On my Business Owners and Entrepreneurs – Transition Guy Podcast I interview some of the most successful global business leaders. The tips they give us are invaluable. I am a business coach with over 30 years business experience. I have long standing clients both here and in the US who I help to scale up their companies. I’d like to share a bit of how I do that. Let’s talk about the importance of the loyalty ladder. We will discuss different types of consumers.

What are the different types of customer?

At the bottom of the loyalty ladder a suspect is a consumer that is interested in your product. A prospect is a consumer who has inquired about your product or service and is genuinely interested. They’re now in your sales process. A ‘shopper’ is somebody that has transacted with you once. A ‘customer’ is somebody that has transacted with you on more than one occasion. Advocates are people that love to tell their friends about your business and finally, raving fans are customers that make sales for you.

Behaviours of customers

The sales environment operates in a high trust sphere. At ‘raving fan’ level the customer has a significant amount of trust in your product or service and transaction speeds are therefore fast. At ‘suspect’ and ‘prospect’ level trust is low and hasn’t been earned yet and the transaction pace is slower.

Margins

The further up the ladder you are, the higher the margin. Clients trust you to give them the right deal. At the bottom there may be more of a question on prices as there is no relationship, no loyalty. If you lose customers then it is usually because you are not paying enough attention to your relationship with them.

Where to focus your sales energies

The answer to building more raving fans and advocates into your business and moving people through the funnel of the ladder is through clever marketing. It is a mistake to focus your marketing strategy on your prospect and suspect list. Speeds and profits are low. Loyalty and trust is weak leaving you vulnerable to your competitors.

Membership:

You need to make your ‘shoppers’ into returning ‘customers’. Membership schemes are a great way of doing that. If customers feel they belong to your company they will eventually become advocates and raving fans. A member will give you a warm prospect and potentially an occasional shopper. Furthermore an ‘advocate’ will bring you in a shopper or a really hot prospect. ‘Raving fans’ bring you shoppers and they bring you customers. Focus your sales team on getting your customers up the ladder of loyalty and into raving fan territory.

To listen to the Transition Guy podcasts where I interview a range of well known figures within the business world

If you want to discuss putting a loyalty ladder in place – get in touch
Remember, failing to learn is learning to fail.