Build customer loyalty…don’t destroy it

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Build customer loyalty…don’t destroy it

Some of you that read Linda’s blog will know about the customer service she received earlier in the month. This started me thinking about the Engagement Loop and hence the article below.

Providing a customer experience used to be about what you did in the store; most customers judged the whole experience with the retailer based on when they were in the store.

In 2014 that has all changed; the power of marketing is now with the consumer, not with the retailer. Customer loyalty in 2014 is based on what I call the “Engagement Loop.”

Research indicates that customers used to visit five stores on a typical shopping visit, that number is now down to three. Retailers now need to protect their customer base; retailers need to build a strategy where the competition is not presented with an opportunity to get to their customer and encourage them to swap stores.

Retailers have to develop the “Engagement Loop” and understand the three stages and how they affect customer loyalty.  The three stages of customer loyalty within that Engagement Loop need to be efficiently managed by retailers as it affects bottom line profits.

The First Stage

The first part of the loop occurs before the consumer leaves their home. They switch on the computer and do their research on the web. They may go to a webpage, Facebook, Twitter or other web forum to do their research on your business. They will also chat to family and trusted friends and work colleagues; they will make a decision on whether they can trust your business. They will also build a picture in their mind of the image of your business and the key is to ensure when they arrive at your premises the visual experience exceeds the image in their mind.

The Second Stage

The consumer arrives and the face-to-face experience in the loop develops. This is where the retail team should ensure that the “Moments of Truth” in the store looks their best and that the team engage the consumer. The “Moments of Truth” include the first impressions from the outside of the business, the appeal of the first power display, and whether or not it is topical and the engagement with the first member of the team.

All team members should be made aware of the “Engagement Loop” and how it affects sales.

We personally experienced how this can go wrong recently. Most retailers invest around 2%-4% of total sales to ensure that the “First Stage” is as appealing as possible to encourage the consumer to come to the store. We used the web to locate a store that sounded reputable.  We have recently purchased a farm and some of the farm equipment was in need of servicing or repair.  In addition we needed a new chain saw small enough for my wife Linda to be able handle and in addition had in mind that we would purchase a new ride on mower in the coming months.  The repairs, servicing, new chainsaw and future purchase of a ride on mower was close in value to $30,000 worth of business to the store within the next few months.  The lifetime value of our farm business to his store would be considerably more.

When Linda purchased the chainsaw she also purchased a spare chain for the saw on the advice of the owner. When Linda went to fit the new chain it was the wrong size.  She returned to the store with the chain and pointed out the problem.  The store owner accused her of swapping the chain, saying that he never made a mistake in supply of chains and told Linda she was liar.

After a good deal of debate, Linda left the chain on his counter walked out of the store, drove to the next town to another dealer and bought three new chains and vowed that she would never set foot inside the other Stihl dealership again. For a $10 profit margin the owner was prepared to lose $30,000 worth of future sales by damaging stage three of the “Engagement Loop.”

The Third Stage

This is probably the most important stage in the loop. The consumer goes home and discusses their experience. 50% of the conversation is one to one with family, friends and work colleagues. The other 50% is via social media. Social media spreads rapidly amongst friends and strangers. In fact 40% of store visits are by consumers who have picked up the reference third hand on social media from people who have not yet even been to your store.

The reverse to that is that bad news travels a lot faster than positive references and damage can be done to a business without the owner even knowing about it.

The “Engagement Loop” is the marketing challenge for the future. Retailers need to engage with consumers at all stages in the process, but, remember the process starts before consumers enter the store and continues after they leave the store.