Most companies don’t truly understand what they need to do to keep a customer. Noah Fleming does. Since 2005, he has worked with hundreds of companies and thousands of individuals. More importantly, he knows how to apply efforts and methods into your business, today.
The Customer Loyalty Loop looks at the psychology of customer experience and what you can do to influence your customer to continue to do business with you over and over again.
Background of the Brain
There are many cognitive biases that affect the way we rationalise, analyse, and process information. The first one is Anchoring bias. This is when one number or fact anchors the context of a specific point. You see this in ads that say, “normally this sells for $89 but today only it’s $15!” The first price, $89, is used as an anchor.
Another bias is Availability bias. This means that if something is readily available to us, we are more likely to let it influence our narrative. For example, if a plane crash is popular on the news, we assign more influence and importance to plane crashes in our thoughts.
A third cognitive bias is risk aversion. This is when we use fear of loss as a mode of motivation and we do whatever it takes to avoid a perceived risk. There are, of course, many other biases that affect our thinking. Critical, rational, logical thinking requires a lot of effort, and our brains frankly don’t like exerting effort. Our perceptions and narratives are not based on rationality, but instead biases that lead us toward simpler, easier decision making.
Our brain is also unreliable when it comes to memories. Our memories can be influenced by stories we hear, emotions we feel, and frames we give it. Businesses should focus on creating the right customer memory, which begins long before the sale is made and continues as the customer does business with you.
The Customer Loyalty Loop
There are four stages of the Customer Loyalty Loop:
Imagination Before Persuasion: the beginning of the customer experience
Conversion Without Coercion: actually getting the sale
Experience Choreography: delivery of product or service
Happily Ever After: follow- up marketing
This isn’t a closed loop. It is a circle, meaning that after stage four, the customer begins stage one again and continues through the cycle.
Each stage is important. The customer experience is the sum of the whole experience, and you need to focus on each of the four stages. Let’s dive into each stage.
Stage One: Imagination Before Persuasion
Categorising people into new customers and existing ones is a false division because they are the same person, just at different stages of the process. To take your business to the next level, you must understand the psychology of the new customer experience.
If you want to succeed in Stage One, there is nothing more important than truly understanding who your buyers are so you can market to them directly. Write a detailed narrative about your ideal customer. Include as many specifics as you can – the car they drive, the foods they eat, the clothes they wear. You can only find good customers if you know exactly what you are looking for.
The customer experience must be meaningful, memorable and personal. Small details, such as free bonuses, personalised attention, and follow-ups can significantly increase customer satisfaction and loyalty.
The Customer Loyalty Loop starts before any sale is made: from the very first time a prospect is exposed to your sales, marketing, and advertising efforts. The secret of Stage One is to learn how to tell your story in a way that implants a positive narrative into the potential customer’s head and maintains their interest in you and your business.
One way to do that is pre-emptive marketing – everything that happens before the sale. Pre-emptive marketing is about building trust, relationship and story long before your competitors even have a chance to influence your potential customer. It lets you be the first to plant a story in their mind.
The most important thing to creating a customer for life is creating a positive memory of the customer’s experience with you. And as we already learned, memories are highly unreliable. Keep this in mind as you learn about the following stages.
Stage Two: Conversion Not Coercion
Stage Two is about continuing to build trust with your prospects and converting the prospect into a sale. You can also build on their expectations of the future by delivering an incredible experience every step of the way.
A customer is the single most expensive thing for a business to acquire, and the most important. To be successful, a business needs to treat the sales process as an integral part of the customer experience.
Look at the details of your customer experience and identify any incongruities that may be impacting the customer. And then fix them, to ensure that your customer has a positive experience every step of the way. The experience at this stage will be remembered based on the cumulative experience of the entire sales process from start to finish. Communicate to your prospect that you have their best interests in mind and you are looking to satisfy them and improve their condition.
Use language that makes your customers feel valued, important, and listened to. Keep your focus on the prospect and you’ll do great. Continuously test and improve your strategies. Test your sales effort. Include any valuable information that will create your preeminent position in the customer’s mind as the one and only source for their needs. Make a list of your current operating procedures and brainstorm new ways of doing things. Test and try again.
Continue to build and maintain trust with your customer. As they transfer from Stage One to Stage Two, they are intrigued, but still unsure about moving forward. Build as much trust and remove as much resistance as possible here. Acknowledge their resistance and provide value to the customer. Offer a guarantee to give your prospects 100% certainty and assurance in their decision-making process.
Stage Three: Experience Choreography
At this stage, the customer has been influenced to complete the sale and now has an expectation that you’ll deliver on the promises made in the previous stages.
The most powerful thing you can do in this stage is to create distinct memories of doing business with your organisation that are remarkable. Remarkable Moments are the moments that leave lasting imprints in your customer’s mind. Remember that the most important thing to create a Customer Loyalty Loop is creating a positive memory.
Remarkable Moments are unique, fascinating experiences that will allow your company to stand out from your competition. It will lead your customer to a trusting and positive relationship with your company.
To create Remarkable Moments of your own, think of the best and most memorable experiences you’ve had with other businesses. Then, develop your own Remarkable Moments for your own customers. Surprise and delight your customers with small details that will leave them feeling valued and taken care of. Think about the packaging of your product, the proposals, the atmosphere, the website. Are your customers quickly greeted and welcomed? Are you taking actions to help them feel calm and relaxed while they browse?
Don’t assume that the transaction is finished once you get the customer. If you can delight your customer and create Remarkable Moments, they will likely speak highly of your company to their friends and family. But it will take effort on your end to keep them feeling positively about your company.
Stage Four: Happily Ever After
A customer that recently finished a positive transaction is more likely to engage in a transaction with you again. And the more frequently a customer engages in a transaction with you, the more likely they are to continue that behaviour. Increase your customer’s frequency and willingness to engage, and you have sent them on a solid path around your Customer Loyalty Loop.
Staying recent is a crucial underpinning to both your customer follow-up processes and procedures. Follow up with a customer soon after you do business together, and they will be more likely to respond with interest.
Remaining familiar are the keys to Stage Four, as this creates the right environment for word of mouth and referrals. To do this, follow the 90-45 rule. This rule says that no customer should go more than 90 days without at least a 15-minute phone call, and that the top 10% of customers shouldn’t go more than 45 days without some sort of follow up. The numbers can change depending on your business, but the important takeaway is to keep a relationship with your old customers. The more you communicate with them, the more revenue your company will generate.
One way to assign specific Loyalty Loop-related tasks is the Pick-3 Process. In this process, you and your team each engage in three simple tasks related to the Customer Loyalty Loop:
calling your three best customers and clients
sending three handwritten notes
calling three inactive clients
soliciting three testimonials from existing clients
contacting three new clients
…or anything else that adds value to the existing customer experience.
Customer loyalty is about connection. Build a relationship with your clients to show that you care about them more than just when they pay you to do so. Cultivate the relationship by remaining top of mind, adding value, and pitching only when it’s time to pitch.
Instead of spending the majority of your time, energy, and resources trying to get new customers, invest heavily in your current customers to give them a memorable customer experience. You will grow your business, increase your competitive advantage, and create dramatic profit returns.