Customer loyalty is essential, regardless of how big or small the business is. Customers who return to the company for repeat customers can spend 67 percent more than new customers. It can cost up to ten times more to get new customers than to retain existing customers. These strategies can help you build and maintain customer loyalty.
What is customer loyalty?
Customer loyalty can be described as a customer’s willingness and ability to purchase your product or service again. Customer loyalty is essential for increasing the lifetime value of customers. It can be a significant source of your steady revenue. It helps you attract new customers. Happy customers are more likely than others to recommend your product/service to others.
How to measure customer loyalty
There are many ways to measure customer loyalty. It is not as simple as whether customers leave or stay. You need to understand the motivation behind repeat purchases, where they shop from, and how satisfied they feel with each transaction.
Every business will answer these questions differently, but here are the top ways to measure customer loyalty.
Customer satisfaction levels
There are five levels to measuring customer satisfaction:
- The customer was not satisfied: They felt that their needs weren’t being met.
- Slightly satisfied: Customer felt that specific needs were met, but not all.
- Satisfied: The customer received what they wanted.
- The customer was delighted: They got what they wanted and some pleasant surprises.
- Extremely satisfied: All customer expectations were exceeded.
Customer satisfaction can be measured by star ratings, reviews, surveys, customer interviews, and on-page star ratings. Customers may prefer to leave reviews based on ratings and include some detail if they want to share their experiences. Likewise, you can ask your customers for more detailed answers through surveys, while customer interviews provide more detail about your product or service.
These are great ways to learn about your customers’ satisfaction levels. You can also take different routes depending on what type of feedback you need. Start simple by asking customers to rate and review their purchases. If the feedback is highly positive or negative, you can follow up with an email asking for a more detailed interview.
Your churn rate is the percentage of customers who cancel or refuse to renew their subscriptions. It is essential for subscription or SaaS companies with regular paying customers. No matter how much revenue you make monthly, if your customer cancellation or stoppage rate is high, it could indicate that there may be a bigger problem.
Look at your churn rate through the prism of customer satisfaction when analyzing it. For example, you can use a cancellation survey to determine why customers are leaving or request a one-on-one interview. It may be necessary to offer an incentive to canceling customers to obtain more information, but it could be worthwhile in some instances.
Customer lifetime value
Based on the entire relationship, your customer lifetime value (CLV) tells you how valuable each customer is. So, instead of looking at it from a purchase-to–purchase perspective, your CLV shows you the total value of each customer to your business.
It is important to remember that it costs more to get new customers than to retain existing ones. Therefore, your company’s growth will be guaranteed if you focus on increasing the value of existing customers. As we have mentioned, it can also increase your chances of gaining new clients through your existing customer base.
Recurring purchase rate
The percentage of customers who return to purchase your product or service again is called the repeat purchase rate. You can also refer to this as your repeat customer rate or customer retention. The higher the percentage, the better.
This metric can help you to define customer loyalty and provide a framework for building customer relationships. For example, to help you decide when to remind customers or send promotions, you could look at the buying habits of your most loyal customers. For example, they may purchase simultaneously, or they might need more push to buy.
Affiliate refers to a business relationship between businesses and other people or businesses to earn a commission. An affiliate is someone or company that shares information with another company. They can also make money depending on how much traffic they bring in. To determine whether you should continue to leverage that relationship, you will need to evaluate your affiliate return, particularly if it is paid for.
Affiliate work can be done in a variety of ways. The most popular methods of sharing are:
To drive traffic from one site to another, you can place links to the business’ website on the affiliate’s site. It is a common practice on blogs and other websites that share informative content. It is especially effective when used with brands and people in similar industries or appeals to the same audience.
Get Exclusive Coupons
Sometimes, affiliates are given a discount code or coupon code specific to their company or name. The code is sent to the cohort as a referral. The fellow will then earn a commission on the use of their code. It is trendy among social media influencers.
Many social media platforms are embracing affiliate marketing. It can be as simple as an affiliate sharing information about its products or services and tagging them in it. This simple action can generate interest and traffic to the site. Affiliates can also track the amount of commission they earn based upon the interactions with their posts. This type of affiliate marketing is popular with influencers, well-known social media users.
How to build customer loyalty
The first step is to understand the metrics and tools for analyzing customer loyalty. Next, you need to create and implement a strategy for customer loyalty. These are some steps to help you get started.
1. Improve your customer experience
Although this may seem obvious, it is an important tip—customer service matters. In 2021, 86 percent of respondents to a survey said they were willing to pay more for exceptional customer service.
Customers remember being treated well and when they are treated poorly. Customers will tell their family and friends about your treatment, leading to more business or less business. Pay attention and find ways to improve their experience.
2. Determine the most effective communication channels
Regular communication with customers keeps you sharp in their minds and allows you to pass on important information. First, however, it is essential to understand which communication platforms and methods are best for them.
Email communication is still viral and can be helpful for specific customers and brands who are not as active on social media.
Customers increasingly use social media to communicate with brands via direct messaging, tweets, or by mentioning them with @ mentions. It can draw attention to the company in a public setting and, if they provide prompt and helpful customer service, can make them a trustworthy business.
Customers and customer service staff can also benefit from webchat. A business can program a chatbot to help answer customer questions and direct them to relevant resources. Chatboxes can be used to help someone looking for assistance on your website.
They saves time for customer service staff by not having to answer common questions. They can then spend more time answering more detailed questions for customers.
You must remember the value of a phone call, despite all the technology available to chat. We can all relate to the frustration that comes with feeling trapped in an endless loop, unable to reach a human being.
It is important to remember that automated phone systems can save money, but highly-trained customer service representatives will build loyalty. In addition, telephone calls allow customer service representatives to communicate with customers more profoundly and improve their company experience.
It doesn’t matter what channels your business uses for communication; it is essential to ensure that your efforts are best for your customers. Your customers will be more loyal if they can communicate easily with you.
3. Develop a reward system
Extra perks for loyal customers is one of the best and most cost-effective ways to reward loyalty. You and your business may choose to offer different bonuses. Some of the most popular rewards programs are:
Point programs are simple and popular. Every customer who purchases from your business earns points. In addition, customers can accumulate points that they can use to redeem points for a reward or special offer.
Spend programs are more about how much money customers spend on each transaction they make with you. Therefore, they will accumulate more rewards the more they spend. This reward system is well-known for increasing customer loyalty and decreasing churn rates.
A tiered rewards program allows for different levels of earnings and rewards depending on the customer’s spending habits. All customers can feel included by rewarding them according to their spending habits. Customers will be awarded for spending more with you if they are loyal customers.
Exclusive VIP Program
Customers can join VIP programs offered by some companies for a monthly or an annual fee. It allows them to receive special discounts and other offers. These programs should provide unique benefits that only those who are enrolled can enjoy.
You can encourage loyalty by creating a reward system that rewards the most loyal customers. It will encourage them and provide an incentive to other customers to try to achieve that status.
4. Give your employees a head start in determining the rewards they will receive
You can give customers a head start by giving them a discount if you want to create a loyalty program similar to the one coffee shops have. Customers must purchase a certain amount of drinks to get a free drink. It could be as simple as giving customers the first two drinks on their coffee card. Customers will be more inclined to finish the program if they are given a heads-up.
5. Get customer feedback
Customer feedback is a key to improving customer loyalty and retention. You can improve customer service by sending out surveys and asking questions over the phone.
You can respond to negative and positive customer feedback online by leaving comments, reviews, or tags on social media channels and other forums. It will demonstrate that you are open to feedback from customers and that you value their opinions.
Sometimes, it is best to handle negative comments in a private forum. For example, you can ask for a private message or an email to address a negative comment.
You can request customers to send you positive feedback. To get the most out of the positive review, you might ask for a follow-up interview or another form of engagement. You should also reward customers for positive contributions!
6. Consider different payment plans
Some businesses are seasonal and have cash flow problems during certain times.
A wedding shop typically receives most of its sales in the summer when weddings are in full swing. However, they struggle during winter. One shop offered a payment plan that allowed customers to start shopping in winter and pay less over the months leading to the wedding.
The plan was successful because it allowed customers to make manageable monthly payments and helped the company bring in cash during slow times. In addition, customers were so pleased that they often recommended the shop to others. The business also saw an almost 400 percent increase in sales.
Consider other payment options, such as ApplePay and PayPal, that are popular with shoppers. These payment options enable customers to purchase products and services online more efficiently than ever before.
7. At every touchpoint, maintain voice, tone, language
Although it may seem obvious, this is an important reminder.
The United Kingdom conducted a study that recorded how customers greet each other when they enter a store. It was then compared with the amount they spent in the store. A study in the UK found that shoppers who received a warm welcome and smile were more likely to spend as much as 67 percent less than those who weren’t. Although it may seem like an insignificant detail, friendly greetings have significant consequences.
Positive language, tone, as well as visuals are important beyond store interactions. It is essential to maintain a consistent manner and voice throughout company communications. It will not only help to build your brand but also ensure that customers have a positive experience. To avoid confusing potential customers, make sure you use the correct language and offer your internal communications.
8. Customers should have a reason for being loyal
Many believe Apple has the most loyal customers. Apple customers will go to any length to show their love for the company. They may spend hours waiting in line to purchase products or argue in support of the products.
These brands are successful because they can excite customers and make product launches, sales, and product unveilings an exclusive event. It is essential to think about your customer’s experience beyond how they use their product. But it also includes how they feel throughout every interaction with your business. For both your customers and current customers, reflect on how you treat them. Make the buying experience with your product or service memorable.
Future benefits can be achieved by investing in customer loyalty
It’s difficult to emphasize how vital customer loyalty is in today’s business environment. Customers understand that brands are more than their products, and they value them as people.
These tips will ensure that your customers have a memorable and positive experience. A good impression can make customers happy, encourage positive reviews about your company, and build customer loyalty.
Disclaimer. The opinions and views expressed in this article are the authors Andrew Napolitano.