I had the opportunity to attend a luncheon presentation at the local chapter of Sales and Marketing Executives International last week. Bret Pinson spoke about "The Loyalty Effect
Reichheld suggests one question to measure customer loyalty:
"How likely is it that you would recommend our company to a friend or a colleague?"
Why is loyalty important? Research has apparently shown that an increase of five percent in customer retention (related to loyalty, but not quite the same concept) results in a 100 percent increase in profits.
Gaining customer loyalty is pretty simple, and awfully hard. It really only requires answering four questions. The problem is that you have to answer all four questions well, consistently, and across your organization. If there's only one of you it might be pretty easy. Twenty of you, and things are getting tough. Two hundred - oof!
Here are the questions:
- Who are the right customers?
- Of these, which ones are loyal now?
- What drives their loyalty? (Hint: don't answer this one around your own water cooler. Go ask the loyal customers why they are loyal.)
- How can we do more of the things that drive loyalty?
