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I’ll Stay With You Forever: Strong Brands Create Loyalty

Loyalty requires a compelling justification. It is a feeling that develops over time, and it doesn’t come from a product or a service — feelings of loyalty develop as a result of our experiences. If you love your cell phone and really enjoy using it you may tell yourself, “The next time I need a new phone, I’m going to buy this brand again.” If you have a great stay at a hotel you may decide to reserve a room there the next time you’re in town. But too often marketers offer “loyalty programs” with discounts for regular customers as a way to encourage repeat business. This misunderstands the nature of the emotion: discounts can only be rewards for loyalty, never its cause. If you hate your first experience at a hotel, will you come back a second time just to get a few dollars off your bill?

Entrepreneurs that want to establish a loyal following must provide experiences that make customers want to return. But when tasked with developing reasons for loyalty, business owners often default to slogans like “good service” or “low prices.” Because these are the most common answers they don’t differentiate your business and they aren’t compelling enough to create loyalty. Price-focused customers will leave the moment a competitor offers a lower one — only one business can ever win the "low price war." Those who choose your business for “good service” can be lost through the actions of a single inattentive employee. These kinds of default motivations are never enough to build a brand. In a crowded marketplace an effective entrepreneur must offer a compelling reason for us to choose her business.

Loyalty is a feeling, not a number, so companies that try to engender strong feelings in their customers are far more likely to reap the benefits of brand-building — it’s the feelings that create the spending, not the other way around. The brand gives us a mental “hook” that we use to attach emotion and meaning to a company and the products and services it offers. Once feelings of loyalty have been attached to a brand, we’ll return again and again, and the business will reap the financial benefits of those emotions. But loyalty isn’t permanent: if a brand loses its vision, fails to continue bringing value to the table or disappoints its customers, they will move on, and the loyalty that existed will evaporate.

Since small business owners have the opportunity to engage feelings far more effectively than large corporations, a small business that generates honest, meaningful connections with its customers can generate long-term loyalty that far outweighs any attempts by large, impersonal brands. Note that in the examples below the experiences come first, the discounts second.

LOYALTY: PAM’S PAMPERED PETS

Pam, owner of Pam’s Pampered Pets, knows a few things about psychology: she understands that both dogs and owners need to feel comfortable with a new place before they are separated for several days. Owners must believe that their pets are carefully cared for and dogs must not feel abandoned.

In her marketing materials, Pam offers new customers the “Two Hour Time Out” a window of time when people can leave their dogs for two hours for just $20. While there, the dogs have the opportunity to get to know the kennel employees and investigate the accommodations. Owners can stay on site and watch their dogs play for a few minutes or the full two hours. If they leave, they can also check in virtually via webcam.

This short introductory session creates an inexpensive positive experience that generates an emotional attachment. When owners come back to pick their dogs up they receive a coupon for 10% off their first long-term stay. Since the dogs — and their owners — have become accustomed to the facilities, it increases the likelihood that owners will use Pam for long-term stays that may cost several hundred dollars.

This program also creates an opportunity for Pam to meet new dogs and get to know them before they are dropped off for a couple of weeks, giving her the chance to weed out dogs (and owners) with behavior problems.

Loyalty: Ella’s Eastside Cafe

Ella’s restaurant does a good business on the weekends, but has had difficulty increasing weekday revenue, primarily due to the restaurant’s location. Moving would be too difficult and costly, so Ella has decided to turn to catering to boost sales. To introduce prospective clients to her new catering menu she markets in-house “mini-parties.”

Potential catering customers book a special table located in the restaurant kitchen and invite up to eight guests to sample small plates of whatever they like from the catering menu at heavily discounted prices. While there, the host meets with an event planner to review a wide range of options including decorations and entertainment. This arrangement makes it possible for customers to find out what dishes they and their future guests like most. It also turns the chore of event planning into something more closely resembling a fun night in a restaurant with a group of friends.

Ella has the chance to talk with her guests before embarking on a long-term project, receiving valuable feedback on her menu and the services that guests want most. She also has the chance to figure out which events she doesn’t want to cater, avoiding a potential drawn-out battle with an unreasonable bridezilla.

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Lead Me! Guide Me! Strong Brands Create Referrals

Most business owners are justifiably concerned about online reviews. But many of these same entrepreneurs spend very little time or energy intentionally developing positive referrals from existing customers.  When you create a brand intentionally you are far more likely to get the results that you want. If you wait for people to write their own reviews — positive or negative – you are leaving your business in the hands of other people who have their own opinions and agendas. Business owners who make it easy to give a referral simultaneously expand their customer base and enable the most effective type of brand communication — the personal endorsement. This is another action tied to the development of a strong brand.

REFERRALS: DON’S DONUT SHOP

To create a stronger referral network, Don’s Donut shop decides to create “Tell-a-Friend Tuesdays.” Each Tuesday morning — the slowest day of the week — Don makes several batches of mini-donuts in the three most popular flavors. He prints tiny boxes with the logo, URL and the message, “I love you so much I’m giving you Don’s Donuts!”

Everyone that comes in on Tuesday and purchases a dozen donuts receives one of the small boxes to give to whoever they want. A boss might pass it on to her assistant; a husband may give it to his wife. Everyone wins: the donut giver gets brownie points and Don gets a personal referral with lots of brand awareness. He also associates his brand with the positive emotions that we all feel when we receive a gift.

REFERRALS:  HARRIET’S HAMBURGERS

Many businesses offer referral programs, but too many of them are difficult, requiring the existing customer to “prove” that they referred the new customer before receiving a small benefit, usually nothing more than a discount. Harriet, the owner of Harriet’s Hamburgers, decided to turn this complex back-and-forth procedure upside down, making referrals easier and more compelling.

Harriet produced ads describing many of the things she’s proud of, including the quality of the food and how they source local ingredients, but at the end of each ad she says, “Tell your server that you’re a friend of mine and your fries are on the house!” While the ads are running, Harriet makes a point of spending each day in the restaurant greeting those customers who come in and say that they know her, making the statements instantly true and creating deeper, more personal relationships with her customers. In a few minutes she builds a relationship with each person at the table, taking the time to learn more about what her customers want — valuable data with more depth than any survey could produce. And, of course, the customers love the free fries.

By creating a more personal relationship with her customers, Harriet creates referrals herself rather than waiting on existing customers to create referrals for her. She can see for herself how effective the ads are, and can even pinpoint which outlets produce the most customers. Word gets around, of course, as existing customers tell their friends to come in and say they know the owner.

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Come Back! Come Back! Strong Brands Create Repeat Business

People don’t wait in line for generic cellphones, fill stadiums to watch generic football teams or pay premium prices for no-name shoes. A strong brand makes people do things: pay astronomical prices, share their passions online and in person, read articles, save money or count days until a new release. These actions are the real-world results of strong brands. The stronger your brand, the more customers will be willing to do to buy your products and utilize your services.

But you don’t have to have a football team or a tech company to build a brand that inspires action. Most of us have waited in line for a table at a hot restaurant or “liked” a great business on Facebook, and these actions are also the product of a strong brand — a strong image in the mind. Two of the most important brand-inspired actions are also the most simple: repeat business and referrals. When a customer returns to make another purchase or recommends your business you receive a real-world return on your brand investment.

Every business owner understands the value of returning customers, but how many go out of their way to make repeat business easy? Many businesses don’t take steps to encourage repeat business, yet new sales from existing customers provide a much higher return on investment; customer retention is far more cost-effective than attracting new customers. For a salon owner it might be as simple as asking a customer if they want to go ahead and book the next appointment. For a software company it might be as simple as upgrade reminders or an email describing new features. But these simple steps shouldn't be the default. Creating an audience of fans requires building a strong brand that encourages action — something well within the reach of most small businesses. The key is creativity.

REPEAT BUSINESS:  FARAH’S FASHION

Farah’s Fashion wants to encourage repeat business, but a discount punch card is too common and plain for a high-end boutique that offers exquisite dresses from up-and-coming designers and the latest couture. Instead, Farah gives custom-made charm bracelets to new customers. Returning customers receive charms that correspond with events and seasons. During New York Fashion Week she gives away tiny Empire State Buildings followed by mini Eiffel Towers during Paris Fashion Week. A fur coat charm is given to customers during the annual outerwear promotion, and a tiny handbag that actually opens is given during a month-long tribute to accessories.

The bracelets encourage repeat business by creating a desire to collect the charms. Those who collect more than ten are automatically inducted into “the charmed ones” — a group of VIP customers that receive special invitations and more customized services. The bracelet itself is a wearable advertisement for the business, readily identifiable to all of the women who shop there.

REPEAT BUSINESS:  MIKE THE MECHANIC

Mike the Mechanic wanted to encourage customers to use his services for long-term maintenance, and he knew that making the experience more personal could achieve that goal. But with three locations and hundreds of existing customers, he knew that in-person conversations would be extremely time consuming, and he would only be able to handle so many. Instead, he decided to create a voice for each customer's car.

New and existing customers were encouraged to sign up for a program of personalized email and text message reminders which were written in the first person, making it sound like the car itself was communicating with the customer. Two weeks after a big snowstorm, for example, the car might text it’s owner this message: “Bob, I’m feeling a little raw downstairs, if you know what I mean. I think I traveled through too much road salt, and it’s giving me a rash. Mike’s is having a special — only five bucks for an undercarriage wash. Would you mind taking me over there when you get a chance?” After an oil change, the car might send an email that reads, “Man, I feel great! Everything’s working perfectly and I’m all greased up. Thanks Bob!” To enhance the personal experience, not every message was related to car care. For example, on a nice weekend the car might text: “It’s going to be sunny and beautiful this weekend. Want to go for a drive? There’s going to be a county fair just outside Summerville.” The message includes a link to the Summerville County Fair website and a coupon for $5 off a family order of bar-b-que, a simple gift that Mike was able to negotiate with another local business.

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I Love You! I Need You! Strong Brands Create Emotion

When you create a strong brand you generate emotions that far exceed what you can achieve with generic versions of the same products and services. Try this: show someone a light blue box tied with a white ribbon and a plain brown cardboard box tied with brown string. Ask which of the two they would like to have. If they know anything about jewelry, they'll probably choose the blue box.

A very specific light blue is the color used on all Tiffany's packaging, and many people recognize the color on sight. For some people, "Tiffany blue" can produce a strong emotion. A plain brown cardboard box won’t generate the same kind of response because no mental association exists between jewelry and brown cardboard, even though a plain brown box could also contain a diamond ring.

There are many, many brands that elicit emotion within us. Do you relish being the first person in your office with a new piece of technology? Does showing off a particular brand of handbag make you feel proud and a little superior? Does driving a particular brand of car make you feel like you “made it?” Brands can generate strong emotions, and these emotions add their own value to your products and services. Desire increases demand — a bottom line return on your brand investment.

This effect is not limited to large corporations; a small company can create very strong emotional associations. If a photographer does a remarkable job at your wedding you may rave about him to everyone who sees your wedding photos. The doctor who goes out of his way to demonstrate care and concern may become someone that you always turn to when you need healthcare. Each time you create strong emotional connections in the minds of your customers they can, in turn, provide you with a wealth of new business.

ENGAGE EMOTION: DINAH’S SURPRISES

Dinah’s Deliveries offers a takeout service for local restaurants and other businesses. But Dinah wanted to create something a little bit different and engage the emotions of her customers to keep them coming back for more. Many different businesses have emerged over the past few years offering “last mile” transportation for just about everything, and they tend to compete on price, maximizing the number of deliveries at the expense of customer service. Since that game was already being played by a large number of businesses, Dinah decided to create her own rules to engage customers’ emotions.

Dinah developed “Dinah’s Surprises.” She worked with local businesses, offering them a chance to get new offerings into the hands of potential customers using a much more effective approach than direct mail. Sometimes the businesses provide coupons — $5 off at a new car wash or free ice cream at Bob’s Burgers. Others use the boxes to send samples of their products, like a free cookie from The Mile High Pie or an engraved pen from Print-On-Anything. Dinah used small boxes and envelopes emblazoned with her colors and logo to present these items to everyone who received a delivery. Staff were given information about the products and services of each featured business so they could answer questions. In addition, Dinah trained staff to treat each delivery as if they were stopping by a friend’s house, taking time to ring the doorbell and wait for it to be answered. Every time a customer received a delivery they also received a small gift, strengthening an emotional connection that keeps customers coming back for more and pushing her competition to the back of the mind.

She also created strong bonds with other local business owners. You can never be certain if anyone sees a direct mail piece no matter how much you spend to make it memorable. But Dinah's colleagues enjoyed much greater confidence, knowing that each sample or coupon was hand-delivered and mentioned by the delivery driver. These entrepreneurs were also a good source of business for Dinah, becoming future customers or a fertile source of referrals.