How to create customer loyalty
When you are looking to create customer loyalty, it’s not as simple as putting together a stamp card or investing in a bit of software. You need a strategy, a plan and sometimes a willingness to change the way you do things.
Creating customer loyalty doesn’t necessarily mean points, cards and stamps. It does mean creating a state of mind based around a commitment to your customers.
Principles vs Practices of Marketing
At the recent Festival of Marketing conference in London (November 2015), Sir John Hegarty spoke about the fact that the principles of marketing hadn’t really changed, however the practices of marketing had completely changed.
Same is true within loyalty (not surprising as it is marketing!).
Principles of Loyalty Marketing
The strategic principles to apply when you create customer loyalty are…
- Identify your best customers, so you can…
- Retain their business, and then…
- Find more people like them.
The points bit or stamp card bit, is one of the loyalty mechanics that can be used (the practices) to achieve these principles. But it’s not as simple as just issuing points or stamp cards.
If your audience doesn’t receive amazing service or truly values what you are offering, then they are always just visiting.
To create customer loyalty, you need a plan and your business needs to be fully committed to delivering it.
Which brings me to Naked Wines…
Principles of being ‘Naked’ wines that is.
The majority of content for this post originated from a presentation made at the Festival of Marketing (12 November 2015) by James Bagley, Marketing director of Naked Wines. Thank you for sharing your insights and story James.
A loyalty state of mind
Naked Wines have a loyalty state of mind. For Naked Wines, loyalty is not about points, cards or stamps, it is about creating and delivering happiness. You may have heard this before as adopted by Zappos in the US. Get it right and it really works.
The problem that Naked Wines were addressing was the business model of wine. Notably, the wine producer and the wine lover were both being ripped off.
Tiny margins for the Wine producer.
Hefty margins for the Middleman
Higher (than it could be) price to the wine lover.
And here’s a stat directly from James at Naked Wines. No bottle of wine costs more than £10 to make. Even the really expensive ones!
Naked Wines address this by replacing the middleman and creating a market place that nurtures and supports wine producers through investment and support from customers.
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Naked Wines operate a transparent business model between customers and suppliers. Or as they prefer to call them, Angels and Rockstars.
Customers are called Angels. Angels fund the wine makers – in turn, they receive high quality discounted wine from high quality unique wine makers in return.
The business they’ve created is a kind of niche Social network with Wine at the heart of it. But for the model to really work, Naked Wines have committed to a business culture to keep both the ‘Rockstar’ wine makers and ‘Angel’ wine lovers. HAPPY.
So far so good.
- Naked Wines ship over 25,000 bottles a day, sometimes much more.
- But still seasonal, with a few spikes during the year such as Christmas.
- Customers love it.
The Naked Approach
1. Focus on experiences.
Naked Wines adopt a strategy known as the ‘results pyramid’. It’s a bottom up approach and staff focused. If you focus on providing experience that will help support beliefs, those beliefs help drive action and that’s what creates results.
2. Focus on five stars
I’ve posted about net promoter scores and this is a great example of how to do it. Only five star service is measured.
To help support that, their Customer happiness team have a budget which they can use at any point to delight customers.
Look at the Naked Wines social posts to see the impact of that!
3. Lead by example
Everyone does a customer happiness shift every month. That way everyone understand how the customers are ‘feeling’ and typical issues that are faced on a daily basis.
4. Treat staff like gold dust – it rubs off!
5. Make a real difference
They operate an annual uk roadshow of their wine producing ‘Rockstars’ to meet Angels once a year. Sometimes amazing things come out from that such as free food Friday, a staff and customer initiative which has supported social projects in South Africa (over 3,000 kids can now be fed for a whole year)
6. Empower people
They support staff ideas to make things a bit better. It’s called the shark tank (after the business show). The top three ideas are selected and those with the ideas are supported to build the business case. The ideas are then pitched to the business and everyone votes on the ideas.
The winning case gets launched. The most recent example of this was the introduction of ‘Text for Wine’.
7. Empower people more.
A recent example of this is Project Giraffe, where staff are encouraged to ‘stick their neck out’.
So how do Naked measure happiness? Obviously they measure smiles on a day to day basis, but they also have some key business measures in place to make sure it’s working.
- Five Star Service (measured daily)
- Customer Retention (measured monthly)
- Staff turnover (annual)
It’s working, and they’ve added scarcity to it. Only so much wine can be made, so they have a waiting list and long term Angels get priority.
A good job all round and a fascinating case study. Let us know what you think?
Do you want loyal customers?
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