Last Updated on 7 months by First Guide
No matter the size of the business, customer loyalty is incredibly important. It was discovered that repeat customers spend up to 67 percent more than new customers. Plus, it’s up to ten times more expensive to try to attract new customers than it is to keep the ones already doing business with you.
However, businesses are finding it increasingly difficult to hold on to their existing customers for several reasons. Let’s look at some of the primary reasons for the challenges that brands face with customer loyalty.
What Are the Challenges to Building Customer Loyalty?
Customers today have easy access to extensive brand information spread across multiple digital platforms including social. And they actively use this information when making purchasing decisions or deciding their brand loyalty.
This does not in any way take away from the fact that retail customers continue to endorse brand loyalty. In fact, brands that can optimize their customer experience and customer satisfaction will undoubtedly reap the benefits of customer loyalty.
According to InMoment, 75% of customers who are loyal to a brand will recommend that brand to their family and friends.
However, you cannot afford to make the mistake of assuming a customer will be loyal to your brand forever.
Furthermore, given the fact that customers have more buying options today than ever before and customer expectations are evolving at a rapid pace, it’s not surprising that a substantial percentage of customers won’t hesitate to buy from a competitor.
Especially if they are not happy with a particular aspect of the brand which could include either the customer service, or the quality of a product, or even pricing of the product or service.
The option of more buying choices has led to a generation of finicky shoppers and consumers who not only have more purchasing choices, but they also have fewer reasons to continue to remain loyal to a brand.
It’s important to note here that even big-name brands with huge advertising spend face the challenge of retaining brand loyalty and holding on to their existing customer base.
What makes retaining customer loyalty even more challenging is the fact the customers don’t shy away from sharing their disappointment in a brand with others. And they will do this over multiple digital platforms which can make it very difficult for brands to control the flow of any negative narrative.
In today’s hyper-competitive market space, where brands are pitched in a high stakes battle to attract new customers while retaining their current customer base, staying profitable and relevant without a strong pool of loyal customers can be extremely challenging.
This only reinforces the need for businesses to aggressively expand on their customer loyalty programs and initiatives if they want to continue staying competitive within their target markets.
9 Ways to Build Customer Loyalty.
While earning the digital loyalty of your customers can prove challenging, the fact remains that it brings in huge business benefits. If you’re looking for real ways to build and keep up customer loyalty, consider implementing a few of these strategies.
1. Engage with your customers
Connecting with your users helps you to create a sense of belonging and community. Share your brand’s new and exciting developments, or news and opinions in your space, to get your users enthusiastic and engaged.
You can use social to inform customers of new trends, special deals and discounts, and the next steps for your company. The more it feels like a conversation, the better.
If you encourage your users to become your brand’s fans and make them feel involved in your company, they’re more likely to have positive associations. And engaged customers are happy, loyal customers.
Customer loyalty is ultimately about reaching out, nurturing and retaining the customers who really make your business.
You’ve heard of the Pareto principle – 80% of results come from 20% of efforts.
But for many businesses, the disparity between your best customers and the rest is even starker: the top 5% of your customers are worth as much as 1800% of the average customer lifetime value (CLV).
So adding just a few more ‘super-customers’ might be the smartest, most cost-effective thing you can do to grow your business.
That starts with figuring out where you’re losing customers – why do so few customers become repeat, loyal members of your brand family?
In the majority of cases, it’s because of poor customer service.
You should make sure your customer service is impeccable, particularly on social channels. If you play your cards right, this can be an easy win for your brand.
Customers are clear that they expect rapid responses on social: 14% expect a response on Twitter ‘immediately,’ and 65% expect you to get back to them within 2 hours.
That’s ‘expect,’ not ‘want.’ This is the floor, not the ceiling.
Yet, how is the average brand doing in this area? You tell me, when about 70% of those who reach out to brands on social get no response at all.
Tighten up your social game and move anyone with a complaint onto PM as soon as you can. Give a positive customer experience, manage your rep and encourage customers to stick by your brand long enough to develop real feelings of loyalty.
Another way to keep your already satisfied customers happy is by recognizing their needs before they even realize what they are. Use your customer behavior data to predict what your customers are likely to want, then offer it to them.
SaaS company Groove slashed churn by 71% by identifying ‘red flag metrics’ and catching customers who were at risk of bailing, and offering them incentives to stick around. Figure out what your red flag metrics are by looking at what customers do before they churn, and being prepared to intervene then.
Finally, an old-school tip that still works: a simple Thank You note, Happy Birthday or Happy Holidays wish will go a long way as well. Remember, customers in every industry want to feel that you care about them outside of your business transactions with them.
2. Drive Business Profits
Research from Harvard Business School, “increasing customer retention rates by 5 percent increases profits by 25 percent to 95 percent.”
According to Econsultancy, 82% of businesses agree that retaining an existing customer is cheaper compared to acquiring new customers.
While it is important to focus on attracting new customers, what brands need to focus more is on boosting their customer retention programs to drive business profits.
A great example is Starbucks a brand that runs a customer rewards program to drive customer retention. In addition to offering customers personalized offers, customers of the brand can earn free drinks and food.
3. Make sure your brand is consistent
Consistency is a vital factor in building loyalty. Your brand wants to feel the same to customers every time they interact with it. We’re back at customer experience again. Customers want to have confidence that we’ll deliver on our promises every time, not just when it’s convenient. In fact, if we consistently deliver good products and services across our organization, if we mean what we say and say what we mean, if we under promise and over deliver, the potential for our organization to not only grow but reach extraordinary heights is real. It won’t guarantee success but it will lay the foundation for us to achieve more and it will usually separate us from our competitors.’
So consistency of experience is important. McDonald’s is one of the most successful brands in the world, and one of the hallmarks of the chain since Ray Kroc started his franchise expansion has been that a McDonald’s in New York is the same as a McDonalds in Indiana – or in India.
Thing is, McDonald’s is also one of the world’s most recognizable brands. And the guys behind it, Richard and Maurice, planned it that way: even when the plans for their first restaurant were still on the drawing board, they were using the phrase ‘Golden Arches.’
Your brand deserves rock-solid visual consistency too. Logos and design elements should look the same on all devices, all browsers. (You’d be surprised how often that goes wrong.)
The only thing worse than seeing a logo stretched out of proportion, pixelated or painted up with new colors is seeing it shared that way with staff and customers.
4. Decrease the Cost of Acquiring New Customers.
The cost of acquiring a new customer is 5Xs that of retaining an existing customer. Again, while acquiring new customers should be a business goal, your greater focus and a key business strategy should revolve around building customer loyalty within your existing customer base.
5. Increase Positive Customer Feedback.
Customer reviews and feedback is one of the most powerful brand-building tools available to brands today. Customers who are happy with your product, service, or brand interaction experience tend to connect more easily with your brand.
And if you have been successful in creating a bond with the customer, they will be far more willing to provide their honest opinion about their experience or respond to your queries when you ask them.
Brands can use these customer endorsements to effectively improve and grow their business.
Customer loyalty-building programs are a must for any business that wants to enjoy long-term success and a strong brand position in its target markets. Here are five strategies that can ensure customer retention and loyalty this year.
6. Focus on what your brand does best
Customers are looking to identify with your brand’s mission and core values. To them, what you do is who you are.
How can you help them to identify your brand’s values quickly and easily?
‘Be definitive,’ says Jim Joseph. ‘The more specific you can be then the more your customers will start to understand what you can offer to them. This may force you to pick the one thing you are the best at, but it’s a story you should stick to.’
Being about just one thing seems counterintuitive – surely offering more products, services, even identities, would endear your brand to more people? But in fact the more identifiable you are, the more affection you trigger in people who do like you. Try to please everyone and you end up making no impression at all.
You need to make sure your customers understand what you do and feel that it’s something they’ve been missing their entire lives, and can’t live without now they’ve discovered it. That means you really need to zoom in on just one thing until it fills the screen. For instance: Nike do a bunch of sportswear and sporting gear – tube socks, yoga pants, dumbbells, water bottles. But shut your eyes and think Nike, and you see sneakers. They’re the sneaker people. What kind of people are you?
7. Build a Community of Brand Ambassadors via a Robust Customer Loyalty Program
“The way to a customer’s heart is much more than a loyalty program. Making customer evangelists is about creating experiences worth talking about.” – Valeria Maltoni
Loyalty programs can provide brands with a powerful way to connect and engage with their customers in a way that can help them build a community of brand evangelists.
Airlines and hotels have been running loyalty programs that offer customers with frequent flier miles and discounts on hotel bookings or stays as a part of their overall brand marketing plan for a long time now.
However, loyalty programs need to look beyond a simple quid-pro-quo equation – if they want to build a loyal customer base.
There is no doubt that offering discounts and offers are a great pull for any loyalty program. However, brands need to make a focused effort towards designing loyalty programs that integrate into the life of a customer in a way that addresses their pain points or adds value to their lives in more meaningful ways.
One such example is Amazon Prime.
For $99 a year, Amazon offers its members with value-added offers which include free shipping, faster delivery, a more personalized shopping experience, free music streaming, as well as movies and TV shows via Prime Video. The value of this offer far exceeds the $99 the customer pays for the one-year membership.
In exchange, Amazon has created a tribe of loyal customers who are willing to make purchases more often and are more willing to engage with the brand.
Another way to add more value to your loyalty program is by aligning it with a charitable cause. Take TOMS for example – they claim that for every $3 that they make, they give $1 away and the company and its community have successfully given close to 100 million shoes to people in need.
For a customer to know that their purchasing decision is impacting the life of someone in need is a powerful reason for the customer aligns with a particular brand.
Your mobile app is again a great platform for building customer loyalty and it should be integral to your customer loyalty program.
Design your mobile apps to score high on UX (user experience) and include an extensive menu of services and features that deliver the user with a seamless brand experience through the entire buyer journey – right from discovery to purchase. Integrate mobile payment options and reward customers who use it regularly.
When you align your loyalty program to deliver customer value, not only does it keep the customer coming back for more, but it can galvanize your customers to proactively endorse your brand among their family and friends. In other words, they can become loyal brand ambassadors.
8. Incentivize your Referral Program.
If you were to carefully analyze some of the best referral programs, they would include three specific areas of focus;
- They use targeted promotions.
- They include personalized incentives for their customers.
- They have a robust network of brand advocates.
Before we move any further, it is important to understand the difference between a loyalty program and a referral program. While a loyalty program encourages customers to make repeated purchases from you, a referral program incentivizes customers to get their family or friends to buy from your brand.
In essence, this is one strategy that can be effectively used to retain existing customers while acquiring new customers.
Now there are several brands out there who have made a kill using creative and innovative ideas to drive their referral programs. Let’s take Bombas as an example.
Their “refer a friend” program says – “When you share Bombas with your friends and family and they buy some Bombas, they’ll get 25% off their purchase, and you’ll get $20 to spend on Bombas.
Riff Raff & Co. is again a great example of how effective a referral program can become if planned strategically. They offer a free toy worth $68 for every five referrals which results in the sale of five of their products.
It’s not difficult to imagine why this would encourage parents to share the referral link of the brand with five of their contacts – especially if their own child is happy and is able to sleep better!
There are tons of examples such as these where brands have effectively incentivized their referral programs successfully. What’s important here is that you plan and design your referral program keeping in mind your core customer and choose an incentive that aligns with your business.
How you choose to incentivize your referral program also depends on you – so you can either go with a “free product” similar to what Riff Raff & Co. offers, or you can offer a cash reward like Bombas, or opt for discounts and other freebies that work for your brand.
9. Personalized Your Marketing Programs.
With so many brands competing for the attention of customers, one of the most effective mediums of speaking to your customer directly is via personalized marketing. It can attract the attention of your target customer and it can help build trust in your brand. At the end of the day, you want customers to be able to make a distinction between your brand and your competition.
To deliver personalized marketing messages, you need some amount of customer data – this customer intelligence which could include information about the customer’s shopping preferences, history of their buying decisions, the time they like to shop, or the time that they are most receptive to marketing messages can help you customize your marketing messages in a way that aligns with what customers expect or want.
Furthermore, if you have a loyal pool of repeat customers, they don’t want to be fed generic marketing messages – they expect personalized messages and content that speaks to them directly and caters to their needs.
Using personalized marketing brands can create offers, discounts, and promotions that encourage buying decisions. If you use email marketing, then personalizing your emails can help boost your lead generation compared to generic emails. In fact, emails that are personalized can deliver 6X higher transactional rates than generic emails.
Netflix is a household name today. Apart from its epic menu of content, the reason why the brand is popular among global audiences is that it uses an algorithm to deliver users with personalized viewing recommendations based on the kind of content the user browses and views.
The “Share a Coke” campaign from Coca-Cola is still a great example of how personalization can pull customers to a brand. By encouraging consumers to replace the drinks logo with the names of their contacts and friends and spread the brand message using the hashtag #shareacoke, the soft drink giant was able to regain a substantial chunk of its sales.
Let’s Wrap It Up
Brands that want to build a loyal customer base for their business need to actively invest their time and efforts in strategies that encourage brand loyalty.
It doesn’t matter how big or small your business is – by incorporating steps to drive customer loyalty you can effectively build a pool of repeat customers who could also become your biggest brand ambassadors.
A major part of building your brand loyalty depends on your being able to guarantee your customers will want to return to your site. Loyal customers are more willing to stick around, and more likely to become strong advocates for your brand on their social channels and among friends.
In an otherwise cold and technical world, people are constantly searching for a sense of human interaction and emotion. Make sure you’re invested in your users in a personal way, gain their trust by making good on your promises and watch your base of loyal customers grow.
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