2. Introducing the Customer Loyalty Loop

Now that we’ve covered some of the popular science about how memories are formed and experiences are remembered, it is time to dig deeper into the core of this book. Let’s get down to brass tacks and discuss each stage of the Customer Loyalty Loop. More important, let’s discuss how you can begin to put these principles to work in your business.

Succeeding at creating a memorable customer experience requires careful and meticulous attention paid to how each customer memory is created. For simplicity and to make this book as compelling and pragmatically useful as it can be, I’ve distilled the Customer Loyalty Loop into four distinct areas. Don’t worry. I’m not going to use some random acronym, even though your mind is clearly designed in a way where if I were to give you an acronym like the word STICK or LOOP, even though you’d be far more likely to remember it. But that’s fine, all you need to remember here are that there are four main steps.

If you think about the traditional customer lifecycle, marketers tell us that the customer follows a similar process. That process goes from awareness (“Hey, I just heard about this great product/service!”), to research (“This looks interesting, but does a better alternative exist?”) to selection (“I’ve decided; I think I’ll just go with this one.”), to purchase (“Yes! I’ll take the blue one.”), to experience (“I love it!”), to retention (“Nice to hear from you again!”), to word of mouth (“You really need to try this!”). According to traditional sales and marketing, all customers follow this simple path.

There’s nothing inherently wrong with the traditional lifecycle model, except each component of the model requires a complex set of understandings and skills, and most organizations focus almost exclusively on the first three or four elements of the traditional model. The majority of that effort is focused on creating awareness. Things like the customer experience, retention, and word of mouth are areas that are hard for organizations to understand and use to take meaningful action. If you want to experience all the benefits of the Customer Loyalty Loop, then you need to know what’s happening at each step. The loop is a cumulative process, and at each stage you have an opportunity to either break or accelerate the process. Based on our previous reading, you’ve also seen how the mind can dramatically impact how the customer perceives the experience and what they remember. This is crucial if you want to improve the client experience and drive revenue growth at the same time.

The Customer Loyalty Loop is an updated view of the traditional customer lifecycle model, applied to the entire customer experience and the individual customers within it. It is a way of reframing the way that you look at your business to ask, “How can I make this experience better for an individual customer, and make it more likely that they’ll want to keep doing business with us over and over again?” The Customer Loyalty Loop is about looking at the customer during each stage of the process and critically asking questions like, “How is the customer feeling right now?” and “What can we do at this step that’s both remarkable and memorable to create a memory that sticks?” Let’s introduce the four stages of the loop now.

The Four Stages of the Customer Loyalty Loop

There are four critical and straightforward stages of the Customer Loyalty Loop that we’ll discuss in this book:

1. Imagination Before Persuasion

2. Conversion Without Coercion

3. Experience Choreography

4. Happily Ever After

It looks like this:

Figure 2.1: The Customer Loyalty Loop

Stage One: Imagination Before Persuasion

Careful attention must be paid to how the customer’s experience starts. This might mean the first time a customer sees an advertisement. Or when a customer walks into a business for the first time. Or when a customer Googles a company’s phone number to make a call and sees six customer reviews, or the first impression of an organization via an advertisement or word-of-mouth comment made by a friend. Marketing to a potential customer should be done in a way that carefully gets them to imagine all the great experiences to come and the memories they’ll create. You must pay careful attention to the message you’re putting into the marketplace from a very early stage. Instead of focusing on positioning, we’ll concentrate on disrupting the mind of our potential customer to make our mark and increase our chances of making the first sale as simple as possible. This section is all about imagination and putting the right message out into the world to attract your ideal customers.

Stage Two: Conversion Without Coercion

In the second stage, we focus on actually getting the sale. Persuading someone to a point where they’re ready to pull out their credit card, or sign the contract and do business with you, is completed in the second stage. Sometimes it doesn’t take much work at all. The customer may just enter your business and be looking for something that you might already sell. And yet other times, we’ve only made it to this stage from our efforts to attract through sales and marketing efforts. In this section, we’ll discuss traditional concepts of persuasion used to convert the prospect into a customer and introduce a far more powerful tool you can use to increase the likelihood of creating a more valuable customer.

Stage Three: Experience Choreography

This may be the most important stage of all, and it’s certainly going to get the most attention in this book. In this stage, we begin the delivery of our core product or service. This is obviously going to be different for everyone. For example, you might be passing through a town and decide to choose a restaurant for lunch. In this example, stages 1 and 2 happen incredibly fast or perhaps not even really at all. The potential customer sees a place that looks decent, her spouse agrees, and they pull over for lunch. In this scenario, the customer walks in and is immediately thrust into the third stage of the loop. For others, like a traditional B2B firm selling high-priced manufacturing equipment or an enterprise software company, the customer experience starts the first time they hear about your product from outside sales, or at the first software demo or presentation. In that example, it is safe to say that stages 1 and 2 are far more important. And for others, like a hotel in New York City, the customer may move quickly through stages 1 and 2 on her own by doing their research. It’s important to recognize, that in some cases, both stages 1 and 2 have been completed, and the third stage has begun before I’ve ever stepped foot in New York City. Even in that example, though, there are still things we can be doing to create the best-possible customer experience.

Knowing how to create, engineer, develop, and improve standard business operations and processes so that experiences are remembered is key. Everyone claims they offer a “wow” experience, but great companies have figured out not only how to offer impeccable customer service across the entire organization, but how to essentially manufacture the feeling of “wow.”

But as we’ve discussed, it’s not just enough to say you provide a “wow” experience anymore, because so do all your competitors! During the experience, you should be cognizant of the few big areas that people will take away (both good and bad) to form their memories, and develop a customer experience that ensures they remember the best version of their experience. For example, first impressions have never been more important. But what about happy endings? Understanding the importance of how your customer’s experience ends is crucial to the lifecycle and profit potential of that customer. (This is also crucially important for the repeat customer, the lost customer, or the reactivation of that lost customer.)

At this stage, we also begin to battle the expectations gap. The gap is sometimes created because of overzealous sales and marketing approaches—promising something that is above and beyond what we’re capable of delivering. During the past six years, much of the work I’ve done with organizations has been focused on the expectations gap and how we can close (or at least minimize) the gap.

Stage Four: Happily Ever After

The loop isn’t a closed loop. It’s more like a spiral. Our goal, remember, is to keep customers buying, buying more, and buying again after that. In this section, we’ll explore some of the earlier science we’ve discussed to look at things like follow-up marketing and how to encourage word of mouth. We’ll look at why post-service surveys are often a terrible idea and why most companies do them entirely wrong. In this section, you’ll learn that all marketing to existing customers should be focused on reminding them of the best parts of their experience, so as to massage those memories into the most favorable versions. Why have people buy from you once when you can influence them and create an environment where customers want to buy again, and again, and again?

For most of my clients, getting a customer is the single most expensive thing they’ll ever do. There’s a massive amount of time, energy, and money invested in looking for ways to attract and persuade new customers to buy. Unfortunately, most companies forget all the other important things that happen after the sale. If they’ve closed the sale, the work is done. But the work is never done. In fact, if you only ever hear your sales and marketing people talking about “how to get a customer,” then they’re only doing half their jobs. Ask them if they’ll work for half of their regular pay.

That’s it. Four simple stages, all starting from long before the customer is ever a customer, to long after the first sale is made. It’s not much more complicated than that. Some might quickly argue that the client’s experience only happens in Stage Three and that everything else is unrelated, and that’s entirely false. In today’s connected world, the customer experience is the whole experience, and that’s why it’s important to understand what’s happening in the mind of the customer at each and every stage and what you can do to ensure the best experience possible. It doesn’t need to be complicated, though, and that’s why it’s important just to focus on four simple stages. Want me to make it even easier? Think of it this way: You have before the sale, the sale itself, the experience, and after the sale. That’s it. Four simple stages with a few unique things you can be doing during each stage to ensure the experience is incredible.

Let’s get started by looking at the first stage of the loop.

The Loyalty Loop Diagnostic

The very terms of customer service and customer satisfaction are entirely overused and really denote something other than what we’re embracing with the Customer Loyalty Loop. Remember, the entire loop hinges on the fact that the customer has already begun to develop perceptions of you and your business long before they show up to complete the transaction. The customer is experiencing from the first time they hear about you in your marketing campaigns, long into your sales efforts, and long after the work is completed. For example, here’s a small list of all the times the customer is having an experience with your company. Keep in mind, this is a list I’m rattling off one morning at 6 AM, and there are dozens of touch points and experiences that matter. But this is a good way to think about it.

1. The first time they see your marketing. Remember the awareness phase of the traditional customer journey.

2. The first time they hear about you from someone else (online reviews, friends, family, referrals, etc.)

3. The first time they call your business.

4. They first time they visit your website.

5. The first time they call you.

6. The first time a sales representative reaches out.

7. How your employees look.

8. The tone and personality of your employees.

9. The speed in which you respond to requests.

10. How you acknowledge problems or situations.

11. How you greet customers the moment they arrive and when they leave.

12. How you treat them during the experience.

13. How clean you leave the work area. There’s a builder in the area where I live that leaves a huge mess all the time. It creates a really poor picture and impression in my mind of that builder. I’ll never build a house with them. If they’re cutting corners on cleanup, where else are they cutting corners?

14. Do you continue to follow-up after the sale, or do they never hear from you again?

As you can see, here are 14 things I’ve just rattled off. We’re not even scratching the surface here, and the customer is continuously having an experience with your company. People love Disney because it understands the customer is continuously experiencing and its always looking to excel in every area. I remember reading a book once that talked about a white picket fence at Disney that’s painted every night after the park closes. The paint dries just in time for the customer to arrive in the morning. Impressions are everything. The experience is everything. Customers don’t remember decent customer service.

They don’t even care if you deliver an experience that’s just “good enough” across all four stages. The only thing that matters is that the experience is exceptional and that it shows that you’ve thought about it from before, during, and long after the sale. If you get the experience right across the entire loyalty loop, then you’re likely to experience all of these benefits and more.

1. Reduced sales and marketing costs. When you embrace the loyalty loop, you increase the customers who are attracted to you. You won’t spend as much to attract customers, because your customers can’t stop talking about you. This increases your cash flow, your revenues, and your profits.

2. Increased customer value. The better the experience, the more consistent the follow-up, and the more you work to continuously add value, the more your customers will trust you. They’ll spend more money with you, and likely more often. They’re also far more likely to refer you to others.

The better the experience, the bigger the financial impact on your business. My goal in this book is to show you what that takes. To that end, I’ve created a simple the Loyalty Loop Diagnostic, a simple 38-part questionnaire to gauge how your experience measures up.

The Loyalty Loop Diagnostic is a simple tool for you to gauge how likely it is that your company is delivering a remarkable and memorable customer experience all the time. Take your time and carefully consider each question, and think about each question as it relates to the book. At the end, tally up your score and see where you stand. This should offer you some guidance on the areas where a few small changes or improvements would generate some fabulous results.

The Answer Key

The next step is to tally up your scores and see how you rank.

A) If your total points are 51 or less, it tells you that you’re likely delivering a very poor customer experience. Your business could be stable, profitable, and seem to be doing well, but your greatest opportunity for growth revolves around creating a well-balanced, cohesive customer experience by understanding each stage of the loyalty loop. You’re likely losing customers regularly and investing a ton of time, money, and energy into customer acquisition efforts.

B) If your total points are between 52 and 89, you’re delivering a decent customer experience. You have an understanding of each stage of the customer experience, but small hinges will swing big doors. You have room for exceptional improvements. You can likely improve profits and revenue by 50–60 percent or more by working on a small number of the things you’re not doing.

C) If your total points exceed 90 or higher, congrats! I’m willing to guess you’re delivering a wonderful customer experience and your business results are confirming that. However, even though you’ve ranked so high, this creates even more opportunity to tweak, improve, and create dramatic growth opportunities by harnessing the power of the loyalty loop. Regardless, you deserve a high-five for a job well done. Now keep improving, keep tweaking, and keep testing. Utilize the action steps found here to embrace continuous improvement. The test is designed such that a perfect score is possible—can you get there?