The Definition of Customer Loyalty – Part 1

//The Definition of Customer Loyalty – Part 1

The Definition of Customer Loyalty – Part 1

By | 2019-07-29T10:45:19-04:00 June 7th, 2018|Customer Loyalty|0 Comments

According to Merriam-Webster, loyalty is:

  • unswerving in allegiance
  • faithfulness to a:
    • cause, ideal, custom, institution, or product.

This all boils down to constant support and manifests itself in countless ways depending on the context. If you’re a B2B SaaS company like us, we hope our customers share our vision, support us forever and are “faithful” to our product. We can’t minimize what goes into fostering loyalty. It surely doesn’t happen overnight. Company-wide intentionality comes into play. Additionally, signs of loyalty aren’t straightforward like the materialization of advocacy; if you’re paying attention you’ll find signs of loyalty without too much work. After reading this two-part blog you will leave with several actionable takeaways relating to, but not limited to, improving your internal teams, communication, honesty, and trust to garner loyalty.


Why is Customer Loyalty Important?

The most convincing argument for why a company must focus on loyalty is for the financial benefits: a lifetime of revenue and the lifetime value of the customer. Having customers for life in no way can hurt the bottom line — unless they’re the wrong customers after which you might want to reevaluate your qualifying standards (see below in Sales & Customer Loyalty). Parts of revenue generation are the high-value relationships that customer loyalty produces. If a customer is loyal, they’ll be more receptive to recommendations of upsell/cross-sell AND possibly provide references that lead to new customers. Loyal customers prove that your company and products/services are convincing customers to stay with you. They will directly increase your credibility through case studies, acting as references for prospects (when a prospect asks to speak to a current customer to confirm product value) and more. Finally, are you truly focused on Customer Success if you’re not creating loyal customers? A customer-centric company can’t be customer-centric without putting customers first and thus creating an environment that promotes loyalty.


What is Customer Loyalty?

The Equation of Customer Loyalty

This above equation was originally presented by Ben Hinson and wraps up the qualities that are experienced by loyal customers. While the equation is beautiful in its simplicity, we’ll continue to explain each part.

  1. Differentiation: Your company, product, and offering should be unique from the others, and thus be one of the reasons that your customer chose you. Differentiation can be the product offering, services, features, personal relationships, commitment to partnership etc. The list goes on but learning what differentiates your company to your customers is important for selling and managing loyalty.
  2. Fulfilled Customer Expectations: Were the expectations laid out during the sales process? What about when the customer started working with a CSM? Are they consistently seeing their expectations and goals being fulfilled? You won’t have loyal customers if you don’t meet this basic promise.
  3. Creating and Maintaining Positive Emotional Connections: Making the customer feel good about themselves, the work they’re accomplishing with you, and feeling like your company cares about them all play a role into massaging the ego and bolstering the psyche. In fact, an article by Ed Powers, a principal consultant and customer loyalty expert at Service Excellence Partners, outlines the science behind, “The Loyal Brain.” You can persuade and work with customers more easily if they enjoy interacting with you – each time you provide a rewarding experience, their brain releases dopamine. This isn’t a negative manipulation, but rather one that helps both sides of the relationship achieve goals more quickly.
What does Customer Loyalty look like?

Customer Loyalty manifests itself in customer actions. To check this yourself, when was the last time you had a customer tell you they were loyal? Below, find some of the actions you can keep an eye out for to see if your customers are loyal. Many of these indicators (*) can also be signs of Customer Advocacy.

  • Natural customer referrals*
  • Constant customer feedback (positive and constructive)*
  • Verbal and actionable validation of work
  • Mutually-beneficial partnership*
    • Partnering for conferences, webinars, new trials etc
  • Customer tells you what’s happening at their company and keeps you in the loop


Who Fosters Loyalty Within a Company?

First things first: Loyalty Starts with R&D

Positive and valuable relationships are integral to helping loyalty grow within a customer base. We can argue, however, that loyalty begins with R&D (product developers, service creators etc.) – before a customer relationship even happens. Having a quality product or service, and constantly evolving it to meet the demands of your customers or industry, is the base of loyalty.


Everyone Else

In addition to the creation and constant revision of your customer offering, everyone from your BDR to Renewal/Upsell Specialists play a key role in promoting customer loyalty. This can be achieved by a complete organizational alignment that is regularly focused on customer needs, feedback and adaptation of their business to the changing prospect desires. Andreas Tollschein, the lead Customer Success Manager at Camunda, spoke with us about how their company was ready for rapid growth within three years of releasing their product. Camunda’s strategy to instill a customer-focused mindset and promote loyalty is to require every team to ask themselves how each decision made affects all customers and prospects. Not reflecting on the effect each decision makes to customers and in effect providing less value overtime does not contribute positively to loyalty. Let’s take a look at what this looks like for Marketing, Sales and Customer Success teams.


Sales & Customer Loyalty

Sales teams offer the ability to bring personalization to the customer with the first person-to-person interaction with the company. Humans crave being valued and listened-to — this doesn’t stop with your customers. Salespeople can not only boost the customers’ brand association through confidence-building (related to decision-making) and validation, but they hold the power to transition the relationship properly so that the high level of service experienced continues for a lifetime with the Customer Success team. The goal isn’t to make the CSM’s resell your product or service. Bringing CS into the sales cycle for introduction and sharing of discovery information presents a united front for the customer. Whether or not it’s ever verbalized, regular positive experiences add up to loyalty over time. Read our full guide on improving customer retention.

Actionable items that sales teams can execute to improve customer loyalty are:

  • Initiate the customer relationship with above-and-beyond care. Simple personalization with branded presentations, remembering unique details from conversations, and tracking difficult conversations and topics are enough to create a standout relationship.
  • Document potential contention points. This is ideal for continuing relationships–CSM’s can be aware of anything important to know before managing the customer for their lifetime. A Hubspot guide covering customer retention emphasized that “with detailed notes and a complete history of the relationship recorded, a new customer success manager will be ready to be a true authority for the customer much more quickly.”
  • Finally, take care to not sell without thoroughly qualifying customers. This can be a dangerous rabbit hole to follow. It’s best to make sure you have the right customers to pursue value with the ability to foster loyalty over time. Customer Success teams will thank you for it.


Marketing & Customer Loyalty: Customer Marketing & Branding

In 2018 alone, we’ve witnessed a magnified desire for deeper marketing and branding experiences. While beneficial to the customer and prospects, these also strengthen company through customer marketing and brand development. We’ve often heard from peers and customers that they love multifaceted media – a video to start a newsletter, consistent infographics, and straightforward information. All of these roll up into creating a strong, understandable and consistent brand. Relevant content (materials, blogs, videos etc.) HELPS customers do their jobs better and attain their outcomes more effectively. Marketing’s power is in the ability to inspire customer loyalty by providing existing customers with relevant and useful content. These are all crafted by knowing what each customer needs to achieve their outcomes and providing that information instead of just a platform or service. In a real-life example, one of our successful customers was undecided on choosing a vendor during the sales process and we decided to create a configured trial experience that was more compelling than regular trial documentation and walkthroughs. This experience, tailored to their desired outcomes, was what we needed to close the sale and initiate their current-day loyalty.

In a workshop led by Indianapolis branding firm, Second Street Creative, they couldn’t stress enough the importance of finding a representative and complete brand for your company. Taking the time to create quality themes and finding a company voice do nothing but create clearly-communicated experiences between you and the customer. A strong brand also helps prospects understand you more easily, and promotes customer loyalty from the beginning of the relationship. Don’t allow anyone to think your company is fickle, not fully committed to customers, messaging or consistent services. Once a strong brand is agreed upon, all marketing materials can be adapted and created honestly. Think of ways your team can infuse honesty into your website, advertisements, and blogs. We think of them as trust-building dipped marketing materials. The values that represent your company will be the most convincing. Every intentional touch helps prime prospects and customers for loyalty before they’re ever passed onto a salesperson or managed by customer success.


Customer Success & Customer Loyalty

The greatest opportunity to build trust and loyalty with customers is in the relationship with a Customer Success Manager. Starting every relationship with the goal of partnership is the linchpin in building loyalty. If a CSM takes every meeting, communication, and preparation with partnership and mutual advocacy in mind, the customer will feel cared for, listened to and valued. Here are some actionable steps to ensure this happens:

  1. Work with Sales to set expectations for the customer relationship and revisit them regularly to define the relationship and offer actionable items for both CSM’s and customers to benchmark from. Some small pieces to consider would be additional pricing features (data cleansing, extra availability etc.), man-hours for complicated or large implementation/optimization projects and how those decisions need to be communicated to the customer.
  2. Establish intentionality in all meetings, including Kickoffs, Discovery, and QBR’s. At the beginning of the relationship, document and agree upon the roles and responsibilities of each party. Update these and present them again at appropriate intervals to hold one another accountable.
  3. Regularly track goals to help level the playing field and allow both sides (customer and CSM) to be honest about their work and performance. CSM’s need to make sure they’re regularly meeting the needs of the customer and receiving verbal or written confirmation for them, even implementing agile methodology! It’s important to document goals and progression to track what work has been completed, what works well, and what doesn’t, along with the customer. You can then amend goals together after deciding how to move forward. Goals (or outcomes) can be visualized and updated in whatever way works best for your team and customer, as well as the roles in managing that list. Are you going to allow your customer to regularly add goals or will the CSM’s manage them all themselves?

Want to learn more? Read on with “The Definition of Customer Loyalty – Part 2,” covering where customer loyalty is fostered, and how to foster and measure it!