Building Long-Term Customer Loyalty

Building Long-Term Customer Loyalty

SANTA FE, N.M. — An oft-repeated story continues to make its rounds among our peers. 

According to the story, whenever a laundry customer is asked which laundry in their area is the best laundry, the customer will always answer, “The one we just left.” 

While the story is allegorical, the point is still well-taken. Too often we and our customers take each other for granted and only realize each other’s value after a separation has occurred. 

For those who own and/or run industrial laundries, this is a tragic and costly mistake.

In our highly competitive industry, customer retention is paramount. Acquiring new customers is an expensive and resource-intensive process with estimates suggesting it can cost 5-25 times more than retaining existing customers. 

On the flip side, according to Bain & Company research, a mere 5% increase in customer retention can result in a 25% or higher increase in profits (up to a staggering 45%-plus increase for industrial laundries). 

Therefore, building strong, enduring relationships with your customers should be a top priority for any successful laundry operation. It all starts with ensuring that your team understands the value of loyal customers and what your customers consider valuable. 

What follows is a high-level overview of this topic to help you on the road to customer retention and loyalty.

The outsized gain recognized in Bain’s research is driven by the key metrics of Customer Acquisition Cost and Customer Lifetime Value (CLV).

Customer service and customer success teams must understand these numbers and their impact. If they grasp the significant investment made to land each new account and the potential long-term revenue streams that can be unlocked through retention, they will be motivated to make customer satisfaction a top priority.

As the graph on page 6 illustrates, the lifetime value and profitability of a loyal laundry customer grow exponentially over time. 

While it initially appears that the costs of customer acquisition create a loss, as the relationship matures, revenue streams expand through new products, services and cost savings.

Loyal customers generate referrals (cold calls result in about 2% closed sales as compared to 55-80% for referrals), reduce operating costs through process efficiencies, and present greater upselling and cross-selling opportunities.

To cultivate enduring bonds, your teams must recognize that value is defined solely by the customer’s perceptions and needs—not your assumptions or subjective opinions. 

A common pitfall is focusing too narrowly on the features or advantages of your services and products because that is not what motivates customers to make buying decisions. 

Simply stated: customers buy benefits. Think of benefits as outcomes or the “what’s in it for me” for your customers. 

The benefits that motivate customers to decide whether to buy from or stay with your company can be broken down into the 5 Ps of Profit (how can I make or save money?): Prestige (is it more highly regarded [think Lexus vs. Toyota]?), Pleasure (will this make me happier?), Pain Relief (does this solve a problem I have?) and Preservation (will it save my job, my business, a life?). 

Understand why each of your customers bought and which benefits appealed to them (sometimes it is only one benefit, but it could be as many as all five). 

Make sure you understand which specific benefits resonated most for each customer, and then continue to not only reaffirm your ability to reliably deliver on those promises but also remind your customers that you have continued to fulfill promises and meet or exceed their expectations.

The first step in delivering upon those promises is to effectively transition new customers from the sales cycle into an engaged service partnership, and that is where a well-designed customer onboarding regimen comes in. 

Onboarding is the sequence of interactions that guides your customers from their initial commitment (i.e., the ink on your contract) through to full adoption of your products and services and, eventually, realization of the value (and benefits) you promised in the initial sales process. 

Technically, the sales process is the precursor to onboarding, but it should be considered an integral part of your holistic customer retention strategy since this is the point at which your team sets a prospect’s expectations and begins to understand what each customer finds valuable.

Following the close, your sales team will typically hand off to your customer service and/or customer success team to begin to fulfill the expectations set during the sales process. Making a strong, seamless handoff from sales to service is vital. 

The salesperson who built initial trust should remain involved early on, while customer service and success assume operational ownership (hint: leverage customer relationship management, CRM, systems to ensure seamless knowledge transfer).

Each stage of the onboarding process builds upon the previous one, deepening the customer’s relationship with your brand over time. Some typical steps include initial contact and introduction of the customer service team, kick-off, training, full adoption and retention. 

This final stage will be ongoing and should be considered relationship management, during which time your customer service/success teams will have most of the contact with the customer, but the initial salesperson should also have regular follow-up meetings to remind customers of fulfilled promises, collect proofs or testimonials, and gather referrals.

While reliable service delivery is table stakes and a positive onboarding experience is similarly expected, true customer loyalty stems from consistently delivering on promises, reinforcing the customer/supplier relationship, tailoring products and services to match each client’s unique definition of value, and delivering new and innovative offerings to match. 

Toward that end, forward-thinking businesses invest in the people, resources and training to ensure that customer-facing teams engage in customer experience management practices like:

  • Proactively sharing insights, suggestions and new offerings.
  • Promptly responding to inquiries. 
  • Recognizing and accommodating unique needs.
  • Gathering voice-of-customer intelligence.
  • Managing feedback loops for continuous refinement.

Building bonds that transcend transactions to become true partnerships is the key to cultivating raving fans who drive referrals and renewals.

Whereas strong businesses desire high numbers in their assessment of Customer Lifetime Value, they also seek to ensure low numbers in their calculations of Customer Churn Rate. Churn, or the loss of customers to competitors, is the Achilles heel of customer retention.            

Combating churn requires a multi-pronged strategy:

1. Focus on Your Vital Few

Implementing incentives or service upgrades across your entire customer base can quickly become unsustainable. 

Rather, the Pareto Principle dictates that 80% or more of your profits come from 20% or fewer of your customers, so it behooves you to concentrate your resources on cultivating even deeper relationships with your most profitable and loyal “vital few” clients first.  

2. Analyze Churn Data

Churn patterns offer invaluable insights for prevention. Examine when and why customers defect, pinpointing high-risk milestones in the customer journey. Proactively reaching out during these periods could potentially re-engage at-risk accounts.

3. Demonstrate Commitment

Don’t wait for customers to raise issues—proactively initiate dialogue to underscore your investment in their success. Update them on service enhancements, solicit candid feedback and express appreciation for their partnership.  

The end of a contract term is a perilous churn phase when competitors aggressively target your customers. A powerful antidote is leveraging contract extensions earlier in the relationship’s lifecycle. 

Rather than waiting for costly renewals fraught with negotiation friction and potential legal hurdles, laundries can capitalize on positive service interactions to seamlessly extend existing agreements.

Any time there’s a change or improvement in products, services, pricing or accommodations for a customer’s needs, it presents an opportunity to extend the contract as a gesture of goodwill. 

Customers are naturally inclined to maintain relationships delivering ongoing value.

Establishing a policy of routinely extending contracts through service enhancements sends a reassuring message: “We’re committed to your satisfaction, not just during contract periods.” 

It transforms contract duration from an adversarial negotiation into a collaborative partnership benefiting everyone, including your retention rate.

The financial dividends of customer retention are unambiguous. HubSpot data shows that 55% of high-growth companies consider retention programs “very important,” compared to only 29% of stagnant/declining businesses.

Loyalty pays compounding returns as existing customers spend 67% more on average than new acquisitions, according to business.com. While prospecting is enticing, the greatest revenue opportunities lie in maximizing customer lifetime value through retention.

In industrial laundry, providing the customer with the quality and consistency they expect are prerequisites—but cannot alone sustain competitiveness. What elevates the leaders is their capability to cultivate resilient loyalty by continually reinforcing value alignment and exceptional experiences.

Differentiation through world-class execution of customer onboarding, relationship management, churn prevention and contract extension are the hallmarks of an industry stalwart positioned to thrive amid perpetual evolution. 

Unwavering devotion to understanding and delivering on your clients’ unique needs is the most sustainable path to profitability.

With the right combination of the strategies and tactics outlined here, a new narrative can take hold. Instead of longing for “the one we just left,” customers can happily proclaim the best laundry is “the one we’ve continued to partner with for years.” 

This long-term perspective is the most sustainable path to profitability for industrial laundries striving to thrive amid perpetual industry evolution.                            

SANTA FE, N.M. — Key to success in industrial laundry industry after deal has been closed

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