Developing a Customer Loyalty Business Plan

Peter Drucker was quoted as saying, “The function of business is to attract and maintain customers.”One should add in order to make a profit or to be financially viable. Let’s suggest that within these combined statements there are three concepts to be explored:

1. There is a distinct difference between customer loyalty and customer satisfaction.
2. Customer loyalty depends on providing the customer with perceived value and a positive emotional experience at every point of connection.
3. Within any profitable marketing plan there are more than the four P’s (price, promotion, product/services, and place) to be considered. Customers need to get what they want and come back for more for a business to achieve long term success.

Customer Loyalty versus Customer Satisfaction

Many businesses, especially in service industries such as hotels and restaurants, conduct surveys to measure customer satisfaction. There may be a card to be filled out in the hotel room or an email survey sent to you after departure. They report your level of satisfaction with the service received and provide an opportunity for the respondent to report any negative experiences. The waiter was slow or the room was dirty can be included using this feedback method.  They can be a measure of dissatisfaction and the resultant scoring produces a level of satisfaction which indicates that the customer’s expectation has been met. In the academic world that would produce a “C” grade.

A business plan, containing a Customer Loyalty program, focuses on producing an “A” grade.  That grade indicates more than satisfaction. It indicates that the customer’s expectation had been greatly exceeded.Based on what is truly important to customers, they have received more value from you than from your competitors. The resultant loyal customer will return to do business with you over and over again and tell others of the positive experience received from your business.

Perceived Value and a Positive Emotional Experience as Part of a Business Plan

Why do people line up overnight for the opening of the doors of an Apple store on the day of a product launch? Those same lines don’t appear when HP or Dell introduces their new product. One of the reasons is that those people in line perceive the value of that Apple product with greater value that anything provided by the competition. Because of that perceived value, these Apple customers, who are sometimes fanatical, are loyal to the products and services provided by the company.

Most of us are not the late Steve Jobs, but we can learn a lesson for his experience of building value. When compared to our competition, are our products more user-friendly, is our service more complete, or is the food we serve always hot. What can we do to make our products and services different and more desirable than those of others in our market?

Next let’s consider every point of connection between your business and potential customers. Furthermore, let’s ensure that every point of connection is a positive emotional experience. In considering points of connection, one must include every point in which the customer comes in contact with the business or an employee of the business. Was parking convenient? How does the store look, both from the road and once inside? Were employees courteous and helpful? Was the room in my hotel clean? These are all points of connection. If one is negative the perception of the entire business suffers.

It may be difficult at first to think of a point of connection with a business as being an emotional experience. It’s easy to think of it as an economic experience, not emotional. Consider this! The other day, I was shopping in my favorite warehouse store. As I approached the front of the store with my bulging shopping cart, I saw that the lines at the checkout were getting longer. I anticipated an unusually long wait and I was close to being late for my next appointment, so I became somewhat annoyed (emotion). Then to my great relief, several managers came out of their offices and began assisting with the checkout process. It was only a short time later, as I wheeled my shopping cart to my car that I reflected with joy (another emotion) on what had just happened.  That emotion was further heightened when I reflected on the numerous times in other stores when the customers had to wait through the delay. This is just one experience where a point of connection serves as an emotional experience.

 The Profitable Marketing Plan

 In a previous article, Business Success Starts with a Marketing Plan, the mix, the 4 Ps, was discussed as part of the development of a marketing plan. Now, the question is once customers are coming to the business and buying goods and services how can long-term profitability be maintained. The answer is through the development of a customer loyalty plan.

Note that the plan to be developed is the responsibility of the business leadership. One of the weak points of the usual customer satisfaction program is that it is centered on either a training program or seminar for those who have direct contact with the customer. That may be the sales or customer service person.  It may be the clerk, waitress, or other front line people. It is highly dependent on the ability to transfer the training into the workplace environment. Training is ineffective unless it becomes part of the attitudes and habits of those within the company. Customer loyalty planning involves all aspects of the business including; the facility, the product, the services, the systems, the compensation system, and employee motivation. It is part of the overall strategic plan and marketing plan. It requires management leadership and involvement.

A customer loyalty program directly impacts profitability. It assures that customers will return to your business repeatedly, therefore reducing the promotional costs associated with finding new customers. It assures that customers will perceive value in your product or services and be willing to pay for that value. The need for price cutting and sales, which erode margins, is reduced. It can also have a positive effect on employee morale, reducing the cost of turnover.

The same principles that drive the planning of highly successful and profitable businesses can be applied to your business, regardless of its size. Creating a business plan takes analysis, leadership and change. Business coaching is key to guiding the customer loyalty process to completion.