Keep your customers coming back for more

What’s better than a customer choosing to use your business, forsaking all competitors, for the first time? Easy. Seeing that customer come back for a second, third, fourth time.

Repeat customers are the holy grail of small business success and should arguably be number one on the list of priorities for any owner. Profitability and growth are all well and good but neither come without garnering a base of loyal customers who keep coming back, particularly during times when business is slow.

“The importance of customer loyalty can’t be overestimated, especially for small businesses or those just starting out,” says business expert and branding specialist, Deborah Lee. “Without it, your word-of-mouth marketing will be non-existent and you’ll struggle to establish a customer base, which is key to forecasting growth and committing to goals.”

Equally as important as gaining customer loyalty, is to acknowledge and reward it. “Everyone likes to feel appreciated, and that goes for your customers too,” says Lee. “They won’t remain loyal for long if they don’t feel as if their choice (to go with you rather than a rival) has been acknowledged, and ideally incentivised.”

In fact, to go one step further and make customer rewards a known element of your brand, can only be a good thing. “Many brands simply see customers as figures on a spreadsheet and these days the public are smart, they know this. So for a brand to see customer retention and rewards as being as important as profit, it can set them apart from their rivals.”

Amélies, a seafood restaurant in the Cornwall town of Porthleven, has upped its game since big names such as Rick Stein opened up shop nearby. “We’re a seasonal business and customer loyalty is crucial to keeping us open all year long,” says owner Sam Sheffield-Dunstan. “We run a 20% discount on Tuesdays throughout winter for anyone with a local postcode as well as a series of Winter Warmer offers that include two for one meals and a local steak night. This serves to maintain our regulars off-season and then summer visitors are a welcome boost.”

But Sheffield-Dunstan knows financial rewards are not the only way to her customer’s hearts. “We pride ourselves on the personal touch. Keeping someone’s favourite table free for their weekly visit or ordering in a special bottle of wine for a wedding anniversary sets us apart from the ten other restaurants in town.”

Pizza Ranch franchises in Iowa, America, also recognise the importance of brand loyalty and have built a band of regular customers without a focus on discounts or freebies. The team looked at the needs of those around them and began holding “community impact” nights, where friends and family members serve tables to support a local cause, such as raising funds for a school project. The restaurant donates the evening’s tips and 5-20% of the profits, and often finds local regulars add extra money into the pot at the end of the night, too. The place is full on what would usually be a slow summer Monday.

The research certainly suggests that loyal customers are the bedrock of a winning business – Gallup found that customers who have a strong, positive emotional attachment to a retailer will spend 37% more with them. But could nurturing these relationships have a direct impact on the cashflow of your business? There’s new evidence to support the thinking that customer loyalty has the power not only to up your profits but to give you access to much-needed cash.

American startup ZipCap saw how crowdfunding was gaining traction as a communal way of covering costs and decided to see if a similar model could help support local and independent businesses. Rather than ask customers to invest, ZipCap simply asks them to stay loyal to future spending and turns that into a financial asset.

“In order for businesses to get loans, they’re often asked for an asset as collateral, but they rarely own the building they’re in and the value placed on equipment is usually only 20%,” explains Evan Malter, ZipCap founder. “With our idea of Loyalty Capital, the business owner rallies the support of their regulars to pledge to spend a certain amount, cash they were already planning on spending, and this can be used to get advance cash. It strengthens the bond between customer and brand, which in turn encourages more spending and word-of-mouth support.”

Their patent-pending Loyalty Capital idea has already paid dividends for a Michigan cafe called Beezy’s. Owner Bee Roll had no collateral to wave in front of her bank manager’s nose, but what she did have was hundreds of people who loved her food. And they stepped up. Bee signed up 130 Inner Circle members who each committed to spending $475 a year – it meant she could take out a $10,000 loan from ZipCap with a 12-month repayment schedule. “Loyalty is a strategic relationship and I take it very seriously – honouring my guests, their quality of life, their hard-earned cash. The loan frees up my energy and motivation to focus on the better parts of running a great business, to keep the guests’ favourite food coming, instead of wondering how I’m gonna keep my doors open through a slow January.”

Amélies’ Sheffield-Dunstan sums it up perfectly: “Success for small businesses is about a triangle of customer service, marketing and word-of-mouth, and customer loyalty is the one thing that underpins that whole structure.”

The trick to building that loyalty is to find out what really makes your customers tick; whether it’s inside knowledge on brand-new products, experiences to tell their friends about or just plain fantastic customer service.

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