Small Business - Becoming the Hub of Your Community and Building Customer Loyalty

Building a loyal customer base is difficult when there are too many businesses competing for the same market. This is especially true for small businesses. Whether you own a dry cleaning shop, a hair saloon, a boutique, sell pizza, clothing or electronics to name a few, you know that out there, it's plagued with businesses that do the same thing you do. To stand out of the crowd you need to either have a killer product that you competition cannot lay hands on (best -recognized- pizza in town), being located in a hot area (shopping mall) or have lots of good luck.

If you don't see yourself in any of these three groups then it's most likely that you will not be able to differentiate and gain an edge over the competition. And even if you do, there's no reason why you shouldn't do what I'm about to tell you. Unlike almost everything in the business world, this has no associated cost and it's full of potential.

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Aside from not counting with the financial resources that big companies have, the problem with small businesses is that they usually don't think big. This doesn't mean that they don't have high aspirations. It means that small business owners sometimes forget to think beyond those four walls that they call their shop. There's no rule that says that small companies can't think as big corporations.

One sure way to "be different" is to stop thinking of your company as an island. Think of it as a part of a gear bigger than your business' mission statement. If you have a bakery it doesn't mean that you have to limit your business to selling bread and cakes. I'm not saying that you should add a gun shop to your bakery. What I'm saying is that there's a thousand services and benefits you can provide to your customers without even moving one piece of furniture or machinery from you shop while at the same time becoming the hub of a larger commercial network; and all this at zero or almost zero cost. All you need to do is network outside of your niche.

They key to increase customer loyalty and increase your business' reputation is to facilitate to your clients access to services and products -outside of your niche- that they regularly use (a great advantage is to know your clients; their habits, wants and needs). You facilitate access by making those services and products cheaper for them. And how do you do that? Like this:

Think about a city or town. People come and go from shop to shop without a particular or organized pattern. You may call it random wandering. Random wandering turns into random walk-ins. If we are talking about non regular customers, people will enter the first place that gets their attention simply because there is no other motivation to choose between Pizza Joe and Pizza Pete than how nice the place looks from the outside.

The idea is to develop a benefits/rewards program for your business. Go to the hair saloon next door, to the bar on the corner, to the diner down the road. Let them know that you can potentially help them increase the number of customers walking through their doors. Also tell them that those people will willingly walk into their shops instead of going to their competitors'. Finally, tell your future partners that they won't have to spend a dime for it. Best part, there's no catch.

The condition is that they have to make a discount to customers coming from your business. It can be a 50% or 10% discount, a free t-shirt every spent dollars. Anything as long as they give something to your customers. This is where you need to negotiate. Obviously a 50% discount is more enticing than a 10% one. In exchange, your clients will have a compelling and money saving reason to buy your "partners'" shoes, pizza or have their hairs cut. All because they are using your rewards program.

But why should you worry about growing others' businesses instead of focusing on yours? Most likely, this won't directly help boost your business' productivity. If you think long term, and this is the idea, this is just half of the story.

Closing the circle

Thanks to you, your clients will now enjoy discounts in several places within your neighborhood or community. You are the "good guy" on the block. Not only you help your customers by getting them discounts and extras, you help other businesses get (and keep) more clients too. This is called having a good reputation. Which is priceless for any company.

The next thing you need to do is get people to your shop. The difference compared to when you started is that now you have several connections that trust you. Other businesses which you've helped grow. Go to each one of your partners and ask them to do the same thing you've done: give their customers a discount when they shop in your place. This way the circle is complete, it's a win-win for all parties involved (called a non-zero sumin game theory).

You can also try both steps at the same time, but depending on the environment you operate it's going to be difficult for some business owners to trust you and go along with your plan. If you follow the 2 step scenario, it will give them time to know, trust you and assess if the benefits/rewards program is working for them.

Leaving the competition out of the loop

The final step is to articulate your 2-way network into a full fledged network. This will require a bigger effort since all the links in the chain have to get involved and cooperate. It will not directly benefit you but it will make the network you created stronger and resilient to possible economic or unforeseen downturns. Hopefully by this time, your partners will be comfortable with the notion of networking. By tightening up your network of partners you will also increase the chances of customers getting habituated to shop within the network instead of going to your (and your network's) competitors.

As you may now realize, it's not about your business alone anymore. Your company is now linked to a constellation of other businesses that not necessarily share your niche. Patrons and regular customers from the other businesses who previously had no connection with you will now have a reason to do business with you; they will save money.

This is just one of the things you can do to think bigger instead of constraining yourself to your own enterprise. Remember, the fact that you are a small business does not mean you need to act like one. Expand your reach, maximize your revenue. All it takes is good PR and moderate sales skills to sell your collaborative project.

Small Business - Becoming the Hub of Your Community and Building Customer Loyalty

Fernando Tarnogol is an Argentinean Psychologist currently working at the Devereux Foundation in Pennsylvania, USA.

He has studied Psychology at the University of Buenos Aires and Human Resources Administration at UADE (Argentinean University of the Enterprise).

His professional experience includes working in HR for HSBC Bank Argentina, two mental health facilities in Argentina performing psychological evaluations and other clinical work and Residential Counselor and two management positions within the Devereux Foundation.

Visit his blog at http://fernandotarnogol.com