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How to build customer loyalty

Loyal customers are good for your business. They keep the money coming in, and help spread the word about your products or services. Good customer service — including how you deal with complaints — helps turn new customers into repeat customers.

Good customer service

"Providing outstanding customer service is key to business success,” says Greg Harford, Retail NZ’s general manager of public affairs. “It's important to look at the whole customer experience from marketing to sales to aftercare.”

Offering great service includes:

  • Dealing with customers in a friendly and efficient way.
  • Knowing your products or services inside out.
  • Handling any problems promptly and fairly.
  • Knowing what consumer laws say you must do if someone complains.

It might feel like less hassle to always agree to refunds or returns, but it won’t do your business — or your customer service — any favours. The same problems are likely to crop up again and again, and your customers won’t like it. 

But if customers can see you take steps to improve, they are more likely to recommend your business to others. Good word-of-mouth is a great marketing tool.

Do use complaints to improve your customer service and your business as a whole.

Do use complaints to improve your customer service and your business as a whole.

Complaints can be a valuable source of data. Use this data to identify problems — and see if your solutions are working. 

Ways to improve your service

Here are easy things you can do to show people you are keen to improve:

  • Invite customer feedback, eg a suggestion box or after-sales check-ins.
  • Display your returns policy.
  • Keep a complaints log to help identify any recurring problems.

“It's important to deal with customer complaints promptly, smoothly and fairly to deal with the issue, comply with legal requirements, and most importantly to generate positive customer goodwill and loyalty," Hartford says.

Customer feedback

Don’t just wait for customers to tell you what they like and don’t like about what you sell and how you sell it. Ask them.

After-sales follow-ups are a good way to gather feedback. Schedule a check-in to see if everything is running smoothly. Offer tips or tune-ups if needed.

You may want to offer incentives, eg discounts if they buy again or recommend you to someone else. Make sure you’re aware of anti-spamming laws — this includes giving customers an easy way to stop receiving messages from your business.

If someone does make a complaint about your product or service, don’t panic. Respond politely. Take the time to investigate fully before agreeing to a refund, repair or replacement.

Case study

Case study

Another helping for loyal customers

Building customer loyalty of course isn’t just about dealing with problems. At Nelson café The Kitchen, owner Grant Maxwell is using a digital loyalty scheme to increase his pool of regulars. Customers can join up in person when they make a purchase or online through the café’s Facebook page.

To get members back through the door, The Kitchen offers 50 per cent off the next purchase if they come back within two weeks of signing up. “We’re finding this is working super well,” says Maxwell.

The Kitchen offers a range of incentives to encourage sign-ups, including:

  • a 20-point kick-starter for joining
  • one point for every dollar spent
  • emails about specials and birthday giveaways.

When it comes to setting up and maintaining a successful loyalty scheme, ease is key, Maxwell says. For The Kitchen, this means using a digital scheme set up by another small business — Collect based in Wellington, which offers cloud-based marketing software.

So no more rifling through wallets trying to find loyalty cards for his customers — and no more punching holes in cards for his staff.

“The digital system is so easy for our staff and customers. All a customer needs to do is tell us their name and their points are logged,” Maxwell says. “We’ve seen a whole range of uptake, from young to old. We’ve seen an increase in regulars.”

Fair returns policies

Clear information is an important part of customer service.

If customers know which returns you’ll accept and which you won’t, they are less likely to get annoyed if you say no. This could mean a refunds sign:

  • on your website
  • by the till
  • on receipts
  • in sales agreements
  • in packages delivered to customers.

It’s a good idea to create a returns policy, even a one-pager of key points, and to share these key points with customers and any staff. Your policy might include:

  • if you offer the legal minimum or more generous terms
  • how to return faulty products
  • any costs involved in returns.

Using complaints data

Collect details on what went wrong when a customer complains. This will help you identify any recurring problems, eg ingredients that spoil faster than expected.

Once you know what’s causing the problem, you can take steps to stop it happening again. This might mean:

  • offering extra training, eg job skills or product familiarity
  • trying a different product line
  • switching to a new supplier or delivery company.

Tell your customer what you are doing to prevent future problems. This is a great way to improve customer service — and save you time and money.

Consumer problems caused by suppliers(external link) — Consumer Protection

Useful tips and templates

Use our new templates so you, your staff and your customers know how complaints will be handled. You can print these out or edit the PDFs on your computer or smartphone.

Complaint record form [PDF, 929 KB]

Complaints process checklist [PDF, 563 KB]

Our new section on customer complaints is packed with advice on what to do if someone complains in person or on social media — and when it’s OK to turn down a complaint.

You’ll also find tips on:

  • fair returns policies
  • training staff to handle complaints
  • clear and legally safe contracts or sales agreements
  • analysing complaints data
  • privacy rules.
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