Customer Loyalty: Ultimate Guide 2021

in: Marketing

    Narmina Balabayli February 3, 2020

In its simplest way, customer loyalty, drives from the overall expression of customers, is choosing one brand’s products and services over others. It is the value of an experience they perceive alongside the product or service. 

Customer loyalty is a crucial factor in a company’s product and services. For companies, it is easier to sell to loyal and engaged customers rather than new ones.

Customers are the most valuable gain for a company. It may sound harsh, but churning customers means you don’t deliver value. 

Imagine this. You hustled for several years and made some profit. But your customers do not come back to your eCommerce website. They made a purchase once, and now they are gone. 

You try hard, but they are not loyal. 

Why Should You Care About Customer Loyalty In The First Place?

Your ex-customers see you as a person they had once dated. They do not find something that connects you and them anymore. They did business with you once, and now it is gone. 🙃

Even worse, they may share negative opinions about your company, how the relationship was terrible. 

If you do not give the customers what they want – meet their needs and provide long-lasting joyful experiences, they will get bored with you, and start looking for another guy. 

How Customer Loyalty Helps Your Business Develop?

Customer Loyalty Helps To Improve Brand Image

I would say that Apple Inc. has the most loyal customers in the world. They are so loyal that it almost becomes a cult.

Apple Customer Loyalty
Source: Unsplash

Many would call Apple fans “irrationally devoted” or “brainwashed.”

Despite these labels, Apple fans are so “in love” with the products. 

Although it is hard to compete with giants like Apple, you can create your own “fan base.” Once you meet their expectations, needs, and give a unique experience, you will have your own fans – loyal customers.

Customer Loyalty Helps In Saving Marketing Costs

The reason for saving marketing costs is that it is easier to sell existing customers than new ones.

Again, let’s again think about Apple. Obviously, they do not need advertisements as much as other companies do. 

Once they announce a new product, hundreds of Apple fans stay in line from dusk to dawn just to purchase it as soon as possible. 

If you give a unique product and service experience to your customers, they will expect more from you: new updates, product features, and more. Thus, they will be eager to do business with you, this in case will lead customers to read your every email, engage in your social media, etc. 

Customer Loyalty Provides The Word Of Mouth

Not online reviews or endorsements, but two friends talking to each other about your product and brand, is the best and most authentic marketing tactic. So, when a customer feels valued and appreciated, he/she will surely promote your brand among their circle

When we love a particular product, we can’t help talking about it. It is like “Friends” fans often quoting every conversation from the TV Show, or telling how many times they have watched it. 

Positively be on their mind. Customers remember well; when they are treated well or poorly and when they like your service or product, they won’t help telling others. 

Apart from this, there are a few other benefits accorded to the businesses from the customer loyalty program. 

  • Retaining your Customers: For the most part, a customer loyalty program will help you retain your existing customers. And going by the BDC (Business Development Bank of Canada), customer retention is much more cost-effective and beneficial than customer acquisition
  • Cost-effective Gaining or attracting a new customer will cost 5x more than making efforts to retain the existing one
  • ROI: 72% of US businesses with loyalty programs see a return on their investment. Interestingly, only about half have customer loyalty programs in place. 

What Makes Customers Loyal?

Keeping existing customers on board is not an easy task in this competitive world. To be successful, you need a mix of marketing strategies and a solid customer loyalty program to retain your customers.

The first thing you need to know is that customer loyalty is the result of a significant correlation between customer service and user experience. And, these two are makeup customer experiences. For this, you should also improve customer experience and customer service

Saying is easy, but the point is: “How do I start?”

When your customers think that you are the best in the market, as Apple fans do, they will be loyal to you. 

Why customers like your company and when they think that you’re the best?

Getting To Know Your Customers

Once your customers understand that you strive to know them, they will be loyal to you.

Collect data about your customers, such as their birth date. 

Everyone loves special treats or small birthday gifts. 

When their birthday comes, send customized mail with special discounts. This shows how your company is attentive to its customers. 

Keeping Customers Informed and Updated

If your product or service has some unexpected problems, notify your customers.

Say, there might be a delay in the shipment process, or you may have found a bug in your digital product. 

In this case, you need to inform your customers about the issue and how long the problem may last. 

Besides problems, when your company has a new product, send personalized announcements to your customers.

We – Nextsale sends an announcement to our customers when we release a new theme, or launch integration and partnership with companies.

By doing this, we show our value to our customers. As in reality, they are valuable to us! 

Incentives: Free Offers, Rewards, Bonuses

Repeating buyers are your most loyal customers – so, you need to make sure that they will do business for you continuously.

Customer Loyalty

Having a bonus system and offering head start are good incentives for customers to come back. 

You can offer a head start as takeaway or coffee shops do. You can use a 1+1 technique, i.e., “get one free for one purchase.”

Or, rewarding your already-loyal customers is also an excellent way to retain loyal customers. For instance, you can give a discount coupon to customers who purchase your product second or third time. 

Check out the the blog to create a high-converting promo popup campaigns.

Moreover, to earn customer loyalty, you need to give free first. 

If you sell digital products, you can offer a free trial. Or, if you sell goods, you can offer free shipping for customers’ first purchase. 

This is based on the reciprocity theory, an idea that to receive from customers, brands should give something first.

According to the study by Dr. Robert Cialdini, when servers bring mint alongside the billing check at restaurants, customers tend to tip more. With one mint, tips jump up by 3.3%; with two mints, the number is 20%.

Stamp cards are also a good way for customers to come back for purchase. 

Each stamp for each purchase. Once all the stamps are filled, customers can get something free. 

Punch card is another good idea because consumers – we all love getting free. We would buy something 10 times to get that free one. 

Rewarding loyal customers with a discount or free order will keep them coming back. 

Personalized Contact

Do not be a techno-guy/robot. What I am saying is that, do not use automated emails and replies in chats too much.

Customers want feelings attached to their conversations. They want to talk to a person who understands their concern.

Customer Loyalty

Your customer is like a person you are in a relationship. In the conversations, creating emotional connections with your customers is essential. 

Thus, try to avoid technology as much as possible. Or, to put it in another way, use technology more wisely to improve the efficiency of your work rather than to automate every service. Automated replies in the live chats, for instance, could be good for initiation.

Continuous Updates and Improvement

Show your customers that you want to improve.

For instance, frequent updates to your website or digital product to ease usability is a key factor in the success ladder. Let your customers know this.

By doing this, you show the customers that updates or service improvements are meant for them. 

Customers mean so much to a company’s success. 

You need to show that you value them.

Considering customer reviews and complaints, and making changes to them is a way to show you are eager to improve and serve better.

How to Build Customer Loyalty Program

Develop and Understand Customer Service Channel  

You need to understand the pain points of your customers before developing the customer channel. In this instance, imitating another loyalty program or just focusing on a single idea won’t work. Customer service channels are the gateway through which the customers can get insider news and information about your brand. 

A frustrated customer will look for ways to connect with you. And it is up to you to provide them with every possible channel for communication. In a customer loyalty program, communication is a must. You can deploy channels like tele-calling, online chats, chatbots, email, user-reviews, Local Stores, and online community. All these mediums are meant for initiating communication between the brand and the customer.

Customer Loyalty
Building a community is a good way to understand your customers and develop your loyalty program.

Choose your Target Customers 

The harsh truth is that a customer loyalty program is not meant for every customer. You should choose your target customer that you want to provide the benefits of your loyalty program. And every single customer that visits your store will stick with you. Some will and others will not, no matter whatever benefit you provide to them. So, it’s essential to handpick your customers for the program.

This must be your initial approach. For this, ask yourself a few questions like: 

  • How much revenue does a customer provide to the company in a year?
  • What is the frequency of purchasing products?
  • How much profit did you earn from a customer?
  • What are your Payment Methods?
  • Can you define the satisfaction levels of the customer?
  • Is there a scope to increase business correspondence with them?

These are the questions that you should answer before choosing your customers. Those who fit into the defined category must be included in the program. 

Enhance Customer Interactions

The State Global Customer Service Report of 2016 has mentioned that 60% of the customers will stop using your products if they have to experience even a single instance of bad customer service. 

You can use a good Customer Relationship Management platform that records all the previous transactions and conversations with a customer. A CRM is best to build a personal rapport with each customer.

Customer Rewards Program 

While building your customer loyalty program, it’s vital to focus on emotional connection. The customer that has an emotional connection with your brand provides 4x more lifetime value to your brand than others.

Rewarding your customers is showing your appreciation for them and helping them realize that you value them as much as they value, if not more. If they are spending more and buying your products more than others, you should also give them something in return. 

Although, this step will come a bit later when you have some data in your pocket to analyze which customer is relatively more valuable than others. But, in no instance, skip it. Prepare your rewards program well in advance and also let your customers know about the program. 

Set your Goals and Measure them: 

There is no better way to analyze the importance of your customer loyalty program than measuring it with the help of a few goals. You can set goals like:

  1. Customer Service Complaints handled in a day or something like time taken to attend to each customer service call. The goal should be to take less time to solve customer problems. 
  2. Increasing the frequency of purchases made in a fixed time period. If at present, your customers are purchasing twice every month, increase it to three times a month.

Final Words

Any type of business wants to acquire more and more customers but also wants to maintain their existing relationships. To do that, businesses need to innovate and understand what a customer wants

And this is not just limited to quality products. Providing quality products is the first step towards making a loyal customer. To make sure that a customer stays loyal, a customer loyalty program is needed.

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