It’s the holy grail of business.
It’s a forever customer, someone so loyal to you they never want to leave. These are the customers who sing your praises to others. They stick with you during tough times because they consider your offering so essential.
Customer loyalty is being tested right now on both sides of the equation. Customers want to know how their preferred brands and companies are responding to uncertain times. And companies want to hang on to their customers now more than ever.
Five years ago, when author and strategy consultant Robbie Kellman Baxter introduced the world to the membership economy in her book of the same name, only a handful of firms (think Netflix, Weight Watchers, Dollar Shave Club, Cross Fit, etc.) were leveraging membership models.
Times have changed.
In the ensuing years, Baxter helped hundreds of organizations create their membership models. Organizations in search of recurring revenue and a longer-term relationship with customers leaned into the membership economy.
The current crisis demonstrates with stark clarity that customer loyalty is no longer merely important; it is the lifeblood of survival. Organizations that once assumed they had created a successful member relationship with their customers are finding their relationship is actually more tenuous than they previously realized. An economic downturn quickly reveals whether customers truly love you, or they’re merely doing business with you.
While some organizations are losing customers, other organizations are watching their customers become their biggest champions. In a time of uncertainty, these organizations are accelerating customer trust and loyalty.
Organizations whose customers stick with them during tough times have created what Baxter calls a forever transaction. In her latest book, “The Forever Transaction,” Baxter describes these in-depth relationships as “the moment when customers remove their ‘consumer hats’ and don ‘member hats,’ commit to your organization for the long term and stop considering alternatives. For many companies this is the holy grail: loyal recurring customers, often paying automatically, indefinitely.”
Baxter completed “The Forever Transaction” just weeks before the coronavirus crisis hit.
Yet fortuitously, she provides a playback for creating forever relationships that can survive a crisis. She writes that customer cancellations are the first thing to go during an economic downturn or financial setback. Instead of making it difficult for customers to cancel, Baxter suggests taking an opposite approach.
She said now is the time to optimize your triggers (features that drive sign-ups) as well as your hooks (features that may be discovered post-transaction to drive loyalty and engagement).
In a normal business climate, retaining customers by “hiding the cancel button” – physically on websites or metaphorically, like the gym membership you can only do in person, on alternating Tuesdays when the manager is there – does an organization more harm than good. In a crisis, this impact is amplified.
To earn a forever transaction, Baxter said, you must offer a forever promise in return. The organization must commit to deliver a result, solve a pain point or achieve an outcome for your members forever in exchange for their loyalty.
In a time of uncertainty, organizations and customers alike are asking, “Do you love me?” and “Will you treat me well if things start falling apart?”
Organizations that already have that kind of relationship with customers have an advantage in a crisis. Their customers will not only stick with them, they will convince others to join.
For organizations that haven’t cemented a forever transaction, it’s never too late. A crisis provides an window of opportunity for organizations to show customers what they’re really made of.
– Lisa Earle McLeod is a leadership consultant and the author of several books. For more information on her company, visit McLeodandMore.com.