A simple smile and a friendly greeting can make customers feel much more loyal towards small independent companies, according to new Kingston University research.

The study, which examined the retail behaviour of 2,006 consumers and the business practices of 1,216 decision-makers in small and medium size enterprises (SMEs), reveals that a smile and a friendly hello is the most common reason (59 per cent) why consumers feel loyal towards independent retailers.

However, only just over half (54 per cent) of respondents stated their small business employed this practice.

Three in five consumers are also willing to pay more for a product from a small independent shop rather than deal with a large corporate retailer, the study funded by Barclays Business Banking and carried out by Kingston Business School’s Small Business Research Centre suggested.

“SMEs are in a unique position to embrace these traditional values of personal customer contact and loyalty and should build on their natural competitive advantages to make a real difference to survival and growth,” Professor Robert Blackburn, Director of the Small Business Research Centre at Kingston Business School said.

More than a third of loyal consumers said they kept coming back because of excellent customer service and one in five said they valued businesses remembering their usual order – but only around half of the businesses which took part in the study kept a record of customers’ previous orders.

The research also discovered that less than a third of small and medium-sized business respondents considered retaining or growing their current customer base to be their main business priority in terms of achieving growth during the next 12 months.

Additionally, only 50 per cent said they would encourage word of mouth recommendations by regular customers in order to grow or survive.

“While the majority of decision-makers do recognise the importance of personal relationships with customers, they are failing to develop their own customer loyalty strategies,” Professor Blackburn explained. “This shows a worrying ‘loyalty gap’ among British SMEs, where they could be failing to capitalise on their ability to provide customers with a highly personalised service.”

The study was one of a series of research projects carried out by Kingston Business School for Barclays.