By Daniel Hunter
Small to medium-sized business (SME) decision makers are overlooking the ‘significance of a smile’ to foster customer loyalty and increase business growth, according to a new report, the Lost Art of Loyalty, launched by Barclays, in partnership with Kingston University Small Business Research Centre.
The study, which examines the retail behaviour of 2,006 consumers and the loyalty business practices of 1,216 decision makers in small and medium size enterprises (SMEs), reveals that a smile and a friendly hello is the most common reason (59%) why consumers feel loyal towards small and independent retailers. However, just over half (54%) of SME respondents stated their business employed this practice.
Over a third (36%) of loyal consumers said this was due to brilliant customer service and 22% said they valued businesses remembering their usual order — but only around half (53%) of businesses are remembering or recording customers’ previous orders.
“It’s vital for SMEs to know exactly what fosters loyalty among their own customers, as the Barclays research suggests that customer loyalty has the potential to directly impact business profitability," Professor Robert Blackburn, from the Small Business Research Centre, Kingston University, said.
"While the majority of decision makers recognise the importance of personal relations with customers, they are failing to develop their own customer loyalty strategies. SMEs are in a unique position to embrace these traditional values of loyalty and should consciously build on their natural competitive advantage of being a smaller business as this can make a real difference to business survival and growth.”
The research also shows that less than a third (31%) of SME respondents listed retaining (19%) or growing (12%) their current customer base as their business’ main priority to achieve growth over the next 12 months and that only and only 50% would encourage word of mouth recommendations by regular customers in order to grow or survive.
This shows a worrying ‘loyalty gap’ among British SMEs, where they could be failing to capitalise on their natural competitive advantage of providing customers with a personal service.
In addition, the majority of consumers (58%) believe that small independent retailers are in a better or the same position to engender loyalty among their current customers than large, corporate brands — and it’s the personal touches which count the most. Nearly two thirds (60%) of consumers said they are always, often or sometimes willing to pay more for a similar product from a small, independent retailer compared to a cheaper product from a large, corporate retailer. It’s up to SMEs to convert these sales via customer loyalty.
This new research comes as Barclays launches a new Business Current Account with a loyalty reward, which reduces the bank charges of loyal customers. The current account is tailored to individual SMEs, with a service guarantee and simple, transparent pricing. This enables businesses to spend less time on banking and more time on growing their business.
“This research shows just how important loyalty is and how something as simple as a smile and a friendly hello, or remembering a customer’s order can help the profitability of SMEs," Sue Hayes, Managing Director of Barclays Business banking, said.
"This campaign is about resurrecting the ‘lost art of loyalty’ and empowering SMEs to capitalise on this to help their business grow. We recognise how important the personal relationship and rewarding of loyalty is. It is something we haven’t always embraced but something we are certainly committed to now.”
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