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The new rules of building customer loyalty

Industry News

Want your customers to stick to you like glue? Today it takes more than a punch-card or priority line.

Inc.com | May 26, 2011

If you give a discount to your most loyal customers, you might be doing something wrong. At least you're not doing all you can to reward your best customers, and keep them coming back. Experts say there are some rules to follow to make your customers feel like kings from the very first moment they encounter your product or service.

Do it right, and you'll not only score a lifelong customer, but also an advocate for your brand and that's a lot more valuable. In order to bring you up to speed, Inc.com has compiled seven of the most innovative and ingenious tips from articles, guides, and interviews in Inc. and Inc.com over the past year. These are the new rules of building customer loyalty.

1. Create Enlightening Experiences
Whether it's selling bikes in his Connecticut store or filling orders for corporate rewards programs, Chris Zane knows a successful business is about more than just selling stuff. Instead, he’s selling experiences. More than a decade ago, he used that concept to launch a business filling orders for custom-fitted Trek bikes geared for corporate rewards programs, Gina Pace reports. Zane's Cycles builds the bikes to specification, and all the recipients have to do is attach the front wheel, using the included instructions.

The end goal: Creating experiences that will make customers feel good about the reward product—and not irritated that they have to spend hours putting something together. Early on, he decided he wouldn't nickel-and-dime customers and stopped charging for any add-on that would cost less than a dollar. He installed a mahogany coffee bar in his shop and gives away free drinks. "We're looking at the lifetime value of the customer," Zane says. "Why ostracize someone over one or two things that might cost us money when understanding the lifetime value gives us the ability to justify it?"

2. When You Do Wrong, Make it Right
Resolving customer complaints is among the best ways to earn loyalty. Lengthy apologies give customers the chance to connect emotionally. Leonardo Inghilleri, co-author of Exceptional Service, Exceptional Profit: The Secrets of Building a Five-Star Customer Service Organization, observes that money is not always the best remedy. That goes particularly for customers who are not buying on price, he said, companies should consider a thoughtful present or service.

3. Reward Customers With Games
A handful of luxury brands have for decades used promises of status to encourage customers to spend more through loyalty to their brands. Today, brands of all stripes are experimenting with the psychology of status and power in rewarding customers. A generation raised on video games is wired to love incentives – and that doesn't just mean freebies.

Gaming reinforces players through positive feelings generated by achievements, which are perceived through points, badges, discounts, or any award – tangible or not. Game mechanics are, simply, ways of generating those positive feelings. And it can be good for you: Giving customers something positive encourages additional interaction with your brand, service, or product. For this very purpose, LinkedIn added a progress bar that documents user-profile completion.

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