Negosentro | Turning Your Funnel Into a Cup: Growing Your Customer Loyalty, by Loren Dalton | Every business owner wants to grow their business. But too often, they focus on only one of the two important levers that need to be pulled: getting new customers into their place of business. They advertise, market, and run promotions to get new customers to give them a try. However, by putting all of their attention there, they aren’t focusing on the other lever, which is even more important when growing any business. That lever is customer loyalty and retention.
The reason why most companies struggle to grow their business as fast as they desire isn’t because they aren’t bringing in new customers. Most spend money on this, and they are, indeed, growing their customer base. Their challenge is that they aren’t bringing in new customers at a fast enough pace to make up for the customers that they are losing on the back end. In other words, they have forgotten that it’s much easier to fill a cup than a funnel. And what makes it worse is that most business owners don’t even know how big the hole is at the bottom of their funnel. Customer retention percentages should be identified, measured, understood and prioritized — on a regular basis.
So why are your customers leaving? There are a number of possibilities. It’s critical to find out why you are losing those customers that you paid so much to get in the first place! We all know that it is MUCH less expensive to keep a current customer than it is to get a new one (5x more in fact). Yet most business owners focus on the latter without even considering the former.
For example, here are just some of the many reasons that a fast food restaurant could be losing customers (or keeping them from becoming more regular customers):
- Quality of Food
- Speed of service
- Quality of service
- Cleanliness of location
In each case, the reasons are compared to the customer’s expectations, which will be determined by – and compared against – the customer’s experiences at your competition. To have great customer loyalty and retention, you don’t have to be the best at every factor listed above, but you’ll want to hone in on a specialty. Take Nordstrom and Chick-Fil-A, who have built their reputations on customer service. Chick-Fil-A’s executive team personally believes that their customer service makes their food taste better!
As a business owner, ask yourself this question: “What if I put the same amount of focus and investment in keeping my current customers as I do in getting new ones?” You’ll grow much faster and be more successful if you turn your funnel into a cup rather than trying to put more into your funnel. How can your company stand out from the crowd and make your customers raving fans?
In June of 1987, I checked in at a DoubleTree Hotel for the first time in my life. When I was given a warm, large, freshly baked chocolate chip cookie at check-in, I was impressed. I’m sure it’s only a small fraction of a cost for them (compared to the money they get from someone who is booking a room), but for a tired traveler, getting that at check-in makes them feel that much better about DoubleTree. This is a small, but wise, investment in winning travelers over to their hotel chain.
My wife feels the same way about Olive Garden and their breadsticks. She loves that they will keep giving them to us throughout the meal if we want… for FREE. That’s a very small investment on their end (as most customers won’t eat too many, since they get full on their meal), but that investment keeps my wife from having us go to other Italian restaurants. She wants to return to Olive Garden.
These examples demonstrate that you don’t have to spend a lot of money in your quest to develop customer loyalty. What you will need to spend is brainpower, so get creative! Then implement your plan and stick to it while you get feedback from your customers. You’ll begin to turn a greater and greater percentage of your new customers into long-term, loyal, regular customers. As you keep growing better than ever before, you’ll look at your former customer funnel and say, with a smile, “My cup runneth over!”
As a graduate of Harvard Business School, Loren Dalton’s expertise is in helping small businesses compete, grow, and win in their respective marketplace. Over the nearly three decades he’s been in the industry, he’s seen many companies struggle with the two important factors in growing a business: customer acquisition and customer loyalty and retention.