Customer Loyalty In The Digital Age Of Retail

Recently, I was reading an article about Jim Koch, Founder of the Boston Beer Company, producer of the famous Sam Adams brand of beer. In the article, the writer extolled the virtues of the Founder, who was admittedly the pioneer of the craft brew industry, but the piece failed to touch on the failure of Koch and the Boston Beer Company to change with the times. As has been well documented, Koch isn’t a fan of India pale ale beers and, when the IPA craze hit, he refused to respond by creating a Sam Adams IPA. After seeing sales drop, Boston Beer Company eventually released the Rebel IPA, but it was not initially under the Sam Adams brand; thus, the company failed to capitalize on its name. Sam Adams fans weren’t given an opportunity to stay loyal to their brand when they wanted to expand their palates. When Sam Adams saw sales decline, Koch began to push away some of his longtime customers with rude responses to their demands. He failed to meet their needs because he was out of touch with them.

I was discussing this with a very good customer of mine who, over the years, has become one of those people I truly enjoy talking to when he stops by. He’s always been reasonable, and he loves our store and loves buying gear. Plus, he’s a nice guy to be around. Like many of the customers I’ve known since I started in this business 15 years ago, he and I tend to talk about many things besides music. Also, like many of our customers, he sends people my way from time to time, encouraging people who normally go to big-box stores to give us a try. I’ve never asked him to do this, but I readily show my gratitude to him by giving him great deals when he wants something new for himself.

A while back, he had sent one of his bandmates in to buy some new equipment. The bandmate had proven to be one of those pushy customers about whom I recently wrote. I’m not against competing, but this customer had worked in retail and he believed he knew what my cost was on everything. He thought he could hard bargain me down to that number. It was frustrating, to say the least. I finally told him there was no way I could go any lower and, if he found the item at a lower price somewhere else, he should buy it there. Although, in retrospect, it was stupid and the kind of thing I usually avoid saying, the guy was just being unreasonable. While having coffee recently with my friend, I asked about that bandmate and if he’d found somewhere else to make his purchase. He hadn’t.

“I knew it,” I said, gloating. “Man, that guy was being really unreasonable.”

“Funny,” my customer said. “That’s basically what he said about you.”

It was a small error, but I actually did my customer and his bandmate a disservice. He’d sent me his friend, assuming that I’d take good care of him. Although I was right to set a limit and not go below it, I executed it with less grace than the situation required. I should have looked at the pushy bandmate as though he were the good customer I already had. I allowed myself to get flustered and say one stupid thing I shouldn’t have said. By handling that one situation poorly, I had a negative effect on two people. Obviously, I didn’t lose my customer over it, but I did learn an important lesson: Sometimes, success isn’t calculated by finalizing a sale but, rather, by holding onto the customers you have. To many, this might seem like a no-brainer, but, as I’ve previously written, it’s very easy to allow ourselves to be overwhelmed with a myriad of other things. It’s easy to be so focused on gaining market share, competing with the Internet and big-box retail, and growing our bottom line that we allow ourselves to neglect some of our already loyal customers.

A prime example of this can be found in most of our stores every single day in the guise of students and parents who come in for lessons. Students and their parents come in, pass us by and go back to the instructors who service them. Aside from the initial sign-up and occasional sale, how often do we really interact with our students? How many of their parents’ names do you know? These loyal customers are in our store every week, and many of them get little or no personal attention from us, other than when they buy something or pay for lessons. Generating and maintaining relationships with these customers, whom we already have, should be of prime importance. Yet, it’s something many stores easily take for granted.

This is one of the many areas in which we can differentiate ourselves from big-box and Internet retail. Big-box and Internet retail are structured to be treated as a single-serving, rigidly formatted consumer experience, with everyone essentially getting the same with every transaction. The customer’s initial experiences with both are often pleasant enough, but the Internet is rife with unpleasant stories of terrible customer service, unfair return policies and nothing to reward customers for their loyalty. This strategy is designed to make the initial purchase cheap, easy and guilt-free for the consumer. However, the moment there is an issue—a wrong order, a damaged product or a return to be made—all bets are off. These areas encompass the “service” indie retailers so often refer to as the value-added reason for consumers to choose our stores over other options. While giving these things our vocal support, we must also make sure we’re following through by providing truly exemplary service and treating our loyal regular customers as if they are stockholders in our company. Our continued survival, and eventual growth, depends on the people who, time and time again, walk in the door. They are our lifeblood.

What are some of the ways you and your staff encourage and reward loyalty among your customers? How do you go about making sure those customers aren’t being forgotten?
Write to me at gabriel@larrysmusiccenter.com.

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