Building customer loyalty is one of the smartest ways of increasing sales, reducing costs and enhancing profitability. In the book, Ultimate Question: Driving Good Profits and True Growth by Fred Reichheld provides one question to split up devoted customers from satisfied and dissatisfied ones along with a formula to help businesses build devoted customers to increase sales.
Yet, this ultimate question and the accompanying formula, as good as they are, neglect to reach that next level where action is taken. And the action that being a sale is what businesses need to stay in business. With this knowledge, the question now becomes when was the last time the person you suggested my products or services actually emerged in and made a purchase?
A proven method should reflect how many actual recommendations are received from each customer whether energetic, inactive, or even lost, center of impact or a passer by. Then this formulation also needs to determine the value of those referrals by the real dollars shipped (increase sales) and potential future dollars to be received.
From these statistics, the business can improve earnings and decrease costs. Then your company can determine the measurable results from its marketing activities. Sales Coaching Tip: Marketing results can be measured and tied directly to new business. For example, recently a gathering was experienced by me at a fresh coffee shop in Northwest Indiana called Evelyn Bay.
- Duplicate to Another Image
- Mega-events and their effects on tourism and destination branding
- Stage in the Sales Cycle
- Coffee Service
- Areas Beyond your P-Zones and I-Zones
- Fluency in a foreign language
- Legally setup your business
- Royalties paid to associations or foundations are subject to 10% withholding tax
Since that time, I have already been there a couple of additional times and have made recommendations to many people because it can be an exceptional place for espresso, a breakfast-time homemade or cover soup. The WIFI, comfy chairs, and general atmosphere are excellent for a quick business meeting to presenting some down time.
Additionally, I have scheduled a lunch conference there with anyone who has never been there. All of this business can be traced directly back to the person who at first invited me. His actions and recommendations to place him at the best end of the customer commitment formulation. The company constructs this formula is up to them However.
These requirements probably should participate that formula. For instance, if a customer delivers one recommendation, then it could look like this: 2/1. The numerator two represents the new customer plus the customer who made the recommendation and the denominator signifies the current client who made the recommendation. When the math is done by you, this means that the customer devotion factor because of this customer is 2. As the existing patron continues to bring in new customers, the numerator raises. For this local restaurant, the gentleman who introduced me is probably somewhere around a 20 if not higher credited to his energetic business networking activities.
The second area of the formula would require assigning an average value to each visit. This would require the establishment learn the common purchase per customer. Finally, per month or year the last part of the equation is knowing the average variety of visits. Continuing with the exemplary case of the coffee shop and using a monthly time frame, a week maybe the common trips are 4 or one. 40 a month patrons. As to the person who initially brought me, his value is probably double to triple due to his active business building skills.
Customer loyalty is truly not about how likely an ongoing customer will recommend your products or services, but instead have they taken action to do so and just how do those actions result in actual dollars? Employing this approach to identifying your loyal customers, you can quickly see where you should place those valuable marketing dollars and more importantly how to leverage word of mouth advertising.