Win Customer Loyalty

Read the news today and the story is the same, everything costs more than it did before. Tariffs capture the headlines, but that’s not the complete picture. The U.S. economy has suffered three price shocks in the past five years: the pandemic, rising oil prices, and now, tariffs. This is an unprecedented time in economic history, not likely to come again anytime soon. Even global juggernauts, insulated by large cash hoards and near monopolies, are rocked by these choppy waters. 

For the small business owner, the impact is more acute. There exists tremendous pressure to raise your own prices in response. In some cases, it seems like the only choice, but before you do, consider that by not raising your prices, you could gain something more valuable, customers for life.

Members Matter

Costco’s response to tariffs is a great model to emulate. Costco’s value proposition is simple: the best value for everything they sell. The company took this promise a step further in 2025 by refusing to pass tariff costs along to their members, going so far as to sue the U.S. government to recoup tariffs already paid. Absorbing these increases will be difficult, and they are unlikely to win their lawsuit, so why take on so much risk? Because Costco knows that loyal customers are far more valuable in the long run than the immediate loss of margins. Loyal customers are your best sales people; they’ll do the pitching for you. And acquiring new customers, or reclaiming lost customers, takes time and money.

Amazon’s Prime membership strategy shows the risks of not valuing loyal customers. Prime members are valuable to Amazon in two ways: members spend more at Amazon than non-Prime members, and the annual fee is lucrative. One small price increase, as Amazon did in 2022, dropped billions of profit to their bottom line. At the same time that Amazon raised fees, they also made Prime less valuable to members by slowly reducing, eliminating or making their offerings less desirable. Amazon stopped working for its members and started working for itself. Members noticed and started to cancel. To recoup these losses, Amazon resorted to steep discounts. This cost them time and money. Prime members were fiercely loyal, but now they are shopping around for other options. Jeff Bezos was correct when he wanted Prime to be so compelling that consumers felt they were "being irresponsible"[1] if they weren’t members. Amazon forgot this, now they are playing catch-up.

About-Face

Verizon also learned the same hard lesson. After adding over three-hundred and sixty thousand net new phone subscribers in fiscal Q424, Verizon lost all those subscribers, plus another forty-seven thousand in the subsequent three quarters.[2] The company enacted an immediate about-face in their posture towards customers. Verizon’s CEO Daniel Schulman explains this shift:

“For the past few years, our financial growth has relied too heavily on price increases. This cannot continue, and there is no question that meaningful change is needed. As we shift to a customer-first culture, we will simultaneously drive a much more efficient cost structure, that fully supports our incremental investments in delighting our customers. I reject the premise that delighting customers and winning in the market means that margins will decrease.” [3]

It worked. The very next quarter, net subscriber growth was over six-hundred thousand, recouping all of fiscal 2025 losses and adding over three-hundred and fifty-thousand more.[4] Smart leaders always return to a customer-centric culture.

Starbucks is executing a similar about-face. In January 2026, they unveiled their new Rewards program, which is similar to the old program they abandoned in 2019. The current program treats all members the same. The new program has three tiers: Green, Gold and Reserve. Starbucks relearned that you shouldn’t treat all customers the same; the more loyal they are to you, the better you should treat them. They also understand that even a small amount of increased spending from your loyal base equates to large revenue gains. Tressie Lieberman, their Global Chief Brand Officer, punctuated this truth:

“Our new program motivates members to reach higher tiers. This creates powerful incentives to drive frequency and fuel growth, and with the scale of the program, small changes in behavior can compound quickly. For example, if half our active Rewards members transact just one additional time each year, we will deliver an additional $150 million in revenue.” [5]

Set Yourself Apart

This strategy may seem untenable to a small business owner, but remember, if you’re hit with cost increases, so are your competitors. Don’t miss this chance to set yourself apart and prove you are a key long-term partner your customers can trust when things get tough. Instead of passing the burden to your customers, be aggressive with your own business. Take actions such as: dropping unprofitable products, changing your vendors, negotiating with your landlord or finding new revenue streams. Fight for your customers. They’ll notice and will reward you with a lifetime of loyalty.

At Rolando Locci Consultants, we are experts at assessing revenue and cost levers to identify areas where our clients can grow and trim without sacrificing their offerings. We’ll work closely with your team to identify the most impactful spending categories, flush out inefficiencies, and direct investments towards the highest yielding areas of your business. If you think you are ready, or will be soon, take the first step towards building a profitable outcome for your business by setting a meeting with us.

[1] Amazon shareholder meeting May 17, 2016

[2] Verizon Q325 Earnings Presentation October 29, 2025

[3] Verizon Q325 Earnings Call Transcripts October 29, 2025

[4] Verizon Q425 Earnings Presentation January 30, 2026

[5] Starbucks Coffee Company Investor Day Transcript January 29, 2026