How to create loyal customers

If you want to stay in business long and prosper, you have to commit to your customers. It's no longer good enough to just satisfy them. The quality of a business' revenue is as important as its quantity. Loyal customers represent quality revenue.

It's great if every customer walks away from your business with a smile. But it's not enough. They have to be compelled to come back for more. And, merely satisfying someone does not guarantee they'll be repeat customers.

Let's take for example a small restaurant located in the Mission District of San Francisco. Casa Sanchez has been making tortillas for years. Customers usually leave with a full stomach and contented smiles, which is nothing less than you'd expect of a successful restaurant. But the truly unique thing about Casa Sanchez is its ability to create and foster loyal customers. Casa Sanchez customers go beyond being just loyal; they are true advocates in every sense of the word. Loyal to the point where more than 40 Casa Sanchez customers have paid between $80-$120 to have the company logo (Jimmy the Cornman) forever tattooed on their body – and there's a waiting list of advocates willing to do the same. That's taking loyalty to the extreme!

Fred Reichheld has spent many years investigating companies that get loyalty right. He has identified six common principles that these loyalty leaders share.

This article explores the first three of those principles and provides tips on creating and nurturing loyal advocates for your business.

Principle 1: Preach what you practise

It's an age-old saying: "Practise what you preach", but it would be dangerous to let action be your only focus. Every company has to have core values - the founders of the great industrial companies understood that in order to prosper, a business had to deliver value to its customers and employees as well as its investors.

"A business must be run at a profit... else it will die. But when anyone tries to run a business solely for profit... then also the business must die, for it no longer has a reason for existence." Henry Ford

At Casa Sanchez, a core value is family. The Sanchez family wants customers to feel like they are sitting down to a meal Mexican-family style. A place where there is music, conversation, laughter, and where everyone knows your name. This core value of creating a family dinner experience is what drives the employees to get to know their customers by name, to know a little about their lives and to smile at every patron. The idea of family is also behind the window that displays all the Polaroids of the customers who have tattooed the logo on their various body parts. They are a family in their own right.

Without a clear and well-communicated vision, Casa Sanchez would be no different than Taco Bell. It would be just another place to eat. The Sanchez family doesn't just tell employees that it is their job to get to know their customers, they lead by example — sitting down with patrons, calling out their names as they come in and keeping the enthusiasm and energy high. Even the recipes come from the grandmother in Zacatecas Mexico, which is proudly announced to patrons and visitors of the company website. In every interview, upon every visit and on every page of the Casa Sanchez web site, there is mention of family. Casa Sanchez practises and preaches its values and then some. Your business can too.

Principle 2: Play to win-win

Trying to garner customer loyalty without paying attention to team loyalty will get you the same results as bungee jumping without the bungee.

Today's experts identify an unyielding link between customer loyalty and employee loyalty. It's no coincidence that principled leadership inspires employee and customer loyalty. Leaders with a sense of responsibility and commitment to treating people well are far more likely to attract and retain the best and brightest employees. They will also command the respect of their employees who will see it as their own responsibility and exciting challenge to fulfill the company's mission and to deliver the best customer service possible.

Delivering superior customer service has immediate and long-term benefits to employees. When the service is good, there is almost always an immediate appreciation from the customer. In the long term, it gives employees a sense of pride, ownership and purpose.

Making a commitment to your team and your customers is a win-win-win situation. Customers are happy. Team members feel a sense of ownership and purpose. And your business will gain the trust of its biggest assets (customers and employees).

Principle 3: Be picky

Aim to attract the right customers for your business. Casa Sanchez isn't right for people wanting a quiet and spice-less meal, and the Sanchez family succeed because they know who they want to serve, what their purpose is and what keeps the customers they want coming back.

This does not mean that "no" is the appropriate response to a customer whenever someone feels like it. It means that your company absolutely, positively must be clear about which customers it can satisfy and it must commit to surpassing their customer service expectations. This is what distinguishes the satisfied customer from the loyal customer.

Believe it or not, the Sanchez family has a waiting list and an application process for getting permission to have the Jimmy the Cornman logo tattooed on your body. Membership in this family is exclusive and brings with it a lifetime of free burritos anytime you want, as long as you flash the tat. Only one tattoo house is permitted to tattoo the logo and only those who have submitted an application and have been approved are granted access to the free burritos, a photo in the window and status as true Casa Sanchez family.

Being picky applies to your other great asset as well, your employees. You have an obligation to be picky about whom you hire — an obligation to your company, your customers and your other team members. Membership should be seen as a privilege. Not only does it inspire hard work but it fosters greater retention. People value what they have to work hard for to earn.

Stay informed of impacts to your finances