Sharing Success

“Defining Loyalty – Thoughts from Uncle Dino”


My Uncle Dino deeply enjoyed sharing business wisdom with Independent restaurateurs in La Trattoria.

One of his columns in which I learned an important business lesson was titled “Defining Loyalty” and written in 1995.

Independents have always had to choose between seeking customers who value quality more than price or those who care more about price than quality. Back in 1995, the pressing business issue wasn’t economic uncertainty or cost inflation but how to respond to fierce price competition from deep-discounting national chains.

Even today, Dino’s definition of customer loyalty helps explain why quality-oriented independents still can’t afford to pursue consumers who care more about price than quality. Here are excerpts from Dino’s original column:

 

Defining Loyalty By Dino Cortopassi (September 1995)

Independents cannot afford to take customer loyalty for granted. So let us clearly define a “loyal customer” and why that helps you win the game! There are two kinds of customers, those who are “loyal” and those who are not.

A loyal customer values your offerings enough to buy them at a price which allows you to be profitable. Conversely, consumers who will only buy your offerings at unprofitable prices, by definition, are not loyal, and you cannot afford to keep them!

Failing to understand this causes some businesses to throw good money after bad to attract/keep customers who cost more than they are worth.

Customers who are willing to buy from you at a fair price are loyal and you and your team should do everything in your power to satisfy them.

1) Loyal customers are more motivated by quality than cost. Once introduced to superior quality food, loyal customers are self-motivated to return. On the other hand, price-oriented consumers must be continually enticed to return with below-cost prices.

2) Loyal customers bring new business. Once they consistently experience the quality superiority of your food, loyal customers go out of their way to promote your business with family and friends…who tell their family and friends…and so on. This word-of-mouth advertising costs you zero.

3) Loyal customers buy more over time. They tend to return more frequently, typically purchasing more per visit. That is why it pays to continually strive to enhance their satisfaction to keep them even longer.

 

Remember that your goal is not to attract and retain customers, it is to attract and retain loyal customers! Here are a few ways to increase your retention of loyal customers.

1) Attract/keep loyal customers with superior food quality. No matter how good your food quality is already, constantly strive to make it better to reinforce the loyalty of existing customers and attract more of the same. (You can never have too many loyal customers!)

2) Send disloyal customers to your competitors. Avoid discounting which only attracts disloyal consumers who cost you more than they are worth. As my mentor Frank Piciullo used to say, “Let them go to our competitors and make them broke!”

3) Help employees understand the value of loyal customers. Employees tend to treat customers with greater respect once they understand their true value to your business. Demonstrate how a loyal customer who spends $40 a week is worth $2,000 per year to the business! Making sure your employees appreciate the importance of truly satisfying every loyal customer every time helps build the quality of your service as well.

4) Treat every customer as your BEST customer. Every customer makes an individual value judgement regarding your quality and service. This is why in our business, each and every customer is treated with respect regardless of how many cases of our product they use. We believe customer loyalty must be individually and continually earned to ensure our own long-term success.

My bottom line is “Don’t try to be all things to all people.” Just deliver your BEST to loyal customers who value your offerings and leave the rest to someone else! – Dino (September 1995)

 

Today, the burning issue may not be competing against deep discounting chains. Instead quality-oriented businesses wrestle with how to maintain profitability despite economic uncertainty and/or having to raise prices to keep pace with inflationary pressures.

However, regardless of the challenge, I believe that Dino’s strategic advice remains equally true today: “Always deliver your BEST to loyal customers who value your offerings and leave the rest to someone else!”