Do you try to win more of your customers’ business with special customer loyalty programs that offer discounts or other incentives to frequent buyers? Such programs can be helpful, but they miss a little-understood point: Clients don’t become loyal to programs; they become loyal to people.
In the battle for customer loyalty, your best weapon is not a clever package of incentives. It is your sales force. This is the first of four articles on Customer Loyalty in which we’ll explore the implications of that statement.
Are You Getting Customer Loyalty All Wrong?
Companies that want to capture more business from their existing customer base often devise loyalty programs as the means; they combine discount pricing with technology or special services, then try to sell customers on implementing the program.
Three problems with this sales tactic exist:
1. Loyalty programs have become commodities, easily copied or matched by competitors.
2. In many cases, customers can switch loyalty programs as easily as they switch suppliers of commodity products, without losing anything they value. At best, they can be temporarily satisfied with a loyalty program.
3. Satisfaction is not even remotely the same thing as loyalty.
Loyalty attaches to people, not programs.
Consider these findings from extensive research by The Sales Board, Inc. (www.thesalesboard.com):
- 75% of customers who leave a company for a competitor say they were satisfied or even “very satisfied” with the company they left.
- Only 25% of customers who defect from a company say they left for a lower price—but 50% of salespeople think that’s why their customers defect.
- Only 10% of customers leave because their needs have changed. Salespeople think a third of their clients leave for that reason.
- 75% of customers actually leave a supplier because of the lack of a solid sales relationship. But only 20% tell the salesperson that’s why they’re leaving.
The obvious conclusion is that if you want customers who are highly resistant to your competitors’ appeals—and that’s the best definition of a “loyal” customer—the most effective sales strategy is to improve their relationships with your salespeople.
This makes sense if you think about it. In your own role as a B2B customer have you ever become truly loyal to a corporate entity or its programs? Or did your loyalty to the supplier really attach to a particular person—probably a salesperson who won your trust and acted like a business partner, not just a vendor? Customers will ditch a program for another program. They are very reluctant to ditch a valued partner.
The ability to forge genuinely loyal customer relationships is not simply a gift that a few lucky salespeople are born with. It involves sales skills, relationship skills and methods that can be learned, practiced, and perfected. That is very good news. We’ll have more to say about it in the next article.
In The Field:
This “In The Field” story hits close to home. Our sales executive Eric Boss became involved in a sales process for a training initiative at Ingram Book Group. Now his story is told throughout Ingram as an example of how building long-term sales relationships yields success.
Eric started his contact with Ingram at the director level. By the time he was done, he had used the Action Selling process on separate calls with two VPs, a Senior VP, and the CEO. Without the skills of Action Selling, he would not have been able to navigate this complex sale. Each contact granted approval to meet with the next level—not because of a fancy pitch, but because of a relationship. Eric’s success in one Ingram division now has been repeated in two more divisions.
