Noah Fleming teaches us that the Customer Loyalty Loop looks at the psychology of customer experience and what you can do to influence your customer to continue to do business with you over and over again.
Background of the Brain
Our brains contain many biases that influence the way we rationalize, analyze, and process information.
- Anchoring Bias. When one number or fact anchors the context of a specific point. For example, when a sale price is anchored by the non-sale price. “Normally $89 but today only it’s $15”
- Availability Bias. If something is readily available, we are more likely to let it influence us. For example if there is a plane crash on the news, we are more likely to assign plane crashes more importance in our mind
- Risk Aversion. This is when we use fear of loss as a motivation and do whatever it takes to avoid a perceived risk.
There are many other biases which affect our cognitive function but these biases are important to remember when comes the customer loyalty loop
The Customer Loyalty Loop
The customer loyalty loop as four stages:
- Imagination Before Persuasion: the beginning of the customer experience
- Conversion Without Coercion: actually getting the sale
- Experience Choreography: delivery of product or service
- Happily Ever After: follow-up marketing
This loop is a circle. After stage four, the customer begins stage ne again and continues through the circle. Each stage is important. The customer experience is the sum of the whole experience. You need to focus on each of the four stages
Stage One: Imagination Before Persuasion
There is nothing more important in stage one than determining who your customers are so that you can market to them directly. It is essential that the customer experience is meaningful, memorable, and personal. Small details such as personalized attention and follow-up can go a long way to ensure this. The customer loyalty loop starts before any sale is made. You must tell your story in a way that a positive memory is implanted into the potential customer’s mind.
Stage Two: Conversion Not Coercion
Stage two is about continually building trust with your prospective customers and converting the prospect into a sale. The customer is both the most expensive and the most important thing for a business to acquire. Look at the details and look at any inconveniences that may be impacting the customer. Then fix them to ensure a positive experience throughout the whole process. This stage is about building trust and removing resistance. Your goal is guarantee your prospect 100% certainty and assurance in their decision making.
Stage Three: Experience Choreography
At this stage, the customer has completed a sale and now has an expectation that the promises made to them will be delivered. The most important thing to do here is leave a remarkable memory of doing business with you. These remarkable memories will lead you to stand out amongst your competitors.
Stage Four: Happily Ever After
A customer that recently had a positive interaction in a transaction is more likely to engage in that transaction again. Your goal is to increase your customer’s frequency and willingness to engage with you. Following up with customers is a good way to ensure a positive repeat interaction. Customer loyalty is about building connections. Building relationships with your clients shows them you care about them more than just when they pay you.
Investing your time and energy in your current customers instead of always trying to gain new customers is a strong strategy to grow your business, increase your competitive advantage, and create large profit returns.