by Noah Fleming
Treat Customers Like Members
Many companies make decisions about their clients based on total revenue spent. They take their top 10–20 percent of best spenders and work to surprise, delight, and care for those customers. There are times when this works and times when it doesn’t. Consider, for example, Bill Gates’ party at your fictional nightclub last night. Bill had all the ladies swooning over him and dropped $100,000 on incredible bottle service. Bottles of Remy Martin Louis XIII Cognac were flowing at $6,000 a bottle. This morning, he’s your best and most valuable customer. Regardless of how he got to your club, the likelihood of him coming back again, and again, and again, are pretty much next to none. I’m sure Bill loves to party, but this is the fallacy of using total revenue spend to determine your “best customers.” Contrast that now to the 836 25- to 35-year-old guys who come in on a weekly basis dropping $600 to $800 like clockwork. They are your best customers, but using total revenue, they’re likely to be missed. You’re focusing on the wrong customers and it’s costing you money. Bill Gates is not your best customer. You can’t always focus on the individual customers. Look to understand what groups of customers you have that are preferred in terms of current value, future business, and referral potential. You need to understand who your best customers are and make offers that are exclusive to them.
My good friend Robbie Baxter released a wonderful book in 2015 called The Membership Economy: Find Your Super Users, Master the Forever Transaction, and Build Recurring Revenue. In the book, she shares various examples of businesses using the membership model to grow and retain customers. The membership model is one of the most powerful tools you can consider in the loyalty loop. If your customers can benefit by doing business with you on a regular, ongoing basis, then it makes sense to offer them that solution. Very few businesses think this way, but Robbie offers dozens of less traditional examples of businesses embracing the model. For example, I can make a strong case that if customers love a restaurant, then offering them a membership with a repeat monthly purchase can make a lot of sense. We can influence the loyalty loop by delivering a remarkable and memorable customer experience that appeals to the mind of our customer, but if your buying cycle and frequency is rather short, think about all the ways you can offer customers a longer-term commitment.
Action Step: The Preferred Customer Club
Schedule a special event, or even periodic events, to reward, acknowledge, and show your existing customers you appreciate them. Last year I had my first-ever Evergreen Summit. I invited half a dozen of my top clients to dinner the night before in one of the best restaurants in Canada.
Create new levels of loyalty for your best and move valuable customers. Most loyalty programs are terrible ineffective. They give perks and rewards once a certain threshold of spending is met. I suggest doing it a little bit different by adding additional value in other ways. Look for ways to offer your best customers unique advantages like early access to new products or higher levels of support (the Bat Phone: 24/7 support line). Consider preferential pricing or bonuses based on a certain spend.
Brainstorm all the little extras you can do for your preferred customers after the sale in Stage Four. Don’t forget that they look back around. Brainstorm all the little extras you can do for your preferred customers on subsequent purchases and transactions with your company.
Brainstorm all the ways you could embrace the membership economy and create long-term offerings for your customers. Think about things like ongoing product deliveries, extended service, additional support, and so on.
Spiraling the Loyalty Loop
The core philosophy of this book is pretty simple. Instead of spending the bulk of your time, energy, and resources in new customer acquisition, you should invest heavily in ensuring you’re doing whatever you can to deliver an amazing, remarkable, and most important of all, memorable customer experience. If you want to grow your business, increase your competitive advantage, and create dramatic profit returns, then the Customer Loyalty Loop is one way to do it.
The loyalty loop is about providing value throughout the entire customer experience and recognizing the entire customer experience encompasses the whole experience from the first time the prospect hears about your business, to happily ever after. Let me share a brief story with you, a true story, but one that offers us a perfect parable to close out the book.
The Loop in Action
Last year, I needed to get some work done at my house. I needed a general contractor, so I decided to look online to see who was local and who might be able to help. I visited many of their websites, filled out contact forms, and called a few of them. Out of the 10 I called, only one got back to me promptly. At least four still haven’t gotten back to me at the time of this writing months ago; five more were confusing and instantly tried to get me to commit to things before even coming out to see me. They wanted to quote pricing without seeing the work or even asking enough questions to understand what I truly needed. Only one of them offered to come out and review exactly what I needed. He was incredible. There were some things he nailed.
First, when I reached out to him, he got back to me quickly. It was within 90 minutes. We had a friendly chat, and he said something that got my attention. He said, “You know; there are a lot of great contractors in town; I know them all, and I’m sure any of us would do a great job! But because of what you’ve explained you need to have done, here are the six things you need to watch out for....” He went on to explain six things that I was going to need to look for in my job. He wasn’t badmouthing his competition. He was providing value. Preemptively, he created a story and told it to me in a way that was vivid and fascinating. That’s Stage One of the Customer Loyalty Loop.
A day or two later, he showed up and walked me through all of the options. He was just how I expected him to be. He was clean cut, drove a nice clean truck with his company’s logo on it, and he was well dressed. He took his time to help me understand everything that was wrong. He explained the options I had available, and which would be the best value. He showed me the cheapest options and the more expensive options. He took his time to explain each one. He also reaffirmed everything we had discussed on the phone in regard to what to watch out for. Finally, he took the time to listen to my concerns and answer my questions. Needless to say, he removed all the resistance from the conversion process. That’s Stage Two of the Customer Loyalty Loop.
When the day came to do the work, his people showed up in a similar truck. They were clean cut, professional, and courteous. When they arrived, one rang our doorbell to let us know they were about to start working. It was early morning, and my kids were just waking up. They wanted to let us know that we might hear some equipment, but overall it wouldn’t be that loud. A couple of hours later, my children were playing in our driveway while the guys did the work. They didn’t litter my lawn with cigarette butts, use inappropriate language, or listen to loud music. Instead, they did the job, and they did it well! My kids got a kick out of watching them enjoy their lunch break. A couple of times throughout the day, they showed me how things were progressing. I was impressed! About half way through the day, the owner whom I had I talked to earlier arrived to inspect his team’s progress. I saw him talking to the guys and looking at a few things. He called me over and pointed out a few additional repairs that I should have done. Was I being upsold? No. In fact, he said he couldn’t do the work himself, but he could recommend a few people in town that could do it. He then explained if I used any of the people he suggested, that he would get a referral bonus from them, and I would get his discount. He assured me the work would be top-notch, and he would only recommend people he knew could do the job well because his reputation was on the line. To me, this was truly a Remarkable Moment! Never before had I been treated by a contractor like this.
He left, and then returned at the end of the day to inspect the work. Needless to say, they did a fantastic job. When I asked if I could write him a check right then and there
, he stated that they would invoice me, and there was no rush. The invoice came days later with a handwritten note from the contractor telling me to contact him directly if I had any issues. That's Stage Three of the Customer Loyalty Loop.
Months went on, and my life returned to normal. During that time, I think I had referred the contractor at least a dozen times to people who needed various jobs done. About three months later, my daughter said, “Daddy, someone is here!” I looked outside to see the contractor inspecting that old repair. I went out and said hello. He was friendly and stated that he just wanted to stop by and personally thank me for the referrals I had sent him. He said he was just checking in to ensure the work they did was holding up. It was. And then, he asked if I’d be willing to provide a testimonial he could use on their website. Of course, I happily gave the referral. And there you have Stage Four of the Customer Loyalty Loop.
This contractor provided a customer experience that was leaps and bounds above what I’ve seen and witnessed with my own eyes in multi-million and even billion-dollar companies. The best part of all? He had developed it himself, and most importantly, he stuck to it every single time. He understood each stage of the Customer Loyalty Loop and treated each part of the customer experience with a level of gravitas and respect leaps and bounds beyond any of his competitors.
During the past 10 years, I’ve worked with some incredibly talented people, in some extremely successful companies, but I’ve had to fight tooth and nail to implement even some of the ideas in this book into their businesses. But when we do get them to execute even a fraction of what’s required, the results are always dramatic and they’re always grateful that they finally relented and listened.
Big companies often get stuck in internal politicking, inability to challenge some departments, or paralysis by analysis in that they don’t know how to look objectively at the entire customer experience, from initial contact to happily ever after. Now there’s no excuse.
Your company might be big, or your business might be small. That doesn’t matter. What is important is that this short story serves as a great reminder to all of us that whether you’re a giant or a one-man show, the basic structure of successful sales and marketing is all the same. If you can get the customer experience right, you win. And you’ll win every single time.
So let’s end right here with one simple question: How does your customer’s experience match up to my local contractor’s? Is it as good as his? If not, we should talk.
Notes
Introduction
1. Noah Fleming, Cultivate the Enduring Customer Loyalty That Keeps Your Business Thriving (New York: Amacom, 2015).
2. Jenny Beightol, “Small Business Survey 2016: Marketing & Customer Retention Trends,” Belly, May 10, 2016, www.bellycard.com/resources/customer-retention-marketing-insights.
3. Robert Cialdini, Influence: The Psychology of Persuasion (New York: Collins, 2007).
1. The Science of Experience
1. Daniel Kahneman, Thinking, Fast and Slow (New York: Farrar, Straus, and Giroux, 2013).
2. Leon Festinger, A Theory of Cognitive Dissonance (Stanford, Calif.: Stanford University Press, 1957).
3. Check out Elizabeth Loftus’s fantastic Ted Talk, How Reliable Is Your Memory?, www.ted.com/talks/elizabeth_loftus_the_fiction_of_memory.
4. Daniel Simons, Counter-Intuition, www.youtube.com/watch?v=eb4TM19DYDY.
5. Melanie Tannenbaum, “Are Your 9/11 Memories Really Your Own?”, Scientific American, September 11, 2013, http://blogs.scientificamerican.com/psysociety/are-your-911-memories-really-your-own/.
6. Business News Daily, “Relaxed Shoppers Spend More Money,” www.businessnewsdaily.com/1269-relaxed-shoppers-spend-more.html
7. Sheena Iyengar, The Art of Choosing (New York: Hatchette Book Group, 2010).
3. Stage One: Imagination Before Persuasion
1. Julian Watkins, The 100 Greatest Advertisements 1852–1958: Who Wrote Them and What They Did (New York: Dover Publications, 2012).
2. Want to try and win the $100 bounty? Check out the hunt here: www.antarctic-circle.org/advert.htm.
3. https://en.wikipedia.org/wiki/Scientific_Advertising
4. Jay Abraham has fantastic tactical marketing materials on the power of preeminent marketing. Check out all of Jay’s material, but start with Getting Everything You Can Out of All You’ve Got: https://amzn.com/0312284543
5. Ad Age and Schlitz Brewing purity claims: http://adage.com/article/adage-encyclopedia/schlitz-brewing/98868/
6. Dan Gilbert, Stumbling on Happiness (New York: Vintage Books, 2007).
7. A collection of fascinating social experiments can be found in the book Experiments With People: Revelations From Social Psychology by Robert P. Abelson, Kurt P. Frey, and Aiden P. Gregg (New York: Psychology Press, 2012).
4. Stage Two: Conversion Not Coercion
1. Check out Evergreen and my blog to understand the concept of the Messy Closet Theory. The theory suggests that organization is often far more desirable than a messy, confusing closet. This concept applies to your storefront, your website, your phone systems, and so on. http://noahfleming.com/the-messy-closet-theory-customer-experience/
2. In Glengarry Glen Ross, Alec Baldwin’s character delivers one of the most fantastic monologues ever. View it here: www.youtube.com/watch?v=Q4PE2hSqVnk
3. “Jets bringing their own toilet paper to London because ‘why not?’,” by Zac Jackson, NBCSports, October 1, 2015, http://profootballtalk.nbcsports.com/2015/10/01/jets-bringing-their-own-to-toilet-paper-to-london-because-why-not/.
4. Erik Knowles, “Resistance and Persuasion,” www.drknowles.com/resistancepersuasion.html
5. Jay Haley, Uncommon Therapy: The Psychiatric Techniques of Milton H. Erickson (New York: W. W. Norton, 1993).
5. Stage Three: Experience Choreography
1. John M. Darley and Daniel C. Batson, “‘From Jerusalem to Jericho’: A Study of Situational and Dispositional Variables in Helping Behavior,”
Journal of Personality and Social Psychology 27 (July 1973).
2. Martin E. P. Seligman, “Learned Helplessness,” Annual Review of Medicine 23 (February 1973), 401–412.
3. Chris Hurn, “Stuffed Giraffe Shows What Customer Service Is All About,” The Huffington Post, updated July 17, 2012. This is the story used by every customer service speaker on the planet: www.hufl'ingtonpost.com/chris-hurn/stuffed-giraffe-shows-wha_b_1524038.html.
4. Lindsey Rupp, “Delight the Customer or Lose Your Job: Restoration Hardware CEO Sends Scorching Memo.” Bloomberg, February 25, 2016.
5. See the e-mail sent to Donald Trump’s e-mail database about using his helicopter in Scotland: http://noahfleming.com/how-to-borrow-donald-trumps-helicopter/.
6. Andrea Petersen, “How Luxury Hotels Decide If You Deserve a Perk,” The Wall Street Journal, April 29, 2015, www.wsj.com/articles/how-luxury-hotels-decide-if-you-deserve-aperk-1430333168.
7. Martin Lindstrom, Buyology: Truth and Lies About Why We Buy (New York: Broadway Books, 2010).
8. Casper.com, the best mattress ever.
9. Ikea employees share information on the “Open the Wallet” sections of the store. http://men-talfloss.com/article/73388/19-behind-scenes-secrets-ikea-employees
10. Antonio Damasio, Descartes’ Error: Emotion, Reason and the Human Brain (New York: Penguin, 2005).
6. Stage Four: Happily Ever After
1. Gail Goodman, “How Gail Goodman Built Constant Contact’s Funnel to Build the $1 Billion Email Marketing Empire,” Kissmetrics Blog: https://blog.kissmetrics.com/gail-goodman-funnel-optimization/.
2. The Serial Position Effect, https://en.wikipedia.org/wiki/Serial_position_effect.
3. Learn more about NPS at http://NetPromoter.com.
4. Jennifer Kaplan, “The Inventor of Customer Satisfaction Surveys Is Sick of Them, Too,” Bloomberg Technology, May 4, 2016, www.bloomberg.com/news/articles/2016-05-04/tastytaco-helpful-hygienist-are-all-those-surveys-of-any-use.
5. Sign
up for my Tuesday Tidbit at http://NoahFleming.com.
Index
A
anchoring bias, 23-24
appropriate reasons to contact customers, 217-222
availability bias, 24-25
B
binary brain, 26, 41-42,66, 136, 178
breaking the loop in Stage Two, 103-106
C
Carousel Theory, 213-216
Cialdini, Robert, 16-17, 26,62, 119-120, 125
cognitive dissonance, 29
coherence, 29
competitors, experiencing your, 148-153
confirmation bias, 29
consistency, 210-212
critical thinking, 27
customer archetypes, 67-70
Customer Iron Cage, 212-213
customer resistance, removing, 118-125 three types of, 126-129
customer value, maximizing, 176-178
D
delighting customers, 131-132, 159-160, 166, 183, 223
dynamic of the customer relationship, changing the, 136-137
E