Building & Improving Customer Loyalty

Effective business apologies are a cornerstone to customer loyalty, satisfaction, trust, and retention.

We all hope to maintain standards of excellence when it comes to our business, however, no matter how close to perfect the business is, mistakes will be made and some customers will inevitably be disappointed about something.

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A bad experience or poor service, whether real or perceived, can have a significant impact on your bottom line.

How employees, managers, and executives handle these types of situations will determine how a customer feels about the company, its staff, products, and services.

A customer who feels listened to, valued, and validated when things go wrong will forgive most errors and understand that mistakes can happen. Even though we'd rather mistakes didn't happen, as a business, we need to view these as opportunities to build customer loyalty. And, extending a credible apology for the right reasons at the appropriate time is usually a good start in satisfying customers.

Business Fact No.1: It's far easier to sell something to an existing customer than it is to acquire a new one.

Loyal customers bring with them a lifetime value—a value beyond the individual sale. Conversely, the loss of a loyal customer represents a significant accumulated loss over time.

As long as a customer remains satisfied they will continue the relationship and with each new satisfying experience their loyalty to the business strengthens. Loyal customers bring with them the added benefit of credible referrals and an expanding customer/sales base.

Business Fact No.2: Referrals reduce sales cycles and sales expenses while building a quality base of satisfied customers who, in turn, provide additional referrals.

Companies that generate this self-perpetuating cycle typically succeed through excellent customer service—sales (as opposed to customers) are never enough to create and sustain this cycle.

Business Fact No.3: Mistakes and errors are essential to consider when developing best business practices, precisely because they are inevitable.

Issues and problems are a part of doing business. Failures represent ideal opportunities for strengthening customer loyalty AND satisfaction. Although it seems ironic, welcoming the occasional failure may be a prudent business practice.

The real difficulty lies in the fact that years of routine and successful business relations with customers often raises expectations and standards—which becomes increasingly hard to sustain over the long term. Very loyal customers are often the ones most likely to be hurt when small mistakes are made so understanding how to build on that loyalty is critical.

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Customer loyalty stems from the quality of your products or service AND very often from how you handle situations in which customer expectations have NOT been met.

Understanding the importance of continually building and improving customer loyalty is crucial to building and maintaining a successful business. And one of the easiest ways, and most opportune moments are when negative things happen.

The fact is that we are more inclined to assign a higher value to a recommendation or referral based on how a company handles a negative situation or crisis rather than how they handle routine, which is somewhat less relevant. (Read more on this topic in our research article on customer advocacy)

It goes without saying that business today is highly competitive. Given that, it's more important than ever to seek out loyalty building opportunities, especially when things go wrong, and appreciate the added value of prioritizing 'customers' over individual 'sales'.

Effective business apologies, when well crafted and handled correctly will help to solidify relationships, enhance a company's reputation, build trust, satisfaction, and in the end, customer loyalty.

Can you really afford to ignore failures and avoid apologizing?

Learn how to manage customer complaints and why a proactive approach to customer retention is important for any business.