If you haven’t yet used your customer loyalty strategies as a potential avenue for growth, now could be the time. In a recent webinar hosted by the National Venture Capital Association, American Express Ventures sat down with business leaders from Melio, Pilot.com and Guideline to discuss how small businesses can foster growth by leaning into strategies that cultivate customer loyalty. The following insights can help you examine your customer relationships and make adjustments that could be a boon for growth.
Focusing on Your Brand Promise
While there are numerous small and mid-size businesses (SMBs) in the U.S., it’s their uniqueness that drives success, says Prashant Gandhi, Chief Business Officer of Melio, a company focused on streamlining accounts payable for SMBs. When customers come to your brand, they’re looking to have you fulfill a promise. Whether it’s to ease pain or speed a process, living up to your brand promise can keep existing customers around and bring new ones in, too.
“For [Melio], our mission is to make it really simple for small businesses to pay and get paid,” says Gandhi. Melio’s seen a decrease in customer acquisition costs thanks to how well they fulfill their brand promise. With every payment sent or requested by one of Melio’s customers, new potential customers who enjoy the payment experience join Melio, introducing even more customers to the company.
“A simple way we measure our performance on virality is to just ask what percentage of ‘get paid’ customers are actually translating into ‘pay to’ customers,” he says. “We track that number, and that number has been rising.”
To follow in Melio’s footsteps, have a look at your brand promise. If you feel that you're fulfilling your brand promise but new customers aren’t coming in, consider creating a customer outreach campaign to explore how you could improve the overall brand experience. Happy customers send more customers.
Where Referrals Really Come From
Referrals can also be an area that deserves your attention. According to Waseem Daher, CEO and co-founder of Pilot.com, SMB purchasing decisions are heavily influenced by recommendations from other SMBs.
“It’s not like, ‘Oh, I do a detailed RFP process,’” he says. The average SMB isn't reaching out to multiple vendors seeking bids. Rather, Daher says SMB leaders are turning to friends and trusted resources asking who they use.
Approximately 90% of Pilot.com’s customers have been acquired through these types of organic referrals. This is why he says it’s critical that any company in the B2B space leans into a model that makes it easy for its customers to recommend the business to other people.
Serving small businesses [has] two challenges. [...] One, can you acquire [new SMBs] and scale rapidly? And then the second one is, can you serve them cost-effectively and efficiently?
—Jeff Rosenberger, COO, Guideline
For example, Pilot.com, a company that simplifies bookkeeping for SMBs, generates many of their referrals through a targeted, tactical, and highly personalized comprehensive content strategy. One of the ways Pilot.com delivers on this is through their twice-yearly business review. That’s when account representatives from Pilot.com sit down with customers and talk about their business’s overall health. Those reps, in turn, will offer their clients proactive recommendations. There’s no additional cost to Pilot.com’s customers for this, and clients are so pleased with the personalized service that they refer more customers to Pilot.com.
As you look at your company’s current referral statistics, consider emulating Pilot.com’s approach. By offering your customers highly personalized service, they’re no longer simply your customers just for the basic service you provide. They remain your customers because they perceive your business to be invested in their business. And that’s what really drives organic word-of-mouth referrals.
How Channel Partnerships Add an Untapped Layer to Loyalty
Channel partnerships are another way your business can foster growth, and through a similar value-added strategy to Pilot.com's referral strategy. Channel partnerships allow your business to bring additional value to your customers but through direct agreements with complementary service providers.
As a company that streamlines setting up 401(k)s for small businesses, Guideline knew that payroll deductions play a major role in funding those employer-sponsored plans. Establishing channel partnerships with payroll providers was a natural step for the company to take.
“Serving small businesses [has] two challenges,” says Guideline COO Jeff Rosenberger. “One, can you acquire [new SMBs] and scale rapidly? And then the second one is, can you serve them cost-effectively and efficiently?”
Rosenberger says that through channel partnerships, Guideline gets some leverage with both. Guideline gets to bring their customers solutions that work with the company's services but also enjoys the financial benefits through the channel partnership agreement when a customer engages with one of their partners. Client loyalty increases because Guideline, becomes a sort of one-stop shop for related services and Guideline increases revenue through partner commissions. Both lead to an ever-improving bottom line.
If you’re exploring channel partnerships to help foster growth in your company, Gandhi from Melio advises you to think of partnerships as a two-way street.
“We’re asking potential partners, ‘Are you the right partner for us, and do you treat us as an equal?’” says Gandhi.
The three principles above all work together in symbiosis to help your business increase customer loyalty, thereby decreasing new customer acquisition costs through increased satisfaction and referrals. Both are boons for growth-minded businesses.
Photo: Getty Images