Marketing Consultant Graham McGregor on why the loyalty ladder is such a useful concept in marketing.
The Loyalty Ladder comes from a great book called 'Up the Loyalty Ladder' by marketing expert Murray Raphael and his son Neil Raphael.
(It's currently out of print however you may be able to get a copy at your library or second hand from Amazon.)
The Loyalty Ladder is simple to learn and gives you an excellent road map to follow to increase your sales and profits.
The Loyalty Ladder has five steps on it.
Most of the people your business deals with will be on one of these five steps. Once you have identified where a person is on the Loyalty Ladder you then have a very simple question to ask yourself.
'How can I move this person one step higher up the ladder?'
Let's take a quick look at each of these five steps:
This is the highest part of the Loyalty Ladder. People on this step are called Advocates and they tell everyone they know how wonderful your business is.
Here you have Clients. These people have purchased several times from your business.
On this step you have Customers. This is a person who has made one purchase from your business.
Here you have people called Shoppers. These people have an interest in what you sell and have made contact at least once with your business.
This is the lowest part of the Loyalty Ladder. People on this step are called Prospects and could potentially buy something from your business.
So how do you treat people on each of these five steps?
At the bottom of the Loyalty Ladder is a potential prospect. They may be interested in your product or service. Your goal in all your marketing to prospects is to move them one step higher so that they now become shoppers.
In other words they now make contact with your business. This could be by phone, email or even a personal visit.
Now they are a shopper what is your goal? You want to move them one step higher so they make one purchase from your business.
They are now a customer and what do you do next? You want to move them one step higher and turn them into a client. In other words they make a repeat purchase.
Once they are a client what is your next goal? Move them one step higher and turn them into advocates. An advocate will tell everyone they know how great your business is and encourage many other people to buy from you.
The higher up the Loyalty Ladder the more valuable a person is to your business.
And a good goal in all your communications is to do things that will move people one step higher on the loyalty ladder.
1. Write down the names of two people who are on each of the five rungs of the loyalty ladder. In other words write down two prospects, two shoppers, two customers, and so on.
2. Write down one action step you could take that may help in moving each of these people one step higher on the ladder. For example you may send a thank you note to a customer. You might give a client a free gift to thank them for their repeat business. You might send some helpful material to a shopper who has not yet made a purchase.
3. Complete at least one action step this week for each of the people you have identified in step one.
"A satisfied customer is the best business strategy of all."