You know what they say – “if you want loyalty… get a dog”. However, for those in business, a four-legged friend simply won’t do the trick, in business you need customer loyalty. Customer loyalty is arguably one of the most important strategies that any business with customers can implement.
What is customer loyalty?
There are a number of definitions for customer loyalty. However, most will unanimously agree that customer loyalty is often the bi-product of consistently positive experiences with a business or a brand. Customer loyalty indicates the extent to which customers are committed to your company’s products or services and how strong their tendency is to choose your brand over competitors.
The value of customer loyalty
The value of customer loyalty is much higher than most would believe. In fact, according to Harvard Business Review, it can cost anywhere between 5 and 25 times more to attract a new customer than it does to sell products to an existing one! However, most businesses still pour their marketing budget into sales funnels that are solely focused on attracting new audiences and neglecting the lucrative audience that’s right there at their fingertips.
Amazingly, if you can increase customer loyalty by even just 5% that can translate to a profit increase anywhere from 25% and 95%. With this in mind, it’s easy to see why customer loyalty is more profitable than customer acquisition.
Benefits of customer satisfaction and loyalty
It’s not simply that it’s more cost effective to market to your existing customers, there are many other benefits to having satisfied and loyal customers.
1Loyal customers are much more likely to recommend your business, and a massive 92% of consumers will trust recommendations from their friends, family and coworkers.
2Loyal customers tend to leave positive reviews and with 68% of consumers stating they use reviews as a way to choose between competitors, that can be very important.
3Loyal customers can form the basis of a brand community that will allow you to refine your marketing and overall business strategy.
Ways of creating customer loyalty
So, now that we’ve established just how important customer loyalty really is, how exactly do you start to build it? There are many, many customer loyalty strategies that can work absolute wonders for your business. However, some of the core strategies include:
Great customer service
Bad customer service is one of the biggest turn-offs for any customer. A customer that feels they have been ignored or mistreated is never going to be a loyal one, in fact, 89% of consumers have switched to a competitor following a poor customer experience. Customers remember when they’re treated well, and they also remember when they’re treated poorly. Ensuring your customers have a good experience with your brand can go a long way in ensuring they develop a sense of loyalty towards you.
Communicate with customers
By communicating, we don’t just mean talk at. It’s important to also listen to your customers, find out their pain points and how they feel you could improve your business. Perhaps the most crucial part is to actually action any intelligence you gain as a result. A customer that feels they have been listened to and understood will be much more likely to become loyal.
Build a community
A community can be one of the hardest things to create, but for brands, they can be an invaluable marketing and loyalty tool. A community makes people feel like they are part of something and helps to foster fierce loyalty. This can be done through your website or even on social media.
Utilise a customer loyalty rewards program
Setting up a customer loyalty program is a great way to increase your customer loyalty, after all, they are designed to achieve just that! Rewarding your customers for purchasing your products is a great way to make your customers feel appreciated, create a tribe of loyal brand ambassadors and improve your customer retention rates.
Do customer loyalty programs really work?
There’s no denying that customer loyalty programs are an effective tool for retaining customers as well as attracting new ones. In fact, among consumers using loyalty programs, 47% spend more with a brand whose scheme they are a member of.
Loyalty programs are incredibly effective in encouraging repeat purchases, creating a point of difference against competitors and encouraging referrals.
So the short answer is yes, loyalty programs really do work!
Advantages of customer loyalty schemes
Customer loyalty schemes have been given increased recognition in recent years for several reasons. First, because customer loyalty programs have a variety of benefits for companies, and secondly because they are now widely used and to an extent, have become an expected part of the consumer experience. But what are some of the main advantages of customer loyalty programs to businesses?
They encourage repeat purchases
Loyalty programs are a great way to keep your customers coming back for more. Customers are much more likely to come back and purchase more from your business because they want to earn themselves more rewards, whether it’s in the form of freebies or discounts.
And in case you weren’t already aware, repeat customers are incredibly valuable for your business. In fact, they spend 67% more than first-time customers.
They create a point of difference against your competitors
Most things in business can be matched. Price, service and location are just some of the factors that can cause a consumer to choose one business over another. However, one thing that is hard to match is an excellent customer loyalty program. Having a good loyalty program will make your customers feel as though they will be missing out on the benefits of your program if they shopped elsewhere.
They provide customer insights
Another benefit of customer loyalty programs is that they provide a great mechanism for businesses to understand their customers more, generate insights and utilise these.
They encourage referrals
If your customers are really enjoying your customer loyalty program, they are going to tell their friends and family about you. An added bonus is that word of mouth marketing is the most trusted form of advertising, and it doesn’t cost a penny!
This will drive new customers to your business, and then the brand loyalty building process starts again.
They lead to an increase in revenue
Loyalty programs are designed to create a sense of loyalty in your customers by rewarding them for purchasing from you. This increase in customer retention can lead to massive increases in revenue and profit. As mentioned above, increasing customer loyalty by just 5% can lead to increases in profit from 25% to 95%.
They can make your consumers feel more appreciated
Loyalty programs make your customers feel special and recognised, which further fuels their admiration and strengthens their relationship with your brand.
Find out more about PERX, the white label customer loyalty platform that offers your customers access to exclusive discounts from some of the UK's most recognised brands. Submit the form below to enquire or book a demo.
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