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Building Customer Loyalty

Before building something we need to understand what is the meaning of the term loyalty.

Simple definition:
Where an individual becomes accustomed to buying from you.

Loyal customers will:
- make regular/repeat purchases
- purchase not one but many of your products/services
- refer others (spread your story)

Some people say that "in every old customer you will find a new customer waiting to be break out and spend more money with you!..."

Value Pyramid Example:
1. Basic Value - Accurate billing, Prompt service
2. Expected Value - Delivery by 10 a.m on next business day (things to stay even with competition)
3. Unanticipated Value - first to provide online tracking, first to provide handled devices

When it comes to loyalty and retaining customers I would say the following:
"The more unanticipated value you provide a customer the deeper his loyalty to you"

Don't forget the 80-20 rule: 80 percent of your revenue is being generated by 20 percent of your customers. This means the not all customers are created equal.

So how to identify your best customers:
- Total revenue (for example $746,000)
- Calculate 80% of revenue (746,000 * 80% = 596,000)
- Next begin listing in descending order revenue b customer
- Add a column which will sum the revenue till now, stop when you get to your 80% revenue)
- RFM



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