Secrets of the ‘Customer Loyalty Loop’: How to Create Experiences Your Customers Won’t Stop Talking About
By Ben Goldstein
Noah Fleming is a sought-after business strategy consultant, speaker, and best-selling author, whose landmark books, Evergreen and The Customer Loyalty Loop, broke new ground on customer loyalty, customer service, customer experience, and customer retention. As the founder of Fleming Consulting & Co., he serves as a trusted coaching and consulting source for thousands of clients who want to dramatically grow their businesses.
We recently spoke to Noah Fleming to learn why timing is everything in customer outreach, why handwritten notes are so powerful, and why every business should use the “Bentley Strategy.”
Credibly: In your book The Customer Loyalty Loop, you wrote, “Many companies make decisions about their clients based on total revenue spent. They take their top 10% to 20% of best spenders and work to surprise, delight, and care for those customers.” So how should a company define its “top” customers? Or, is the goal to simply give the same level of attention to all your customers?
NOAH FLEMING: I do think there is a point where you want to know who your top customers are, but a top customer might not always be a top spender. A small customer that hasn’t spent as much money has the potential to become a great, loyal customer. If you only focus on revenue, you’re missing an opportunity to grow accounts that could become large.
At the same time, you have to make some assessments about customers that have been with you a long time who don’t necessarily spend a lot. They probably don’t need as much service or as much love. The big mistake, obviously, is treating every customer the same, where everybody gets the same message, the same promotion, the same story.
You’re also not a fan of using Net Promoter Score to measure customer experience, because it’s impersonal and doesn’t generate any real insight.
Sometimes when a company sends me an NPS survey, I’ll just fill it out falsely — I might give them a one, I might give them a 10. The reason I do that is because I want to see what they do with it. And the answer that I get 99% of the time is absolutely nothing.
They do nothing with it. So, whether I’ve given you a one, a seven, or a 10, Net Promoter Score is useless unless you use that information to make effective decisions.
If I give you a 10 and you don’t have a referral process in place, or mechanisms to create word of mouth or to ask me for referrals, you’re not going to get them. If I answer a one, very rarely do I ever hear from the company asking me why I gave them that score.
I might fill out the little survey and say, “it’s because your service sucks,” but then nobody calls me up and says, “Can you explain that to us?” It’s such an absolute waste. So, if you want to use NPS, that’s fine, but you have to use the data.
One of the other takeaways I got from your book is the importance of timing when it comes to customer outreach. What should the first few post-sale communications look like, when you’re building a relationship with a new customer?
I call this the “Carousel Theory.” A carousel is a mechanism that goes around, and up and down, and every animal on the carousel is at a different level. Your customers are all at different points as well.
Just because somebody has bought something from you, it’s not always the appropriate time to ask them for the next sale. So, you have to use some critical thinking to say to yourself, “What is the right thing we should be asking for from this customer at this time?”
An automated follow-up asking me to review a hotel stay three days later is fine. But in reality, it might not be the best time because I might still be traveling, I might be not home yet, whatever the reasons could be.
So, you need to think about what is the appropriate time, what is the appropriate reason, and where are the customers in our life cycle? It’s not always best to ask for a testimonial right away. It’s not always best to ask for a referral right away. And of course, you have to continuously add value throughout the experience.
Related: Customer Loyalty Programs: Why Loyalty Programs Are Better than Coupons
You’ve discussed the massive ROI that can come from a simple handwritten note. So many brands rely on technology tools to run their customer loyalty programs, and a handwritten note can really help you stand out. Do you have any tips on who should get those notes, or when to send them?
I use what I called the Pick-3 process, in which every member of your team engages in three tasks related to customer loyalty, every day. Especially in the small- to mid-market range, I always get the CEO doing this first, because all CEOs are salespeople, and they should be involved in these efforts.
There is nothing more valuable than a legitimate handwritten note arriving from the CEO of a company I’ve just given $20,000 or $30,000 to, saying “Thanks for your business.” And there’s nothing more meaningless and filled with crap than a SendOutCard that’s been automated and has a digital signature stamped on it.
There was a great story in Forbes about a company called HEX that sent 13,000 handwritten notes over the course of a year, and the ROI they got from it was phenomenal. I urge my clients to start small, send one note a day, get your sales people to start sending these things — “Just writing to check in. Just seeing how you’re doing.
We appreciate your business. It’s great to have you on board.” All of that stuff has meaning, because somebody actually took the time to write something that was meaningful and personal. It goes a long, long way.
Are there any common mistakes that you see retail businesses making when it comes to customer loyalty?
Well, the big one which I talked about in my first book is they don’t capture my information. They don’t find out who I am. They don’t get the right data from me.
They might make an attempt at it by asking for my name and postal code and trying to get me on an email list, but the fact is, if you don’t make it part of your process and procedure to ensure that you capture something or at least try to, then you’ve sort of gambled everything on me having this remarkable experience the one time I’m in your retail establishment.
If they do get the information, the next big thing is they don’t do anything with it. I suggest this concept of consistency over quantity; if a retail business can build something as simple as a newsletter or a weekly e-mail blast, and if they can be consistent and send it out week over week over week without missing a beat, they will succeed from it.
It will generate results. But the fact is, most of them are too busy running their business. They’ll send out one, and you might not hear from them again for six weeks.
The other big mistake I see with retail businesses is that they don’t really know how much a customer spends, or they don’t know how frequently a customer shops with them.
Start tracking those things if you can, even on an Excel spreadsheet. I’ve seen very small retail businesses do this, where they track how many people come in every day to their shop and leave without buying something, how many come in every day and actually spend something, or how much does the typical customer spend.
It would be useful to know if you have 90 people coming in your retail business every day and 70 people don’t buy something, right? Unfortunately, most companies don’t have a clue. But if you know those simple numbers, you can try and make changes to improve them.
What’s the “Bentley Strategy,” and how can small businesses take advantage of it?
The Bentley Strategy means creating moments within your customer experience that are truly remarkable. There are some great hotels that have a house car, and they’ll say, “Oh there’s a Bentley out front, just let us know if you need to go anywhere.”
These are very expensive perks, but the fact is that when their guests go home, they’re not going tell people that they saved $100 on their room, they’ll be talking about the fact that the hotel or the restaurant had a Bentley outside that they could use.
It’s the same thing with cruise ships that offer butlers, for example. These are the high-end perks that you can actually buy into, and they’re so memorable, so remarkable, that we want go home and talk about it.
What I suggest in The Customer Loyalty Loop is that every business of every type can develop something on par with the Bentley and the butler. Sometimes it requires a little bit of outside-the-box thinking to imagine, “What will work for my small retail shop? What will work for my restaurant, or my service business?” But the fact is, you can build these things.
I don’t believe it’s about gimmicks. I don’t believe it’s about sending cookies or something. I try and urge my clients to think about, what can you build into your experience that is so powerful that people can’t go home and not talk about it?
CONNECT WITH NOAH ONLINE
Official site: noahfleming.com
Noah Fleming on Amazon: https://www.amazon.com/Noah-Fleming/e/B00K3ZV074