Implementing a New Business Model That Creates Customer Stickiness

Businesses work hard to create and market products and services that solve customer problems and fill customer needs. But what creates the customer loyalty of brands like Amazon or Apple? What makes us repeatedly choose one company over another?  What choices can organizations make that create customer “stickiness”?

Companies that successfully capture the loyalty of customers don’t do it by accident. Instead, they make conscious design choices and implement a business model that delivers value, is distinctive in the marketplace, and difficult for competition to replicate. Let’s look at some examples of principles that increase customer “stickiness.”

The Apple Platform

Apple has long been a leader in innovation and redefining customer needs. They have great products that are appealing, and are masters at bringing value to customers through services and interconnections facilitated between and among their devices.  This makes it difficult for customers to defect to competitors’ products. Essentially, Apple’s business model utilizes its devices and other services/products (think music, videos, home entertainment, payment and more) to deliver value to customers.  For an Apple user to replace an iPhone with a non-IOS device, they have to learn how to use a new device and interface.  Not only that, they need a new music library, apps, video chat – and have to completely relearn the user experience.

The Apple platform secures its business model. When customers purchase an Apple device, they accept much more— the Apple platform, which brings much more value than a device would on its own. Even non-Apple ancillary products like headphones, a case, etc., need to be Apple licensed to ensure compatibility.  This still provides connectivity (and revenue) back to Apple.  Essentially, the platform creates strong customer loyalty and an impenetrable barrier for competitors.

The Amazon Customer Experience

Companies like Amazon also create stickiness for customers. Beyond Amazon’s platform, their business model masters the buyer experience to anticipate – and even create – customer needs. For example, Amazon has long offered their “Prime” membership service.  This service facilitates shopping and provides quick shipping for every purchase.  Additionally, there is a “subscribe and save” feature, where I can set up a recurring purchase within a specified amount of time.  No need to log back in and reorder – my product will simply arrive when I need it.  Amazon’s innovative products and solutions make the buying process easier for the customer – and more difficult for them to switch to a competitor.

The REI Co-Op

Finally, we discuss outdoor gear and clothing retailer REI.  Founded in 1938 by a young couple and their mountaineering buddies to improve outdoor gear, REI has grown considerably and maintains a loyal following.

REI’s customer stickiness is from very different business model than Amazon or Apple. REI was founded as a Co-Op and remains one today.  They pride themselves as the best customer-focused company in their industry, period. REI feels only they can carry quality gear that true outdoor enthusiasts love and appreciate.  Have a problem with a product even years after purchasing it?  REI replaces it or refunds your money – no questions asked.   Need advice or replacement gear half-way into a major excursion?  REI accommodates your request – even at a financial loss.

This extreme customer focus stems from REI’s Co-Op business model.  REI Co-Op members (i.e.. customers) have a vital role in the company.  REO makes sure that members are taken care of first and foremost.  REI’s highly differentiated customer experience, focus on the best gear, and Co-Op structure results in amazing customer stickiness and retention through generations.

Intentional Customer-Sticky Business Models

Each example utilizes platforms with innovative products, distinctive services, and unique structures that compel customers and detract competitors.  Building and refining these unique, customer-sticky business models is intentional. The organization makes strategic and design decisions to create relevant, differentiated and customer-sticky business model.

Platform business models are becoming increasingly powerful, distinctive, and profitable.  Organizations must design a business model that draws customers in and keeps them.  The right business model retains customers because they want to maintain the ease, value, and affiliation they receive.  While business models and methods may differ, successful companies create the same effect: strong customer stickiness.

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