Are customers loyal or just too lazy to go elsewhere?

Keeping the customers you already have is, of course, important.  After all, it costs between five and eight times more to win a new customer than it does to keep an existing one (opinion varies on the exact number - but whatever it is, it’s significantly more). But there’s a difference between a customer who is ‘retained’ and one who is ‘loyal’.

You might think the difference is academic, as both are continuing to give you their business and pay their invoices. But their motivation for being your customer, and their attitude towards you, can vary enormously - and this can make a difference to the security of your sales figures.

Loyal customers know, trust and respect you, and place a genuine value on what you offer. They might have tried other companies, or might have left and then returned. But they want to be your customer for the right reasons – things that transcend price. This is not an excuse to take them for granted, ignore them, give them second-rate service or push up your prices unreasonably.

It’s a reason to treat them well, so they become ‘brand advocates’ – people who will sing your praises, and give you valuable testimonial quotes (which will help you attract other customers). Treat them as your friends. Make them feel special. Ask for their thoughts when you have new ideas. Nurture the relationship for the long-term.

Retained customers are a very different thing. They may be with you simply because they haven’t found a better option… yet. Perhaps they can’t be bothered to look – perhaps they lack the time to think about your performance as a supplier, or are simply apathetic about what you do.  Maybe you’re just one small supplier which is “under the radar”. Or maybe they are just “satisfied enough”… enough to stay, and not question too much; but not enough to be considered really loyal. While it’s tempting to think the business is secure, customers who are only “retained” are vulnerable to predators. Given the right circumstances – such as a swifter competitor or a cheaper price – they will consider their options. 

The sad thing is, a retained customer was probably once loyal – or at least actively happy to have you as a supplier.  At some point they have started to take youfor granted, or question your worth.  And as the supplier, that’s your fault. It’s your job to keep in touch – no, in step – with your customers to stop that happening. You must keep reminding them why they chose you, and persist in giving them reasons to keep on choosing you. 

So there are three important marketing jobs to be done:

1. Gauge where your customers are on the loyalty scale – through regular, well-considered research; and by watching for clues, such as a change in purchasing patterns, or unusual queries over pricing.
2. Listen to the research feedback, and take it seriously. If there are genuine reasons why customers are thinking of leaving you, don’t ignore them.  Investigate and consider how you need to take action. The problems won’t go away by themselves, but your customers may if you don’t take their feedback seriously.
3. Remember marketing is more than just the quest for new customers and new business.  It’s also about regular communications to keep the customers you have, and increase your value to them. Think of it as moving customers up the loyalty scale. So remind customers what you do well; what makes you different; what they won’t get anywhere else; how you’ve solved problems for them, and others.  

Then it’s back to step 1 – measure again.  And repeat.

Annette Harpham is principal of SharpEdge Marketing, a marketing consultancy and outsourced marketing management service which specialises in B2B, manufacturing and construction marketing.