What Really Earns Loyalty in the Local Business World?

Posted by MiriamEllis

St. Valentine’s Day is on the way, and I’ve been thinking about love and loyalty as they apply in the local business world. It’s been estimated that it costs 7x more to acquire a customer than to retain one; in my city, most of the major chains offer some type of traditional customer loyalty program. Most rely on a points-based system or an initial sign-up investment to receive benefits, but I wondered about Main Street.

I picked 15 locally owned businesses at random to see if they had created loyalty programs, and then I checked Google and Yelp to see if any of these programs had been inspiring enough to generate mentions in reviews (the most obvious online signs of devotion or dismay) in the past year. Here’s what I found:

Business Model	Loyalty Program	Mentions in Reviews
Toy store	$10 coupon for every $200 spent; $5 birthday card gift; teacher discount	1 mention
Grocery store	Grocery purchasing card that donates to local schools	0 mentions
Video store	Rent 12 videos, get 1 free	0 mentions
Craft store	Senior Tuesday 10% discount; birthday discount of 20%	0 mentions
Hardware store	No program	N/A
Bookstore	Purchase $25 rewards card and get 10% off of purchases for 1 year	1 mention
Restaurant	Complimentary birthday or anniversary dessert	0 mentions
Deli	No program	N/A
Café	Get 10 stamps for beverage purchase and get a free drink	2 mentions
Clothing boutique	No program	N/A
Kitchen store	No program	N/A
Bike shop	Spend $6,000 and receive free flat repair, swag, free event entry, and more	0 mentions
Hair salon	Get 7 cuts and receive ½ off on merchandise	0 mentions
Bakery	No program	N/A
Pet supply	Buy $5 card, get 5% off of merchandise for the year	2 mentions

At a glance, 2/3 of the independently owned businesses in this city have created loyalty programs, and in the last year, there were 6 total mentions of these benefits in all of the reviews earned by the 10 businesses offering these programs. Of course, this doesn’t mean that more customers aren’t participating in these programs, but it does seem to indicate that the majority of customers feel positive about a business for reasons other than official loyalty programs, at least in my small study.

So, what does foster loyalty? In the reviews I looked at, nearly all happy customers referenced either a specific great experience or an ongoing positive aspect of the business. These memories, if impressive enough, are what drive good reviews and help customers to remember to return for further good experiences. Then there’s the flip side — experiences so negative that they can drive a customer away forever.

Given the high cost of acquiring new customers vs. retaining existing ones, I’m going to document here 5 personal experiences with local businesses that made me vow never to return, and then I’ll follow that up with 5 excellent experiences that not only merited a great review from me, but have also lead to multiple transactions over the years. It’s my hope that these personal mini case studies will give local business owners and local SEOs a glimpse into the mind of one unbiased consumer, and that the findings will be widely applicable to most business models.

Bad business

The bad experience	What could have made it better?
Lack of empathy Worms in the rice bin of the bulk section of the local grocery store! Yuck! Reply from the store clerk? A very bored "Oh." No apology, no offer to get a manager. Not even an, "Eww!" of shared feeling. I’ve never bought bulk from them again.	Show me you care The wormy rice grocery store clerk could have mirrored my dismay and gotten a manager over immediately to explain how the merchandise had gotten bugs in it, and have let me seen them removing the bin before I left the store. Staff not only need to be treated empathetically by employers, but need to be trained to share that culture of empathy when confronted with customer complaints.
Lack of training Shopping for an exercise bike at the local sporting goods store, I was pleased to find floor models you could try out. Unfortunately, none of the staff knew how to turn the bikes on. They all stood there scratching their heads and saying, "I dunno. Maybe there’s a key or something." Needless to say, a transaction never happened.	Show me you’re trained Staff could have phoned the owner to ask how to operate their bikes, or at least have taken my name and number to have the owner invite me back for a personal demo. Owner could have assured me he was scheduling a staff-wide training session to ensure I'd have a better experience next time.
Lack of management In the midst of a family emergency in a rural area, I needed lodging pronto. What I found was a room filled with dead bugs, inch-thick dust, and a fridge festooned with green mold. Owner response? His housekeeper was having "emotional problems" and he guessed he ought to check up on the place from time to time. Ya think? Had to scramble for another place to stay in the next town, which was the last thing I needed to be doing that day.	Show me you're on top of things This couldn't be fixed on the spot because the owner had let things slip for too long. He might have offered to help me find another place to stay, given me some local coupons, or done something to express his regret. Any business owner who isn't overseeing his own business lacks the necessary commitment to succeed.
Lack of quality My community has a hate-hate relationship with the only local fabric store franchise, attested by a volume of negative reviews. The place is an absolute mess and basic, high-quality fabrics are almost always lacking. The inventory is cheap and disorganized. I’ll drive for hours to shop elsewhere, or shop online. This chain is my very last resort of desperation, because I know I’ll be disappointed and feel unhappy if I go there.	Show me you’re responsive Read the bad reviews and then poll the customers to find out what local sewing enthusiasts would love to see stocked in the inventory. And keep the store clean at all times! Playing the monopoly card because you’re the only game in town is not going to win loyalty. Should a more responsive competitor open its doors, the existing chain could see its customers leave in droves.
Lack of accountability When the electronics franchise in my area sold me an external hard drive that blew out my computer, I expected... something. Maybe an apology? Maybe a free fix-it service? I got neither. Instead, I got a condescending speech from a manager explaining that he wasn’t responsible for the products he sold. If I wanted to pay his tech team for diagnosis, they’d get back to me in a week to tell me how much more it would cost to fix my computer. I haven't trusted the company since.	Show me you’re responsible Instead of rudeness, the manager could have mirrored the horror I was feeling about my computer, offered free overnight diagnosis, and demonstrated that corporate policy stood both behind the products sold and behind me — the customer! Any business policy that fails to recognize that customers are the lifeblood of existence is exposing a glaring weakness, and a competitor with a genuine plan to win customer loyalty can make that weakness work for them.

Good business

Now, for the good stuff! These experiences were impressive enough to make it into my permanent memory bank, and moreover, have been the foundation of repeat transactions. Here’s a chance to consider whether your customers are having similar positive experiences when doing business with your company.

Great job!	Why does it work?
Superior selection Twice a month, I take a 3-hour trip to shop at an independent market that offers a selection of produce and groceries with which the local natural food chain can’t even compete. The food has a clear emphasis on local sourcing, is clearly labeled with its farm or origin, is fresher, and — a major biggie for me — is 100% organic. Markets nearer to me simply don’t have this superior quality, aren't 100% organic, and often carelessly mislabeled products.	Proven quality You’ll notice I didn’t say I shop there because it’s cheap. Quality matters more to me than anything when it comes to the food I purchase, so I’ll go a country mile and to some expense to get the best I can afford. This can be applied to any product lineup when the customer base is looking for the best. You can go the extra mile, as well, to explain why your products/services are superior to other offerings. Educate customers and then let them experience the difference.
Superior staff My favorite plant nursery is owned by a family that knows absolutely everything there is to know about gardening. They’ve got an amazing library of horticultural books, too, and often look up unusual plants for me, sharing their knowledge and their delight in all things green. I value their expertise, and make my major annual purchase of vegetable starts from this nursery each spring, knowing every question I have will receive a helpful answer.	Proven training Everyone who works at this business either knows the answers to my questions or knows how to get those answers for me. You may not need a staff of wizards, but the infrastructure needs to be there so that every employee knows who to ask when they don’t know the answer to a product or service question. Your investment in employee training — in educating the people who represent your business — is priceless.
Superior convenience My family may be in the minority, but we only own one car. And when that car gets worked on, we’ve had oodles of fun sitting for 4 hours on a hard bench in a dirty parking lot in 101 degree weather, waiting to get back on the road. But one local automotive chain has started offering courtesy cars — you can believe we’re going for that!	Proven support It’s the sensitive business that implements policies that make life a little easier for customers at times of inconvenience. Maybe that means offering water in a lobby, shortening check-out lines, or narrowing service window timeframes to limit long waits. Put yourself in the customer’s shoes in a not-fun situation and ask if there’s anything that would make it a bit easier. Offer that support.
Superior atmosphere Are there places you hate to shop? That dark cave, or hulking warehouse, or total zoo! You feel lousy and tired being there. You’d rather be anywhere else. Remember the fabric store, mentioned above? In contrast, there’s a small quilt shop in town that I can go to for some of the things I need, and the soft lighting, soft carpets, and beautiful organization of the merchandise make shopping there a treat and a pleasure. I shop there whenever I possibly can.	Proven welcome Cleanliness, organization, a user-friendly floor plan, and visual appeal are conducive not just to one-time purchases but to return visits to enjoy the welcoming vibes of a place. Volumes have been written about trapping customers in "mazes" to make them purchase more. Sadly, it works, but do you feel you'll win more loyalty and better reviews from customers who feel trapped or customers who feel welcomed?
Superior individuality Big brands have their place, but it’s at the locally-owned business that customers are likely to have the most unique shopping experiences. From the first time I visited one of the many farm stands in the area in which I live, I was delighted with their rustic tin shed, befriended by their down-to-earth staff, and touched that they often threw something extra into my shopping bag — an apple, a bunch of thyme, a variety of melon I’d never tried. The upshot: I shop there once a week, every week of the year.	Proven creativity Big box stores may be here to stay, but Main Street is still fighting. The big box is not going to give you a free lettuce, or lend you an umbrella when it rains, or tell you to pay them next time when their power goes down. It’s not in their corporate policy to do those things. Your locally-owned business gets to react to spur-of-the moment customer needs, creatively customize shopping experiences, and put a genuine human face on transactions. With a unique approach, you can become a cherished local institution.

Making a local business policy

For independently-owned businesses, official loyalty programs can offer an extra reason for customers to return to you, but the findings of my little research project indicate that they are not the core catalyst of great reviews or repeat business.

As a local business owner, you have the necessary freedom for making a particular culture, rather than a program, your official policy. So much of this comes down to basic acts of thoughtfulness: matching product/service quality to customer needs, running a well-cared-for ship that puts customers in the mood to buy, and training staff not just to answer questions but to use their own talents to provide creative solutions at the spur-of-the-moment. Sometimes, it’s the smallest thing that can make a memory and gain consumer loyalty — something as small as offering genuine thanks for doing business, or genuine empathy when a customer is disappointed. While looking at reviews, I couldn’t help noticing the repeat use of the word "love."

"I love their selection!"

"I love how helpful they are!"

"I love their bagels!"

Can you think of any other word with a more promising ring of loyalty?

Humans are generally loyal to family and friends because of the ties that bind, stitched with countless memories of important shared experiences. With business, it’s different. I’m not intrinsically bound to any company — not until they’ve created enough of a good impression to make it into my permanent memory bank, reminding me to "please, come again." And a bad enough experience stays imprinted on my mind for a very long time, too. Like the elephant, I never forget.

What will your local business be doing in 2016 to go above and beyond? To go from just doing business to doing it memorably well? Please, share your plans to inspire our community!

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