Too Few Small Businesses Focus on Fostering Customer Loyalty

The holidays are over and we've all returned to our normal routines. As we focus on our New Year's resolutions, I'd like to share one of mine—getting better at knowing and maintaining my professional relationships. I've been careful over the past decade to only add folks to my LinkedIn connections list who've left a meaningful impact on me because I met them through a professional event, we worked together, or they were customers I served. I passed the 2,001 connections mark this month, and it makes me think: Just how well can I possibly know 2,001 people?

Funny enough, as I look for the names and pictures of my online collection of colleagues, I am struck by the fact that while I may not remember the exact words used in the face-to-face exchanges that led to these connections, I am filled with the emotion of those memories. The same is true for your customers—they may not remember the exact transaction that led to their first or second purchase from you, but they certainly remember the emotion of doing business with you, and the satisfaction (or lack thereof) in the product or service they consumed.

One of the very best ways to imprint a positive emotional memory is to leverage the "Know Me" factor. If you want loyal customers, you had better know them, and you had better use what you know about them and their preferences for all future interactions, especially if you are looking to build loyalty among the new customers you brought to your store and Web site during the holiday season.

Getting to know your customers and growing your individual relationships with them are critical to earning loyalty, which can provide a small or medium-sized business (SMB) with a significant competitive advantage. To do this, follow three key steps: listen, act, and measure. Surprisingly, our research shows that too few business owners understand the need to focus on growth through fostering customer loyalty.

The annual Sage Business Index surveys approximately 14,000 SMBs in 18 countries around the world. The good news: For the first time in four years, businesses are more optimistic than pessimistic, with scores rising above 50 (out of 100) across all three areas surveyed: their own prospects for business growth and success, their confidence in their national economies, and their confidence in the global economy.

U.S. business optimism toward personal business growth and success is the highest it's been in four years, with confidence rising 2.88 points to 67.53 in the last year. A majority of those surveyed expect increases in both hiring and revenues.

What raises a red flag with me is the finding that only 34 percent of small business owners plan to grow their businesses over the next 12 months by increasing customer loyalty. That number should be much higher.

A customer experience that drives people to return to you and prompts them to become advocates for you across their social media platforms is a necessity, not a luxury, in 2015. The question is: How does a business create that ideal customer experience based on that customer's known preferences and needs?

Getting to know your customers and getting them to like you requires building a database of their personal information. After all, you can't get to know your customers if, well, you don't know anything about them. Everything—from their email addresses, phone numbers, and details about how they prefer to be contacted to their birthdays and tastes in popular culture—can help you cultivate relationships throughout the year.

Collecting data needs to be easy. Whether someone visits your brick-and-mortar location or your Web site, or follows your social media platforms such as Facebook, Twitter, and Pinterest, they shouldn't have to hunt for the opportunity to provide you with their information. Make it so simple that customers won't think twice about it.

Collecting, analyzing, and leveraging customer information is the equivalent of listening to customers tell you about their worries and aspirations, and how they feel about you and your products and services. You'll better understand their core needs and why they buy from you. You'll know what delights or frustrates them. So listening is the first step.

Next, act on what you've learned to create a customer-centric culture. Leverage your customer-facing team members, your Web site, and your smartphone app to make it easy for customers to conduct research, take advantage of sales and other promotions, and get support. Have adequate staffing at the customer service desks in your store and don't bury your online support contact information and tools on your Web site. Also, be mindful of your presence on sites such as Yelp or Facebook, which can impact your ability to attract new customers.

Finally, measure the outcomes to ensure continuous improvement. Gauge how customers perceive their experiences through annual surveys and regular point-of-sale satisfaction questions. Once you have the information, analyze it and use the findings to guide decisions on product and service design and policy and procedure development.

The term customer experience refers to more than ensuring lines at checkout and customer service are short and that technical support can solve problems. It covers the entire duration of the relationship you have with your customer, including awareness, discovery, attraction, interaction, purchase, use, cultivation, and advocacy.

Service excellence requires you to contribute to your customers' successes and productivity. It means being good at minimizing value erosion and maximizing value realization by reducing customers' efforts and increasing their capabilities. Take a genuine interest in people. Get to know your customers and employees. The information you glean could mean the difference between success and failure.