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After banging in that last piece of hardwood flooring, most companies are already on to the next job site, rarely giving a second thought to their last customer—unless they receive the dreaded complaint call. This type of daily grind provides little opportunity for owners to concentrate on anything but the job at hand.
What happens the next time that happy customer needs a recoat and hasn't received even a call or a card from you? Unlike lawn care service,where landscapers have an opportunity week in and week out to stay in front of their customers, a hardwood floor installation is hardly a recurring event for most people. In such an increasingly competitive market, with comparison-shopping customers, most companies have a knee-jerk reaction. They feel the sudden need to pump money into a full-fledged advertising campaign in order to lure in new customers.
These companies should think again, because you can floor the competition by building a strong customer loyalty program. Do the math: If you currently retain 60 percent of your customers and you implement a program to improve that to 80percent, you've just added an additional 20 percent to your growth rate.
Customer loyalty is the practice of finding,attracting and retaining customers who will regularly purchase from you. However, don't confuse customer loyalty with customer satisfaction. Ask yourself: Even though your customers might have checked "Very Satisfied" on the last customer satisfaction survey, would you be the first company they call for their next hardwood flooring job?
Building customer loyalty involves building a strong brand among your clientele. Whether they are builders, designers or consumers, they must receive constant communication through a number of different channels, instilling a sense of reliability, consistency and service about your company. Customer loyalty programs can help "de-commoditize" an industry that often lives and dies by the price per square foot.
Fringe Benefits
Customer loyalty is rooted in a fanatical devotion to your best customers. Forging long-term relationships with existing customers allows you to more efficiently use marketing dollars. Let your competition blow their budgets fighting each other for new customers.
Securing that first sale to a new customer can be very expensive when you consider the marketing and promotion costs as well as your own time and energy. However, subsequent sales to that same customer are much less expensive. It is your existing customer base that offers the greatest profit potential. Remember the old 80/20 rule: 80 percent of sales come from 20 percent of your customers.
The benefits of an effective,well-rounded customer loyalty program are numerous. In addition to providing a platform from which to garner more direct sales from an existing customer base, an ongoing customer loyalty program allows hardwood flooring companies to:
- Help encourage word-of mouth marketing and personal referrals
- Enhance customer service by identifying product and service problems earlier
- Tailor product offerings and provide personalized communication
- Thank customers for their business
- Improve customers' spending habits (i.e., up selling, cross-selling or increasing buying frequency)
- Differentiate your business from the competition
- Improve customer retention
- Eliminate the reliance on other onetime offers and deep discounts
- Add a mechanism to track customers' buying behavior (i.e., frequency and monetary amounts)
- Improve the chances for future sales growth.
Keep in mind, however, a successful customer-driven program is founded on understanding who your customers are and what's most important to them.
Who Are They?
Analysis of your customers allows you to identify those who are not only the most profitable but who also fit within your current business objectives.
It isn't necessary to go and buy the latest software package that creates an infrastructure of data, facts and analysis behind the scene. (You can if you have the budget, though.) Identifying your most valuable customers can be as simple as listing your clients in an Excel spreadsheet.
Start with customers who:
- Purchased high-end products
- Paid on time and without structured payment plans
- Bought more than once
- Paid full price without asking for discounts
- Have not canceled or changed original work orders
- Required little hand-holding or lengthy after-sales service.
Take a look at your sales activity and actually make a list in order of decreasing sales. The results can be surprising. It's quite possible some of your largest customers are among the least profitable. Or, you may even find there are those customers you would be better letting go. However, don't be quick to discount customers who complained or were originally unhappy with your products or installation. If you promptly follow up and solve customers' complaints, they are far less likely to complain to everyone else and are far more likely to view your company as customer-oriented.
Once this list of customers is established, look for ways to develop and maintain an ongoing dialogue with them. Use a variety of different methods—phone calls, on-site visits, e-mail, direct mail, etc. As mentioned previously, a key benefit to a successful customer loyalty program is the ability to personalize communication unique to these customers' needs. Customized,one-to-one marketing is a sure-fire way to keep competition off the front doorstep.
Build it and They Will Stay
It doesn't take the next cutting-edge database and Web-enabled technology to build a strong customer loyalty program that promotes repeat business,develops long-term customer relationships and improves your company's performance. Even the smallest wood flooring specialists probably already have everything they need.
Here are seven keys to building a successful customer loyalty program for your business:
1) Find loyalty among your existing customers. Identify and understand your best customers' behaviors. In addition to organizing a list, include additional details such as how they decide to buy and why they are buying. Use whatever affordable tools, software and data-mining techniques you have available.
2) Establish regular contact. The more you reach customers, the more likely they are to use you for the next flooring project. Send holiday cards or invite them to trade shows. Ask to use them as references. Use a newsletter to update them on new products, services and news about your company. Use clips from local newspapers as an excuse to toot your own horn—there's nothing like third-party endorsement. Host free seminars. Err in favor of person-to-person contact rather than new technology alone to keep customers loyal.
3) Start from within. Building customer loyalty involves the front line of your business. It's important to hire and retain employees who are customer friendly. Plain and simple: Hire nice people. From the person answering the phone to the installer or clean-up crew, all support personnel should have some level of basic customer-service training. Loyalty is built on the customer relationships your employees build and maintain.
4) Create and demonstrate good business ethics and practices. Good,ethical business practices start from the top and trickle down to your employees. Set the tone for your employees and they will feel good about their jobs and pass their enthusiasm onto your customers.
5) Build reliability. Be able to "walk the walk." If you say you will be at a customer's house at 10 a.m. on Saturday, then make sure you show up on time. Be reliable. If something goes wrong, let the customer know immediately, and compensate them for their inconvenience. Go out of your way to right any wrongs.
6) Employ customer-centric language. Take a close look at both your verbal and written customer communication. Do you and your employees refer to customers by name? How many times does your marketing literature refer to "we" the company versus "you"the customer? Speak to customers from their own perspective. And, don't forget to use personalized communication whenever possible.
7) Use discounts sparingly. If you are going to offer discounts, know your profit margins. Don't offer discounts until you know the impact on the bottom line. Also, be selective about when you offer them. In addition, factors such as the ability to offer highly differentiated products from the competition, to stock higher end products where price is not a question, to include products with a high customer service component (where you can compete on the intangibles), and to provide multiple products that appeal to your target customer base will positively affect the success of any customer loyalty program.
Whether you're a small- to mid-sized business or even a large manufacturer,you will always have an advantage over the competition if you connect with customers and build a solid relationship. Customer loyalty is the elixir of growth and the best differentiator. Without it,you are destined to compete on price within an even larger fish bowl. It's time to put your time and money where your profit is—loyal customers.
Customer Loyalty Success
Kirk Washington, the owner of successful Main Street Floors in Alpharetta, Ga., got out of “playing the game.” He doesn’t buy into giving away the freebies (sports tickets, free lunches, expense-paid trips) anymore. Instead, he concentrates on building customer loyalty.
“Everyone competes on price to some extent, but to build a successful business in this industry, you can’t live or die by that alone,” Washington says. “You don’t have to be super creative in building customer loyalty. A lot of times, it’s just the little things such as showing up when you say youwould and returning phone calls.”
Ninety percent of Main Street Floors’ customers come from new construction, with builders and remodelers making up the other 10 percent. Washington concentrates his marketing dollars on what helps his bottom line—building customer loyalty.
“One of the most underutilized tools to help build customer loyalty is the warranty,” Washington says. “We’ve had great success embracing the warranty, even though the industry as a whole treats it like the plague. In my eyes, it’s as important as the initial installation.”
In addition to the warranty, Washington also chooses to offer some of the most unique flooring products in the area, further differentiating his company from the competition. And, if he chooses to offer discounts, he then ties it to repair services instead of product or installation.
He offers this advice: “Consumers are demanding more and are better educated about our industry, so know who your key customers and accounts are. However, don’t try to be all things to all people. Work within suitable geographic areas and stay within the boundaries of your business objectives.”