One of the most common terms that you might have heard while talking about brands is customer loyalty.
Also, there is a common trend that hovers around the term that it is difficult to maintain a loyal customer base while others benefit from customer lifetime support.
Customer Loyalty Programs can’t be considered purely coincidental, it is both science and art at the same time. This article will help you understand the science behind the concept and help you master the art of building strong customer loyalty. You’ll learn all about customer loyalty, what are the best strategies associated with and why it is so crucial for a brand.
Customer Loyalty: Definition and Meaning
Simply put forward, customer loyalty is defined as a long-term positive relationship between a customer and a business. Loyalty is generated when a customer is provided with consistent positive experiences.
A positive experience can be a subjective thing and differ from customer to customer. However, the Master of Building strong customer loyalty programs has concluded the following points:
- Interactive Onboarding Experience
- Stellar Customer Service
- Consistent Quality Services or Product
- Building Communication on a Personalized Level
Moving aside from all the technicalities, the most crucial factor when it comes to customer loyalty is emotion. Customers with strong emotional commitment choose a brand over 82% of the time while consumers with low emotional commitment go for it 38% of the time.
Since there is no metric system emotion yet, there are some diverse ways of measuring customer loyalty. The most basic one includes calculating the number of purchases/subscriptions/renewals in a customer’s lifetime.
Benefits of Building Customer Loyalty
The next question that comes up is ‘What is so important about customer loyalty & why?’
It is a no-brainer that retaining a customer is easier as compared to acquiring a new one. According to Paul Farris, Landmark Communications Professor of Business Administration Emeritus at the University of Virginia Darden School of Business, says, “a repeat customer has a 60-70% chance of converting.” Moreover, customer acquisition costs are considerably greater as compared to any of the current customer retention strategies.
Once you build a loyal customer base, they’ll always have your back. A satisfied customer will always choose your brand over a similar, cheaper-priced brand.
Also, a loyal customer base provides the most optimum form of organic marketing for you, i.e., Word of Mouth marketing. People are 90% more likely to trust and buy from a brand suggested by a friend.
The following are some benefits of building strong customer loyalty:
- Loyal customers practically become brand ambassadors
- Provides supremacy over your competitors
- The rise in consistent revenue generation
- Gaining crucial feedback
- Fosters overall business growth
- Boost in customer retention
- Improved customer engagement
Strategies for Building Effective Customer Loyalty
It doesn’t matter whether the company is B2B or B2C, it is important to work towards building strong customer loyalty. Moreover, it is an ongoing process and there are several factors to keep in mind.
Onboarding is a crucial point of the customer’s journey, as it is the process and opportunity of presenting your products or services to the customer for the first time. It should be carried out in a personalized and interactive way that can leave a positive first impression on the customer. This process is different from awareness marketing which also leads to brand introduction.
A robust customer experience management (CXM) platform can help any organization to automate and enhance its onboarding process.
It is quite a common trend to post FAQs on the company website. It is a great yet effortless way to engage with existing customers as well as potential ones. Any organization can take this functionality up a notch by communicating these FAQs with their customers in a dynamic way. This can be carried out by integrating a CXM platform into their systems.
Customer Loyalty Levels
This form of strategy is aimed at fostering a durable relationship with customers by organizing customer loyalty levels a.k.a ‘Tiers.’ The level at which the customers are placed is based on the number of transactions or referrals they make.
Customer Feedback Loops
The easiest, but most underrated customer loyalty solution is the Customer Feedback Loop. Once the customers express dissatisfaction or leave a negative review, it’s vital to respond or communicate in a meaningful way.
The trust of the customers can be easily restored by timely recognizing and polity responding to any of the customer reviews. This process can be automated using a Customer Communication Management (CCM) platform.
Customer Account Management Teams
Management teams are a crucial part of a customer loyalty strategy. They work as an interface between customers/other businesses and the company’s customer and sales service and customer success teams.
However, there might be a chance that these teams might not communicate effectively with each other due to the existence of ‘data silos.’ To overcome this, you can leverage the power of a strong SaaS-based CXM solution that can negate the effect of data silos in your organization.
Research & Statistics related to Customer Loyalty
- A company can use 5 to 25 times more resources on customer acquisition costs as compared to customer retention strategies. This implies it is cheaper to retain a customer than to acquire a new one.
- Boosting the customer retention rates by 5% can boost profit by 25-95%.
- A retained customer has a 60-70% chance of up/cross-selling.
- 94% of customers who got an unexpected reward or special recognition felt more connected to the company, and 34% of them expressed that positive and interactive experiences led them to give the company more business.
- 86% of customers will pay more for a better and more personalized experience.
- Consumers with a high emotional commitment choose a brand 82% of the time while consumers with low emotional commitment choose it only 38% of the time.
- 79% of consumers expressed a loyalty program makes them more likely to buy from a company.
The Relation between Customer Loyalty and Retention
Customer loyalty and retention are strongly connected. Customer retention keeps a measurable track of loyal customers’ engagement and transactions.
The point of retention is to maintain the existing customer base to generate revenue from them. The company needs those customers to make recurring purchases.
They achieve that by providing value and offering wonderful experiences that are dynamic and personalized in nature.
Why is Customer Retention Pivotal?
- Saves the costs of customer acquisition
- Fetches valuable data
- Generates more revenue
- Adds value to the customer experience
- Improves the work of customer service representatives
How to Automate the Whole Process?
We have discussed so many techniques to enhance customer loyalty and it is evident that implementing this is not easy at all. The concept of automation can be a lifesaver in executing your plans. You can take advantage of the wide variety of CXM tools to boost customer loyalty.
How can a CXM tool help in boosting customer loyalty?
Spot Signs of Customer Dissatisfaction
A CXM tool can hint at customer churn levels. It can help you keep track of the KPIs that depicts engagement. You can then use customer behavioral data and triggers to act. Haven’t heard from a customer in a while? Are purchase patterns changing? All this data can be at your fingertips using a CXM solution.
Boost Customer Engagement
CXM can be a powerful tool to foster loyalty in customers that you have lost touch with. CXM tools can notify account managers when it’s time to reach out. Dynamic and interactive communications can keep your customers engaged and notified about your brand.
Customer loyalty is about what you can do for your loyal customers. How you communicate, what you offer, and how you impact the world dictates just how loyal they will be.
The world is constantly changing, and you must make customers feel safe, appreciated, and rewarded for your investment in you. Providing great customer experiences is the key!