How Building Customer Loyalty Increases Profitability

by Marcia Layton Turner

It's common knowledge that it costs more to find and attract a new customer than it does to hold onto one you're already doing business with. Loyal customers have a higher lifetime value, buy more, cost less to serve, and are therefore more profitable. So what tactics and strategies are the most effective at forging long-lasting business relationships? Here are three:

1. Offer more value. Ten years ago, Aztec Technologies in Middletown, Conn., struggled with how to differentiate its office technology equipment and supplies in a saturated market.

"Ink and toner can be purchased anywhere, so why buy from us?" asked owner Cathy Kies. The answer her company came up with has become Aztec’s signature “Complete Solution” program, which provides free equipment service to its best supply customers. Business customers with 10 or more printers can call Aztec for tech support when something goes awry with a printer – at no cost.

“Such programs lock customers in,” said Kies, “but in a win-win way. They don’t want to leave because they’re getting value that they would have to pay for elsewhere.”

What can your company offer its customers that costs little or nothing for you to provide but that reduces your customers’ cost and inconvenience? That’s how you can come up with a value-added offering that builds loyalty.

2. Be convenient to work with. Even if you can’t offer added value or free products and services, you can certainly aim to be the easiest and most convenient to deal with. Convenience has become a priority for businesses and consumers alike, so the more you can reduce the amount of time it takes to receive your products and services, the higher the likelihood you have customers for life.

Just look at Amazon’s Prime program, which provides free two-day shipping for customers who pay $99/year to participate. Toy stores that provide free gift wrapping for last-minute gift givers and grocery stores offering a ready-made meals are also cashing in by offering convenience.

What can you do for your customers that would reduce the amount of time they have to spend procuring or obtaining the products and services you sell? Can you create a mobile app? Provide a guarantee of some sort? Stay open longer?

3. Make customers feel special. Remember the fictional bar Cheers, where everybody knows your name? Everyone wants to find their own version of Cheers in many industries – a place where they can feel welcome and special. The truth is, we all want to be acknowledged or recognized. What can you do to convey how important each and every customer is?

Can you and your entire staff memorize their names and faces? Can you seek out opportunities for them –business or personal – that further their own goals? Can you take time to communicate in person or by phone? What can you do to communicate that your customers are important to you?

Anyone can drop off free candy or send follow-up emails; that won’t set your company apart. In fact, Kies sees programs that involve inexpensive incentives, such as candy or freebies, as more “of an insurance policy against loss” than a growth driver.

By offering real added value, however, businesses can see real results. Just ask Keis, whose Complete Solution program revenue doubled in just three years.

“It was a game-changer,” said Kies. That’s how much impact loyal customers can have.

About This Author

Marcia Layton Turner

Marcia Layton Turner writes regularly about small business. Her work has appeared in magazines such as Entrepreneur, Bloomberg Businessweek and Black Enterprise, as well as at CNNMoney, Amex OPEN Forum, and


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