Few companies are successful at developing solid brands. Branding is difficult and few executives appreciate branding as a discipline.

Effective branding requires clarity, focus, and sacrifice. Effective brands have a deep understanding of what business they’re really in. They know what they promise their customers and continuously focus on delivering that promise. If an existing operation or a proposed idea doesn’t speak to their customers’ needs, they eliminate it.

Effective brands show unfaltering courage. It takes strength to stand for something meaningful and tenacity to do it each and every day. (Courage is one of the Seven Golden Rules of Cult Branding.)

Effective branding takes patience and maturity. It takes a willingness to learn from your customers. It takes resolve not to radically alter course to chase the latest fads, but also courage to innovate in new directions.

Effective branding requires open, honest communication across all business divisions and even with key partners and vendors. Effective brands go through the painstaking effort to cultivate a culture that reflects the brand, rallying their employees and their customers around their brand.

Branding is a discipline. It’s not “airy-fairy” and it’s not about logos or taglines. Branding is at the heart of your business. If you don’t understand what your brand represents, you’ll likely see your market share continually shrink. Business owners who understand the importance of branding and adopt it as a discipline cultivate customer loyalty and will rule the future of commerce and industry.

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How is that possible?

Profitability is driven by loyalty. Your loyal customers shop you more often, tell their friends about you and tend to avoid your competitors. Loyalty develops as a consequence of doing something meaningful for people. “The numbers” strip out the human element—it doesn’t help you focus on what’s meaningful to your customers.

A blaring example is the decision to outsource your call center operation for customer support. No question—the cost savings in the short term can be enormous. But what’s the long-term customer attrition rate?

It costs fives times more to acquire a new customer than keep an old one. A high attrition rate means you have to funnel your resources into marketing and advertising in order to continually acquire new customers because you can’t keep your old ones.

Online retailer Zappos has over 75% repeat customers. Yes, they invest heavily in training and supporting their in-house customer service staff, but their 62,000% growth rate over the last 8 years speaks for itself. CEO Tony Hsieh doesn’t run Zappos strictly by the numbers, but instead keeps his focus on loyal customers and innovates around their needs.

Honor the human element in your business. Celebrate your customers. Support your employees. You’ll build more profitable businesses and you’ll also feel better about yourself.

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You can’t do it if you use common thinking. You can’t do it by throwing gobs of money at an advertising budget. (Anyone remember Pets.com?)

You have to be smart, strategic and visionary. You have to adopt core values and live by them. You have to cultivate a culture that perpetuates those values. Most importantly, you have to excite your customers and cultivate loyalty to your brand.

Online retailer Zappos, led by CEO Tony Hsieh, went from $1.6 million in sales in 2000 to over $1 billion in sales this past year. What started out as an online shoe retailer is quickly morphing into a mega-retail clothing powerhouse. How did they do it?

Zappos’s tag line “Powered by Service” says it all. Zappos’s commitment to provide the best online shopping experience has led to a series of unique decisions designed to foster customer loyalty:

• To execute hyper fast order fulfillment, their fulfillment center operates 24/7.
• To ensure consistent fulfillment execution, they house all items in their warehouse (no drop shipping from outside sources).
• To take the risk of shopping online away from their customers, Zappos offers free shipping both ways. (To my knowledge, they were the first to do so.)
• To wow their customers and add the element of surprise, (Principle #7 in Why We Talk) they upgrade most orders to overnight or two-day shipping for free.
• To meet their customers’ diverse needs, they offer a staggering selection of over 1,000 brands and over 200,000 styles.
• To truly be “Powered by Service” their customer service staff goes through a five week training on the Zappos culture, core values and customer service protocol (including sending customers to their competitor’s websites on occasion).
• To ensure friendly, helpful staff aligned with the Zappos culture, they offer new hires $2,000 after the first week of training to leave the program if it’s not a good “fit.” (According to Hsieh, this saves them money in the long run.)
• To fulfill their customer’s higher human needs, Tony Hsieh is committed to delivering happiness to his customers.

I can keep going with this list. Zappos does a lot of things right (which helps explain why Jeff Bezos/Amazon.com just bought them). All of these attributes contribute to 75% of their sales coming from repeat customers.

What are the benefits of loyalty? Retention, more repeat business and positive word of mouth (customers create new customers for you). These are the ingredients needed to achieve a 62,400% growth rate.

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Here are ten reasons why your Brand Lovers are so important:

1. Your Brand Lovers choose you more often than your competitors. To most Mac users, there’s no alternative competitor to choose from.

2. Your Brand Lovers spread the word about your brand and create new customers for you. Basically, your best customers are the source of your word-of-mouth stream.

3. Your Brand Lovers are by nature loyal customers. Customer loyalty is a better determinant of profitability than mass appeal. (Again, just ask Apple.)

4. Focusing on your Brand Lovers and cultivating customer loyalty can help you double your return on assets (ROA).

5. Similarly, serving your best customers can lead to explosive return on investment (ROI). Example: When Apple opened their retail stores they expected to generate $1,000/square foot. They actually generated $4,000/square foot.

Ultimately, your Brand Lovers drive the profitability of your business.

6. In The Loyalty Effect, Frederick Reichheld explains how a 5% increase in customer loyalty can increase a company’s profitability by 40 to 95%.

7. Think about what would happen if you turned just 10% of your occasional customers into Brand Lovers. For large enterprises, this shift represents billions in additional revenue and radically higher profit margins.

Need more reasons?

8. By focusing on your Brand Lovers, your cost of acquiring a new customer decreases.

9. Your marketing effectiveness soars as a result of building a stronger brand presence focused around the needs of your best customers.

10. By focusing on your Brand Lovers you can build a powerful brand that stands for something meaningful to your special customers. This gives you clear differentiation and helps you organically attract more of your most profitable customers.

The bottom line is that serving your best customers is the surest way to grow a profitable business—in any economic climate.

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