Acquisition’s Effect on Long-Term Customer Loyalty

By Brandon Carter | Updated on Nov 19, 2015 9:00:00 AM

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We said loyalty begins with the onboarding process. While onboarding certainly plays a major role, in reality loyalty, or the prospect of it at least, begins when the customer meets the brand for the first time. The relationship begins long before the first transaction takes place.

What are the expectations set from the beginning? What is a brand promising?

As Robbie Kellman Baxter mentions in The Membership Economy, people who go to McDonald’s for their anniversary dinner are going to be pissed when they’re not offered champagne and caviar. McDonald’s goes out of its way to set expectations and model its experience to fit the needs of its most desirable customers.

Yes, they're going to lose out on the fine dining crowd and those dollars. So be it. 

Too often brands are built around the top of the acquisition funnel. They’ll say anything they can to get someone to make that first transaction.

Oftentimes, their customers feel betrayed because the brand does nothing to fulfill its promises, or doesn’t match the experience they expected.

It’s an ongoing problem. We’re all living and dying by what happens toward the top of the funnel, while ignoring those who’ve already completed it.

How do we fix it? Start at the bottom.

From the Bottom to the Top

American profitability has largely been built on acquisition. Consider the stock market, where companies lose billions of dollars because they didn’t grow as much as projected on a quarterly basis.

Growth is sexy, no doubt. The problem is we’ve come to expect growth to primarily come from new business. Meanwhile, customers churn out and the state of loyalty finds itself in a mess.

The answer is to build your growth engine from the bottom of your funnel - not the traditional funnel, but the membership funnel espoused by Baxter in her book and our webinar. In that hourglass funnel, the circular bottom is where your most loyal customers live. member benefits

On one level, focusing on this area for acquisition means your most loyal customers become referral sources, feeding their contacts into the top of your funnel themselves.

On another, more accessible level, building from the bottom means shaping your organization to match the values and experiences desired by your target audience. Your brand will naturally follow suit, conveying the message and promises the organization was built around. 

When your acquisition tactics explicitly convey those values, the people who enter your funnel will be much more likely to stay long-term. And as we’ve learned, long-term is even more profitable than a constant stream of new customers who churn out quickly.

  • Building loyalty with 5% more customers would lead to an increased average profit per customer of between 25% and 100%
  • “Fully engaged” customers (those with a strong attachment to the brand, or brand ambassadors) deliver a 23% premium over the average customer in share of wallet, profitability and revenue
  • Engaged consumers buy 90% more frequently, spend 60% more per transaction and are five times more likely to indicate it is the only brand they would purchase in the future. All of these factors lead to engaged customers delivering three times the value to the brand over the course of a year

We can go on and on (and we basically do, over on our loyalty stats page), but you get the point.

The money is there in acquisition. And there’s a lot more of it there when you acquire with customer or member loyalty in mind.

What Not to Do

Do you love your cable or internet company? If your bills inch up every month like mine do, probably not. Their focus is on bringing in a constantly-ascending volume of new customers, to the extent where longtime, loyal customers are subsidizing the deep discounts offered to the new business.

As a result, customers are finding ways around paying traditional paid TV providers. Cordcutting - using over the air TV signals and online streaming services - is growing in popularity. (As is the acquisition of broadband providers by those TV providers, naturally.)

Imagine if McDonald’s branding promised an elegant, quiet evening of fine dining and hand-crafted aperitifs in between courses; yet their actual experience was what we all know McDonalds to be in actuality: fast food, playgrounds, efficiency.

The long-term effects of acquistion-at-all-costs can bring down an entire industry. Don’t be like that. Build your acquisition process with your most engaged, most loyal customers in mind.

The long-term results will speak for themselves.

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Topics: customer loyalty

Written by: Brandon Carter

Brandon is a writer and marketer for Access Development. He's a frequent blogger on customer and employee engagement & loyalty, consumer trends, and branding.

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