Is Your Customer Loyal to You or Your Price? | Shep Hyken

Defining Your Customer’s Loyalty 

What would happen if you were just a little higher priced than your competitor?  How would your customers react?  Would your loyal customers continue to do business with you, in spite of your higher price?

Unless your strategy is to always be the lowest price, one would hope the answer to the last question is, “Yes!”

These questions come from a conversation I was having with a client that resulted in me asking the question, “Do you think your customers are more loyal to your company or your price?”

The client said, “I hope they are happy with our company, in spite of our price.”

I said, “Hope is not a strategy.  You should know why your customers are loyalto you.”

By the way, and this is important, if your strategy is to be the lowest price, that’s okay.  This client knew his company couldn’t compete on price, so our conversation then focused on how he could compete.

Unless the customer just happens to call or visit your business for the first time and doesn’t know much about you, your customers typically fall into one of these two categories:

1. Price sensitive customers who are loyal to your price and not your company.  Even if they appear to be loyal to the company, it’s only because of price.  The real loyalty is a benefit that overrides everything else: low price.  Just realize that the moment that customer finds a lower price from a competitor, they will leave you.  If your business model is to be the lowest price, then you know what you have to do to hold on to this customer.
2. Value or relationship driven customers who are loyal to the company.  Price is less relevant to them as they appreciate the value that the company provides.  That value can come in the form of customer service, convenience, expertise, bigger selection, quality of product and even a relationship with someone in the company – basically anything other than a low price.  Keep building that relationship and offering value and the customer is more likely to stay with you.

With either of these two customer categories, there is a simple key to being successful, summed up in one word: consistency.

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