Fred Harteis of Biznet Productions claims that building a big I-Commerce business has a lot to do

with developing loyalty, or what Michael Dell calls

building community.

Top performing companies focus on attracting and keeping customers. Why? Loyal customers provide greater profitability. Loyal customers spend 80% more than other customers. Eighty percent of a company’s sales come from 20% of their customers.Loyalty can’t be purchased by the pound. Loyalty can’t be stocked on shelves in colorful ‘new and improved’ packaging.

Customer loyalty is built over time. Customer loyalty is built in stages.

Time: In the consumer goods and services industries, (e.g., food, health, beauty, restaurant, telephone) it takes 12-18 months to build and earn a customer’s loyalty.

Stages: Each customer loyalty stage has a number, a name, and a cost. The stages of customer loyalty are:  Try > Buy > Ask > Tell Others > Loyal.

Try: To get a customer to the “Try” stage, she must first become aware of the product and sample it. Across most industries, the average cost to get someone to ‘try’ something new is between $60 and $120. That’s a lot. This is known as the Customer Acquisition cost.

Cost is six to eight times more: A good customer is like a good friend. It should be worth a lot to keep them. Many companies still haven’t grasped this. They need to do the math. It costs six to eight times more to acquire a new customer than it does to keep a customer. If the customer doesn’t continue to buy the product, the $60-$120 to get them to TRY it was wasted.

Spending Priorities Wrong: Most companies continue to spend 75% of their sales and marketing budgets to get non-customers to try their products, while spending relatively little on the 20% of their customer group who provides them with 80% of their revenues.

Telecommunications is an industry famous for getting this part of the business backwards. We see telecom companies pay to acquire the same customer over and over again. They’ve been known to write checks to get people to switch to their service.

Next, they take such poor care of those same customers that they drive them away again.

Breaking this cycle requires a giant amount of long-term cultural and corporate change. Spending money to acquire new customers doesn’t require change; it requires cash. Most choose cash over change. Most are wrong.

Build customer loyalty. It’s good business says

Fred  Harteis, who has built several large business's such

as Harteis International and Biznet Productions, which focuses on building community.