One result of the economic downturn is that many experts see customer loyalty falling by the wayside as consumers strive to squeeze the most out of their scarce cash. A big challenge for businesses is avoiding getting wiped out on price. But cutting your profit margins to the bone isn’t the key to a successful customer retention program.

It’s easy nowadays for consumers to compare providers on price as well as other factors like product specs and delivery options. In her book Taming the Search-and-Switch Customer: Earning Customer Loyalty in a Compulsion-to-Compare World, author Jill Griffin suggests a set of questions, which she calls the Worth-It Test, to help owners of growing businesses determine whether their product or service presents a clear advantage over the competition and can justify a higher price for the customer.

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According to Griffin, you always need to be focused on your customer’s next best alternative. Depending on your business, that alternative could be a competitor’s product, the choice to solve the problem internally, or simply doing nothing. Once you’ve identified your customer’s next best alternative, Griffin recommends asking yourself the following questions to determine whether your offering will be viewed as “worth it”:

• Does your brand offer clear differences compared with the alternative?

• Is the added benefit substantial relative to the price difference?

• Can you easily articulate the differences, and does the brand provide convincing proof? You can’t count on customers to read between the lines to identify your advantages.

• Do your employees exemplify the brand’s strengths through their performance? Smaller businesses can especially stand out in this area. Griffin cites a 60-year-old Dallas hardware store that thrives despite a Home Depot nearby, in part by providing more personalized expert service.

Griffin also touts online customer reviews as a strong tool for demonstrating the value of your brand and building customer loyalty. Scour the online review sites for positive comments from real people, and showcase them prominently.

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