Even your regular customers are not necessarily loyal. The relationship between regular customers and profitability is weaker than most of us believe, according to a four-year Harvard research study involving 16,000 people: “About half of those customers who made regular purchases for at least two years…barely generated a profit.”
However, customers with the attitude of loyalty are incredibly profitable. “Customers who score high on both actual and attitudinal measures of loyalty generate 120% more profit than those whose loyalty was observed through transactions alone.” This is not just a business-to-consumer phenomenon—it’s true in the business-to-business world, as well.
Patrons with loyalty glow when they talk about you. And they are not just your customers—they’re advocates, believers, activists, campaigners, sponsors, friends, and fans. When these people go out to dinner with friends and loved ones, they excitedly tell stories about their experiences with organizations they love.
Think of the impact on your work and your organization if more of your customers behaved in these ways. But just how much does loyalty matter to the bottom line? They not only purchase a lot from you, but they enthusiastically send other customers your way too.
Promoters are about four times more profitable to your bottom line. So if we’re discussing your profits, then yes, loyalty really matters. And earning loyalty starts by adopting the Loyalty Leader Mindset and living the Three Core Loyalty Principles.
Who Is Responsible for Creating Loyalty?
The CEO, right? Well, certainly they play an important role. Love for customers is expressed not only through personal interactions, but also through the creation of policies, processes, and technology that make it easy for customers to do business with the organization. The CEO plants the fertile field that nourishes these activities and outcomes for customers.
But the CEO is not the primary driver of the loyalty we are talking about here. It’s all of us—the people who serve customers inside and outside the organization every day.
Bain and Gallup have found that in most organizations, the farther you move down the hierarchy from the CEO to the frontline, the lower the employee engagement and loyalty to the organization. And people who are customer-facing—the very ones who have the biggest impact on the customer experience—are usually the lowest-paid, least-trained, and least-engaged employees. Turnover among these employees is over 150 percent per year in some organizations. Needless to say, with one foot out the door, a frontline employee may not be riveted on building long-term customer relationships.
Like promoter customers, promoter employees love you, talk you up, and recommend you to their friends. They stay with you and serve your customers with zeal and energy. They are by far the most important factor in gaining customer loyalty.
While many complex variables produce your bottom-line profits, there’s no question that your customer-facing employees play a critically important role.
Fiercely loyal customers are rarely found in places without strongly committed employees, and the behavior of employees directly serving customers is often the deciding factor in whether or not customers are loyal.
There’s a difference, however, between being “happy” with your job and having a Loyalty Leader Mindset.
Employees must not only love their jobs but be engaged in making customers happy too. Someone may love their job because they like the benefits and can chit-chat with friends all day, but that doesn’t bode well for the customer experience.
So, whose job is it to inspire employees to do a great job for customers? You may say, “The manager, of course.” No question, the team leader is the linchpin—the leverage point—in building the team culture and inspiring everyone to do their best for customers. But what if you don’t have an inspiring team leader? Can you make a real difference in your team’s ability to earn customer loyalty? The answer is most definitely yes. And not just in your own engagement with customers, but also, and perhaps even more importantly, in your interactions with your fellow team members.
Anyone can adopt a Loyalty Leader Mindset. You don’t need a formal title. You can be the most experienced executive in the company or the cashier they just hired yesterday. It doesn’t matter. A loyalty leader earns loyalty from others by living the principles that acknowledge their worth and limitless potential.
Leaders have to choose to adopt this mindset. In fact, too many formally designated leaders operate through an ineffective or even harmful paradigm. You may have heard that people don’t quit companies; they quit their manager. The research bears this out. According to Gallup, “Managers account for at least 70 percent of variance in employee-engagement scores across business units. This variation is in turn responsible for severely low worldwide employee engagement.”
If you are a manager, how are you doing as a loyalty leader? Ultimately your financial results and your performance reviews will depend on the answer to this question: Are you a leader who earns loyalty from your employees and customers?
To change the behavior, engagement, and loyalty of employees, the leader’s mindset and resulting behaviors need to change. Many managers get their jobs because they’re technically skilled, but they may not have learned how to model, teach, and reinforce the behaviors needed to earn the loyalty of others. Employee loyalty comes from genuinely caring about their thoughts and ideas, sincerely wanting to understand their goals, and then helping employees achieve them. It comes from a willingness to appreciate their contributions. Just as loyalty comes from feelings deep inside you, the power to inspire loyalty comes from deep inside as well. It’s fundamentally a question of the kind of person you choose to be.
The damaging paradigm that earning loyalty requires others to change is self-defeating. But once you shift to a mindset that loyalty requires you to change first—well, it’s liberating. It’s in your control. You have the exciting challenge of becoming a person who inspires loyalty. You have it in your power to build a team of loyal employees, no matter what kind of leaders you have or what kind of fate the company’s recruiters have dealt you.
You might already be that one-in-ten leader who naturally inspires the loyalty of other people, but most of us are not. It doesn’t mean we’re bad people—it just means we haven’t necessarily focused our lives on the principles that drive loyalty. We might be very talented operationally. We might be strategic, organized, disciplined, and highly productive. But we are unlikely to enrich the lives of our customers and employees, or our own lives for that matter unless we live by the principles that kindle loyalty in the hearts of others.
How Can You Earn the Loyalty of Your Colleagues and Customers?
Principles apply the same way to everybody, regardless of our backgrounds, life experiences, or beliefs. Principles also rule our relationships with people. If we ignore or violate those principles, we will fail. The Three Core Loyalty Principles for leading loyalty in any relationship are as follows:
Loyalty is the natural consequence of principled behavior. Principled behavior awakens loyalty much more effectively than reward points or promotions. Customers and employees are fiercely loyal to organizations and people who show empathy for them, take responsibility for their work, and who act generously. These are not just techniques—they are behaviors that can be learned and adopted by anyone in your organization.
Engage your team to win the heart of every customer with Leading Customer Loyalty. Register for a complimentary webcast today and learn how companies get their frontline teams to act in a way that builds customer loyalty and drives faster growth.
About the AuthorMore Content by Leena Rinne