As a business owner, you dream of having an army of delighted customers promoting your company. You want your customers not just to recommend your business but to gush about it. These are the customers that have 100% faith in your brand and won’t stop until they’ve told the world how good you are.
But how do you develop a strong, loyal customer base?
To build a tribe of loyal customers, you’re going to need to start from the ground up. That is, your best customers are built on the first interaction.
The ‘Ladder of Loyalty’ is a 7-step journey to creating raving fans. To get more customers at that level, you can consciously improve each step, starting with the end goal in mind.
What is the Ladder of Loyalty?
The ladder of loyalty is a concept that helps businesses understand how to build loyal customer relationships.
It’s based on the idea that customers have a journey toward building brand loyalty—from awareness, to engagement, to conversion, to advocacy, and beyond. This ladder can be used as a framework for marketing initiatives and customer service practices, helping companies identify where your customers are on the ladder and how to move them up.
By understanding the ladder of loyalty, businesses can create a strategy for nurturing client relationships, and growing your loyal customer base in a way that benefits both the business and its customers.
Why is a Customer Loyalty Ladder Important?
The ladder of loyalty is an essential concept for any business looking to drive repeat sales. It’s a way of understanding the customer journey and why repeat business is so valuable. In other words – think “wallet share” rather than “market share.”
After all, generating new leads can be expensive, but existing customers already know and trust your company, making it easier and more cost-effective to upsell, cross-sell or generate referrals. Keeping current customers happy so they continue to give repeat business and referrals is one of the most profitable ways to grow your business. Not to mention, great customers tend to refer more great customers – so it’s also the most enjoyable way to grow your business.
The Seven Rungs on the Ladder of Customer Loyalty
A suspect represents someone who could buy from you. They might not know of your business yet, but they meet your definition of a target client. For example, if you sell high performance auto parts, your suspects could be anyone who owns a muscle car.
Because there is not yet a relationship, there is obviously zero loyalty at this phase. Yet the ladder of loyalty begins here, because their first exposure to your business is through your marketing. Does it connect? Does it engage? Does it deliver value?
Prospects are people who have expressed interest, and are considering buying your product or service. This interest could be a phone call, website submission, or a request for a quote.
Is your sales process designed to make your prospect feel great? Does every touchpoint add to the relationship bank account in a way that drives loyalty?
These people actually buy from your company… once. You might refer to them as a customer, but the truth is, when it comes to loyalty, you haven’t earned it yet. Should they need your product or service a second time, they might shop around for a new provider if they’re not blown away by their first experience.
Your customers are shoppers who buy from you more than once – repeat clients.
Many businesses make the mistake of putting all their marketing and customer service efforts toward new clients, but profit is built on repeat business. I’d suggest dedicating portion of your marketing budget to invest in nurturing these relationships. This group is critical, and needs to be treated with special care.
Members feel like they belong.
They don’t price shop, they just send in the order. And just like at a country club, “membership” with your company comes with benefits. They’re treated with a sense of exclusivity, and it’s obvious to them that they’re one of your best customers. (It’s ok to play favorites.)
Advocates will recommend your company, but only when they’re asked. They will send you a referral on occasion, or take the time to write a testimonial.
Most good businesses have developed a fair amount of advocates, and it leads to steady – although not necessarily predictable – growth.
The ultimate stage of customer loyalty. These people are walking advertisements for your brand. They’ll recommend you often, without even being asked.
You know the type – that person who always tells you where you need to eat, when you never asked their opinion. Or the one who takes to social media with posts like, “If you ever need used car, go see Mike’s Used Cars! #Mikerocks #hugausedcarsalesman”
Your raving fans are more powerful than any salesforce you could ever employ. I’d suggest setting a company goal for how many raving fans you want to develop, and a plan for how you’ll thank them along the way.
Tips For Moving Clients Up the Ladder of Loyalty
Here are some questions to discuss with your team:
- Do we have Raving Fans now? Who are they and what is it they love about our company? (Take your fans to lunch to find out!)
- Which rungs are most crowded on our ladder of loyalty?
- Which rungs are too empty?
- How can we make someone’s first interaction with our company so spectacular that they’d be willing to send a referral before they even do business with us?
- What are 10 possible things we can do to get a shopper to come back a second or third time?
- Who used to business with us but stopped? What can we learn from that experience?
- How can we show more appreciation?
- Who is an excellent repeat customer, but has never sent a referral? How can we change that?
The 80/20 rule applies here: 80% of your profit comes from the top 20% of your customer base. So not only are repeat customers and referrals good for the bottom line, but it’s darn fun to do good business with good people!
The effect of Customer Loyalty Ladder
By tracking customer loyalty levels, you’ll be better informed about how customers are engaging with your brand and which strategies will work best in order to attract new customers and build them into your best marketing resources.
This can also help you identify areas for improvement in order to better serve customers and build loyalty.
Keep in mind that customers don’t always follow this ladder step by step. They may skip steps or go back and forth between them, so it’s important to be flexible, continue to gather customer feedback, and adjust your strategies accordingly.
1. Who invented the ladder of loyalty?
I first learned of the ladder of loyalty from Brad Sugars, a well-known author and the Founder of ActionCOACH. He came up with the concept to help companies measure where their customers are in terms of loyalty and engagement. The ladder breaks down customer relationships into seven distinct levels, from unaware prospects to promoters who will go out of their way to spread positive word about your business.
2.How loyalty is measured?
Loyalty, as it relates to the rungs described in this article, is best measured by 1) repeat business, and 2) customer referrals.
However, other ways companies might track and measure loyalty could include use of NPS (Net Promoter Score) surveys, feedback forms, or other metrics such as the lifetime value of a customer in your business.
3.How loyalty is built?
In short, people will be loyal to businesses that make them feel great. This means that you meet their needs, deliver a valuable product or service, create an amazing experience, and show your appreciation.
Treating your customers in this way builds trust in both the character and competence of your team, and that is the foundation for long-term relationships and referrals.