Customer loyalty key to growth of small businesses
A smile is the most common reason a client will be loyal to a small, independent business, but only 54% of small and medium enterprises (SMEs) do this, according to the latest research from Barclays.
The study, which was carried out in conjunction with Small Business Research Centre at Kingston University, looked at the impact that customer loyalty can have on business for small organisations. It found that 59% of consumers say a smile with a friendly greeting is the most common reason why they feel loyal towards a small business.
Similarly, 36% said that brilliant customer service would secure their loyalty, and 22% said that having their usual order remembered would keep them coming back. What’s more, almost two thirds of consumers (60%) admitted they would pay more for service from a small business rather than a comparable product from a corporate enterprise.
This is excellent news for independent beauty salon owners, however Barclays’ research also showed that small businesses are not capitalising on loyal consumers.
Only 54% of the businesses surveyed said that made a practice of warmly greeting their clients. The study also showed that just half of small businesses encourage word of mouth recommendations, one of the most basic tactics to secure business growth. Some 19% of SMEs listed retaining current clients as their business’s main priority for achieving growth in the coming year, with only 12% identifying growing their current clients’ spend.
Robert Blackburn, a professor at the Small Business Research Centre in Kingston University, said, “It’s vital for SMEs to know exactly what fosters loyalty among their own customers, as the Barclays research suggests that customer loyalty directly impacts business profitability.
“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 study examined the retail behaviour of 2,006 consumers and the loyalty business practices of 1,216 decision makers in small and medium businesses.