Serious customer loyalty mistakes to avoid.

Managing customer retention rates is an incredibly important part of growing a sustainable business. Winning a new customer is wonderful, watching an existing customer that you have acquired switch to a competitor, not quite so much.

A very common approach to growth is to focus on new customer acquisition.

In most cases, it is completely ignored how many existing customers are already leaving during this time. Concentrating on customer loyalty is only of secondary priority, again with reference to customer acquisition. The attempt is made to retain new customers for as long as possible with the company through attractive prices and long terms.

In short, many companies make serious mistakes when it comes to customer loyalty.

If you want to start focusing on customer loyalty in your company, then you will be interested in the following examples of the most common and serious mistakes in customer loyalty.

Promise too much but deliver too little

Is your website overselling your product? It's not uncommon for product offerings - especially SaaS products and similar services - to overemphasize the benefits of getting every final conversion out of the traffic received.

It is very tempting to over-promise in product information, especially in a crowded market where even the slightest advantage can set your product apart from your competitors. However, if you can't keep your promises, you will quickly find that your company is losing customers.

Optimizing conversions is an essential aspect of the acquisition process, not only for startups, but it should never result in your landing page or website giving a different impression about your product.

When you make promises, you must deliver. If you don't live up to expectations, you will lose customers faster than you can get them.

Automate every aspect of your customer service

Automation is an important part of any online business. Automating repetitive processes saves time, reduces costs, and allows you to focus on the areas of your business that require a lot of human attention.

One of these areas is customer service, for example. Customers are people, and after all, people want to talk to other people when they have problems, suggestions, and questions. FAQs and an automated chat system can save time and reduce costs, but they can also seriously affect your customer loyalty rate.

Every year companies lose billions in sales due to poor customer service alone. The most common customer service-related complaints are fairly predictable:

• For the majority of respondents, one reason for dissatisfaction is that they couldn't reach a real person over the phone.
• Shortly after that are the cases in which customers wanted to reach the company by phone, but no customer service number was given on the website.
• Another reason for dissatisfaction is poorly configured and ineffective speech recognition systems that make "getting through" to a real person almost impossible.

There is the right time and the right place to automate processes. In most cases, customer support is not the place to be for this action.

Instead of an automated chat and an FAQ page, offer a direct telephone number, a real live chat employee and an e-mail address that is checked frequently and via which inquiries are answered promptly.

Recommended Reading: For ideas that can help you with automation, see our blog article " Practical ideas for automating the customer feedback workflow"

You can't keep up with your competitors

Your product might be the best in its category right now, but if you have competitors they will most likely work on improving your product even further.

If you take your leading market position for granted, you could soon lose customers to a more motivated and ambitious competitor.

Customers don't just buy your product because it's good - many will buy it because it's the best in its category. It could offer the best value for money, the best overall quality, or the best mix of both.

If you slip into second place, you will find customers churning to a competitor, especially if the move is quick and easy.

Regardless of whether your product is the best in its category, you need to constantly pay attention to what the competition is offering. Instead of resting on your laurels, pay attention to your competitors and make it a point to stay one step ahead of them.

How to stay one step ahead of your competition:

• Find and recognize your competitors.
  Identifying your competitors' strengths can give you an idea of ​​the areas in which you need to improve in order to remain competitive.
• Understand your customers.
  Are you aware of your target group and their needs and expectations.
• Hold on to existing customers.
  Nurturing your customers increases your bottom line as they are more likely to keep buying from you and recommending you to their friends.

See each customer as an opportunity to win that can be replaced.

As a product-based business owner, another mistake with customer loyalty is assuming that every customer needs to be profitable, especially in the short term.

From time to time customers will be disappointed or upset with your product. It may not be ideal for their needs or they had unrealistic expectations prior to purchasing.

If you focus purely on the short term, it is tempting to view these customers as expendable.

Sometimes retaining a customer means disregarding profitability in the current month and paying more attention to potential customer lifetime value.

In implementation, selling a physical product can mean overwhelming customer service by sending out a free replacement, complete with a bonus to say, "Sorry".

If you are offering an intangible product, it may mean foregoing the customer bill for the month.

When responding to a dissatisfied customer, think long-term and you'll convert critics into promoters - keeping short-term profits in mind will give your brand a reputation for making money only.

Do things manually when automation is possible

Providing personalized service to each customer is a great way to build a reputation for your brand that you care about your customers. However, this project can quickly become costly.

Instead of doing everything manually, you split tasks into two categories:

• Tasks that are directly related to customer interaction, e.g. B. Telephone or chat support
• Tasks that are indirectly related to customer interaction, such as customer surveys and sending notification emails

In the first category, personal interaction is really valued. Customers will always prefer to talk to a real person over a machine, but they are less concerned about whether their emails and notifications are created manually or automatically.

When you automate strategically, you reduce the cost of providing great service to your customers so you can do more with less. If you do everything manually, you could be overwhelmed by the amount of customer support tasks your team has to do.

Discount on your offer to improve customer loyalty

You are probably familiar with this case: A once loyal, satisfied customer contacts you with a request to cancel. A case that every company, no matter how successful it is in terms of customer loyalty, has to deal with at some point.

When a customer contacts you with a request to cancel, it is tempting to offer a discount in order to keep their business. This often works, but it can also have several negative effects:

• The customer might see the months in which they paid full price for your product as a missed opportunity to receive a discount.
• The value of your product goes down in the eyes of the customer.
• Instead of competing on quality, you start competing on price, which makes your product a commodity rather than a unique offering.
• As the customer pays less, your margin goes down.

There are times when discounts make sense. Preventing cancellations is sometimes one of them. You just need to be aware of the negative impact of discounts and the long-term impact on customer perception of your product.

Reading recommendation: In our blog article "How your pricing policy affects customer satisfaction." You can find out more about pricing policy and customer loyalty.

Marketing to the wrong audience

If you get the wrong customers, it's only natural that most of them will leave. Many companies make the mistake of focusing on low-cost customer acquisition and target groups who are not ideal customers at all costs.

For example, imagine you have a SaaS product aimed at enterprise customers. Is it better for you to contact large companies, albeit at a substantial cost, or to advertise to small businesses and freelancers?

Cheap customer acquisition often leads to poor customer loyalty. Use customer profiling to make sure you are targeting the right audience and companies who need your product and have the means to pay for it in the long run.

These tricks will help you define your target market:

• Take a look at your existing customers
  Find common characteristics of your customers. How old are you? Are you married? What is your income?
• Look at your competition
  Who are your competitors aimed at? Maybe you should be targeting the same market, or maybe there is a niche market that you have overlooked.
• Brainstorm your product / service
  Who will benefit from the value of your offering? Think of a problem your product or service can solve, then determine who is willing to pay for the solution.
• Rate your product or service
  Take a look at what else is out there and think about what is so unique about the way your product / service solves the problem. If you can't answer these questions - wrong target market or offer.

Reading recommendation: You can find out more about communication with your target group in our blog article “How to understand your target audience – a short guide”

Improve your customer loyalty with Callexa NPS customer surveys

Callexa automatically performs Net Promoter Score surveys your customers with and helps you to find out how they think about your company and how likely it is to recommend you to their friends, colleagues and acquaintances.

Register your permanently free starter tariff today and start the NPS customer survey.

Recommended reading: If this article helped you and you would like to learn more about the role of NPS in shaping the customer experience, continue reading here: "The role of NPS in customer experience (CX)"