Business Consulting 101 - The Simple Stupid Way to Build Customer Trust and Loyalty

The Simple Stupid Way to Build Customer Trust and Loyalty

Reducing the cost of Customer Acquisition, Increasing Repeat Customers and Maintaining a Loyal Customerbase

Aggressive or clever pushing is the only way to market a product, service or a concept seems to be the most popular mode of operation to grab a greater share of the market nowadays. Recent lower than cost sales festival of FlipKart (August 2014) and a few other etailers including snapdeal and Amazon prove it without a doubt. These companies are losing money by selling products below cost to acquire clients (more appropriately known as "Loss Leader"). But what these companies do not realize is that customers acquired by such deals do not tend to be loyal to the brand once such offers dry up and jump ship to another retailer if offered better deals. For the customer who was only brought on board because of the low prices, there is no incentive to stay loyal.

So, what do they need to do build a loyal customer base which would rather spend more than move to a competitor. Brands like Armani, Apple, British Airways, Harley-Davidson, Tag Heuer, etc., have created a large loyal customer base being the envy of organisations worldwide. I am not exaggerating when I say that each one of the above companies started with zero customers and worked their way up to where they are now. While aggressive pushing and clever penetration strategy works out to a certain extent, these alone do not help sustain the long term.

The Harley-Davidson Story

enter image description here A leaf out of companies that command great respect, love, bonding and customer loyalty will educate us with the knowledge required to build one of our own. Let us take Harley-Davidson for example.

It would be hard for this generation to believe that Harley-Davidson, the sought after name in the motorcycle industry had a hard time competing with the low priced, affordable, high quality Japanese motorcycles in the 1980's and losing a lot of marketshare to the Japanese manufacturers unable to compete with them on price. Harley-Davidson, back then did not have the cult following it enjoys now. Though they made motorcycles of reasonable quality (read - not so reliable as the Japanese makes), they were just another brand fighting for the same piece of pie against superior quality reliable, affordable Japanese brands.

Harley-Davidson had two must do's: They had to increase their quality and compete with the Japanese brands on price. Improving the quality of the motorcyles was a necessity to survive but that increased costs eventually. Harley-Davidson already much more expensive than the Japanese motorcycles were in no situation to compete on price selling lower than cost (refer first paragraph of this article), take the loss just to survive and were pushed to the edge to survive which made them give birth to a strategy that gave birth to the cult following it currently enjoys.

After improving their quality to challenge their Japanese counterparts, Harley-Davidson's knowledge of their customer's needs and their appeal to hedge their emotions yielded good returns building great trust and bonding with the brand. They made them feel they cared. They made them feel they belong. They made them feel they were special. This increases trust in the brand and eventually salesTheir managers to this date meet customers regularly at rallies, where new models are demonstrated, feedback is collected and acted upon. Strategic Advertising reinforces the macho brand image and promotes customer loyalty. Harley-Davidson still works hard to make the customers feel that they don't just own a motorcycle from the company but are an integral part of their global family. This initiative changed Harley-Davidson from just another to the "privileged to ride" brand of the world.

Harley Owner’s Group (HOG)

The Harley Owner’s Group (HOG) is a exclusive membership club that entrenches customer loyalty and Harley-Davidson ensures customers receive benefits they value. The result is that customers trust Harley-Davidson; this trust is used to develop stronger bonds and greater profits in a virtuous circle. Rich Teerlink, former chair of Harley-Davidson, once said, “Perhaps the most significant program was and continues to be, the Harley Owner’s Group (HOG). Dealers regained confidence that Harley could and would be a dependable partner and capturing the ideas of our people, all the people at Harley, was critical to our future success.”

Lessons learnt from the Harley-Davidson saga to build brand loyalty

• Deliver a consistent (and ideally a “branded”) experience each time customers deal with your business.

• Be clear about the value proposition you offer.

• Provide incentives for new customers to return and reorder.

• Reward loyalty benefits for established customers.

• Be competitive. What seems like a good deal to you may not match your competitors.

• Make the customer’s experience as smooth and enjoyable as possible.

• Reassure customers with reliable services and products.

• Use customer feedback to continuously improve your processes.

• Work with partners and invest in resources to deliver reliability.

The above are not new strategies but are relevant businesses of the past, present and the future. A few business leaders tend to forget these basics in a bid to capture the "NOW" market to establish their market share quickly. But the important thing about running any business is to sustain through the passage of time and grow albeit steadily than to flourish one day and begone another.

Take heed and Prosper