Get personal: How your business model impacts brand loyalty.
As an entrepreneur, I’ve learned first hand what will happen to your business if you can’t find the right kind of relationship with your customers. Put shortly, no customer loyalty will be achieved, retention will drop, and the business will slowly die.
The type matters.
Even though it’s one of the most overlooked parts of a business model, the type of customer relationship your business establish with customers is an important part of the companies’ strategy. In fact, Gartner reported that 89% of businesses would compete on customer experience this year — as opposed to price or quality. The customer relationship is important to your business because it specifies how both existing and new customers experience a meaningful (and often valuable) connection with your company. If your customers demand — or even prefers a certain type of relationship with the businesses that “woo them,” chances are that you’re in trouble, if you don’t live up to their expectations. To complicate things, people tend to have different demands for different types of purchases. Usually, this has to do with price; the higher the price, the more a personal approach usually is expected. However, this is not always the case. As an example, a lot of us expect a more personal approach when ordering food at a restaurant (i.e. a conversation with a waiter) than when buying clothes. We are okay with buying clothes in a self-service manner, so why not a meal? Why are these categories different? When modeling a business or building a brand, you need to make sure that you understand what people expect from your specific category.
Being personal creates trust.
You know how a human to human relationship is built by sharing personal information and getting to know each other? In its essence, it is no different when consumers meet brands. And even though the type of relationship expected differs from audience to audience and category to category, it is a fact that the more personal the relationship is, the more trust is created between the parties in it. And the more trust created, the more loyalty follows. Remember that bar you went back to because the bartender was a great guy? That’s customer loyalty based on a personal relationship in pure form — and the concept is transferable to any business. The more personal your business model can get (viable CAC matters), the better results will you normally get back. I would even bet that if Airbnb ran a query of house owners showing up to greet visitors personally, crossed with rating scores, there would be a pattern showing that the personal approach receives higher ratings as an average (Airbnb, this would be cool to see).
Change the direction.
So what are we doing to apply this? Well, in 2016, brands bought more ads than ever, proved by ad revenue peaking for all top 5 digital ad networks. Businesses spend more and more resources on exposure, which ironically saturates the very channels they try to make valuable. Companies strive to automate every part of their customer journey. We are even creating chat bots, so we don’t have to talk with our customers ever again. Don’t get me wrong, I’m not opposing the business aspect of scalability, but are these brands considering the impact this has on their customer relationship and thus their businesses? I think most probably are not.
As business- or brand owners, we have to realize that the customer relationships we are establishing (or not) are as important as any other part of our business model. Before we jump on the next automated service, we have to figure out what kind of relationship we have to build with our target audience to create the kind of likability and trust our customers require to be loyal. If brands in the future want to create and keep customers, they have to be more personal — not just more exposed.
