment. And by the way, if you haven’t read Influence and you’re in sales and marketing, it’s almost impossible to take you seriously. I remember once saying this to a crowd of seasoned marketers, and many of them pulled out their phones and ordered the book on the spot!
But does the same psychology of influence that Cialdini taught us, which influences people to say “yes” the first time, also persuade them to continue to say “yes,” again, and again, and again over time? Does the same science of persuasion make a person continue to do business with a company over and over again, or to become “loyal,” or to b
ecome frequent and repeat customers? Are the principles of influence the same? It turns out they’re not, and it turns out there’s another set of principles that are an absolute necessity for long-term success.
Here’s one for the highlighter and notes files: The biggest danger of getting a “yes” by using the tactics of Cialdini wrong is that you might not get the second “yes.” Think about that for a minute. When it comes to marriage, most people typically want a single “yes.” When it comes to getting your customers to buy from you, I don’t want a single “yes.” Do you? Of course not. Nobody wants a single “yes.” The most expensive thing any of us in business do is get a customer. Do you want the customer to say “yes” one time or multiple times? Do you want that customer to tell others about the great experience they had with your company or go gently into the good night? The power of the Customer Loyalty Loop is about setting up all of your contacts, all of your marketing, all of your business processes, and your entire customer experience in a way that ensures people want to keep doing business with your company time and again.
Enter the Customer Loyalty Loop
The Customer Loyalty Loop deals with the psychology of customer experience, but more important, it’s about understanding the psychology at each step of the client’s journey and what you can do to influence the customer to continue to do business with you over and over again. I’ll say it again: It doesn’t matter what type of business you’re in; if you have a customer, this book is for you.
Smart marketers have grasped the fact that they need to shift their thinking as it relates to the journey of the client. During the past 10 years, we’ve seen a demonstrable change in the marketing world generated from the collection of big data. This newfound marketing data has given organizations the ability to make decisions and create targeted and relevant marketing on a person-to-person basis unlike ever before. But has it helped us? Too many organizations are collecting loads of data but are unsure exactly what to do with it. Instead, I propose the collection of small data and the small insights that swing big doors.