6 Ways to Build Customer Loyalty for Your Business
Customer loyalty is a key driver of business growth, as repeat customers are generally the most predictable source of revenue and have a lower cost of sale than net new customers.
Therefore, creating an effective strategy that engages and helps retain existing customers is a top priority for organizations.
What is customer loyalty and why is it important?
Loyal customers have become accustomed to doing business with select brands and seeking them out even if it’s a bit inconvenient or if a competitor offers a similar product at a discounted price. Customer retention provides several benefits which include, but are not limited to, the following:
- commercial references from satisfied and loyal customers;
- positive customer feedback on social media sites and other avenues;
- information on customer buying behavior;
- more targeted marketing to existing customers; and
- a better understanding of customer needs.
How can you retain your customers?
Building customer loyalty requires understanding several key areas that can help ensure the business has an effective customer retention strategy. This strategy can help retain customers and convert leads into happy, loyal customers.
Here are six ways to build customer loyalty for a business.
1. Connect with customers through multiple channels
Keep existing customers informed about new products, promotions, and any other relevant information that affects the products or services a customer typically seeks from this business. Tools like HubSpot and Marketo support multi-channel communication and can maintain contact with potential and established customers within the platform. These marketing automation tools natively support different digital communication methods or integration with popular messaging, SMS, and social media tools.
These communications can also be used to remind customers of the company’s core values on topics such as climate change, recyclable materials, and support for nonprofit organizations.
2. Show you know the customer
Adobe’s and Woopra’s platforms, for example, can ingest different data sources such as sales data and customer demographics and provide insights into overall customer behavior. These datasets can then be used to guide the delivery of timely promotions and product recommendations based on the statistical likelihood that customers will take that direction.
Big data and artificial intelligence have given a huge boost in this area and are supporting initiatives that help provide purchase predictions based on a customer’s unique attributes.
3. Capture and Leverage Customer Feedback
Organizations need to be able to capture and act on feedback from their existing customers. Many of today’s best CRM tools, such as Salesforce, Microsoft CRM and others, are a great way to collect and centralize customer feedback from social media posts, customer calls, email surveys , telephone surveys or suggestion boxes. By analyzing this feedback and creating a strategic plan, businesses can better understand what they need to adjust to retain these customers.
4. Show your appreciation with a loyalty program
Although customers don’t save a huge amount of money by participating in a loyalty program, even small rewards can show a company’s appreciation for its customers. Offering customer-only discounts or promotions is an easy way to keep those shoppers coming back. These programs also give a company the means to collect useful data, such as identifying the most valuable customers and those who are likely to do business elsewhere. Additionally, a loyalty program can motivate a repeat visit as the customer aims to achieve a certain goal or discount. For this to work, a company must ensure that the incentive is adequate and appropriate. Several platforms allow businesses to access a loyalty program, including LoyaltyLion, Qualtrics Customer XM, TapMango, and Salesforce Experience Cloud.
5. Stay relevant to the customer
A business must demonstrate its ability to evolve with the market and meet customer needs in order to maintain customer engagement. Products don’t necessarily need drastic changes, but they do need enough to show that the company is keeping up with current events and customer needs. Being open and honest about these changes and why they happened can promote positivity as customers consider their purchasing options.
6. Know your numbers and measure them often
Building a loyalty program alone is not enough to increase revenue or maintain loyal customer support. A business should also measure and analyze key data points to assess its effectiveness and correct its course when needed. These key measures are:
- customer satisfaction scores or net promoter scores;
- customer lifetime value (annual revenue per customer multiplied by the average number of years with a customer, minus customer acquisition costs);
- the ratio of repeat customers in a year (the number of repeat customers in a yearly period divided by the total number of customers in that year or period);
- the annual revenue generated by loyal and regular customers compared to other customers;
- revenue based on loyalty level – if different membership levels are in place; and
- number of purchases associated with promotions for regular customers.
Engaging with and retaining customers should be a top priority for any organization. One of the best ways to do this is to implement a loyalty program that rewards loyal customers and attracts new customers to the business. However, the best loyalty programs require the right tools to collect and analyze data insights, marketing and sales tools to implement that insight, and a strategy to bring it together.