Today, customers are informed, and that means they know what your competitors have to offer. The challenges this poses to your business is that if you do not offer them much value, it’s only a matter of time before they have moved on.
Customers, just like a dating relationship, will stick where they feel appreciated! How you serve them, their experience with your business and how satisfied they walk out, are many among other factors that they consider. If they do not feel that they a priority, to them you will be their last option. Of course, as a business owner you dream is that anytime a customer thinks of a product or service, they think of yours first. To make this a reality, you need to understand customer loyalty and its importance.
What is customer loyalty?
Customer loyalty is a measure of the willingness of a customer to do repeat business with you. We can also define it as a customer’s devotion to your products, services or brand. It is the result of a level of satisfaction with what you are offering the customer, their experience when dealing with your brand and the value of the goods or services you offer to them. It is about you as a brand consistently meeting and exceeding the expectations of your customers.
Why is customer loyalty so important?
Customer loyalty is crucial for the following reasons:
1. Customer retention and acquisition
According to Harvard Business Review, acquiring a new customer is 5 to 25 times more expensive than retaining an existing customer. So, why not focus your attention on providing a better experience for the existing one so that you can reduce the cost of acquisition?
2. Provides competitive advantage
Customer loyalty helps you stand tall from your competitors. If you all are offering the same product or service, customer loyalty will help you to win. The basis of this is the trust that your customers have in you as a brand.
3. Growth of your business
For your business to make profits, it means your revenue is more than your expenditure. Repeat customers will buy for your business more than new customers. According to Customer Thermometer, 65% of sales will come from existing consumers. It is also easier to up sell or cross sell to repeat customers as their customer portfolio grows meaning more volumes are guaranteed for your business. In addition, loyal customers are a lot more likely to refer your business to potential customers, hence lead generation becomes easier for your business which can highly boost your business growth.
4. Boosting your brand image
Brand image is an important aspect of any business. It’s is how customers perceive your products and services and how they feel about them. If customers are satisfied with your services, they will portray your brand positively and are likely to be your brand ambassador hence improving your brand image.
5. Minimization of service cost
It is more cost effective to serve a loyal customer. The reason being they are already familiar with your products and your processes. So they are likely to try and resolve their issues on their own from the knowledge base gathered while doing business with them before requesting for your support. They are also likely to assist other customers with their issues since they have know-how from their prior engagements with you.
6. Reduction of cost of marketing
In today’s world, word of mouth is a highly trusted tool of marketing. We are highly likely to build trust in your business if our friends or families already trust your brand. So when referred, these leads are easily converted to customers. What a cost-effective way of marketing your brand?
7. Forecast accuracy
Making accurate sale forecasts is important for every business. With a loyal customer base, this becomes easier since you have overtime collected data on their spending and behavioral patterns. Therefore you are able to draw more accurate financial projections on how future sales could look like. This helps you to reduce risk in regards to new product development, cash flows, and inventory.
How do we earn a customer’s loyalty?
I hope now you understand why customer loyalty is not an option if you want to remain profitable. Next let’s look at ways of winning your customers and retaining them.
1. Know them and let them know you.
Understanding your customers is the key to achieving your business objectives. As a business, you should strive to offer a simple, friendly and personalized service to your customers. Remember, if they don’t feel valued this could be the last time they are using your service or buying your product. Is that what you want? Of course not. Do not make an assumption about them. Get to know them.
Some simple acts of a personalized service include:
- Know them by their name. It feels great to be addressed by your name.
- Ask them about their kid’s age.
- Show them that you are aware of their special moments such as birthdays, public holidays and anniversaries.
You can achieve this by implementing emails programs which trigger alerts to their emails or via short messaging to wish them well on such days. Other incentives could including offering them a discount for such seasons.
Whatever you opt for, it is important to make them feel valued.
In addition, you have to be open to your customers. Is a certain service experiencing downtime or have you abruptly run out of some stock or is a new product out? Keep the customer informed. Send personalized communication to your customers. Do not wait for them to learn from the media. This will badly work against the trust you have built over time.
To make it more personalized, assign relationship managers to your clients and create a relationship building strategy. This is important to ensure new customers have someone to walk through the customer life cycle with. Also, this works well for existing customers since they have someone dedicated to engaging them personally,
2. Build a consistent brand Identity
Help your loyal customers to remain loyal by establishing a brand that they can get behind. At any time, they expect any service from you to match what your brand promises. Remain true to this at all times and in all platforms. Keeping brand identity consistent may be challenging but is a key inspiration to your customer loyalty. For example, if the message on your social media platforms is not consistent with your website, then you will sow distrust in your customer’s mind. In contrast, if your message is uniform across different platforms, the consumer will easily resonate with your brand. Ensure every touch point reflects your brand message.
3. Reward loyalty: Implement a customer loyalty program
A customer loyalty program is different than a referral program. A customer loyalty program is a reward system used by businesses to motivate their repeat customers by providing incentives. The incentives could be in the form of discounts, free prizes, paid up holidays or other promotions. The intention is to offer something that will make the customer keep coming back. Most businesses employ a simple point system. In this case, the customer redeems the points redeemed for a reward. The system could be card based or with the advent of mobile technology, digital based. Check out our article on customer loyalty software.
You may also implement a tiered loyalty program. In this program, the value of the reward differs depending on the customer’s loyalty. The lowest value reward is at the bottom of the loyalty ladder then it increases as customer’s loyalty goes up.
Statistics from Zinrelo showed that 57% of Americans abandoned a loyalty program as it took too long for them to earn points. On this note, ensure that whichever system you employ, it offers some benefit to the customer as the goal is to keep them motivated to come back. We shall look at the benefits of this program at the end of this discussion.
4. Encourage customer feedback
While it’s well known that it’s more expensive to acquire a new customer, we cannot underestimate the value of their feedback; loyal or new customer. Your attentiveness to what the customer is saying will have an impact in their decision of coming back. Customers want to feel that someone is listening to them. If you do not listen to them, they will be listened to elsewhere. Is this good for your brand?
Customer feedback gives you insight into whether your products are meeting the needs of your clients.
Encourage your customer’s feedback through live chats. Customers will easily give reviews, air their concerns and ask questions if they know that someone will respond to them immediately. Another way to encourage feedback is through social media. Always ensure you are on top of the game in engaging your customers on social media. Ensure speedy responses and use the platform to build relationships with them. Never stop learning from your customers. You will never regret this!
5. Be the best at what you do
Do not give the customer a chance of having second thoughts about your services. Do what you promised to do and do it the best way possible. Excellence goes a long way in impressing your customers and also in earning their trust. An excellent service creates more happy customers who will keep coming back and telling others about you.
6. Make Customer service a priority
It is important to create a customer-centric culture in your business. Crucial in this is ensuring that all staff, whether customer service representatives or support staff all embrace excellent customer service. It’s key to ensure also that customer care is a crucial aspect of your business strategy. Organize your business to focus on the needs of the consumers. Ensure that your customer service team is well empowered with the relevant tools and information to respond promptly to customer queries. Give the customer a wow experience.
7. Essentials of good customer care
To ensure customers are served well and continue being happy with your services, the following is necessary:
- Effective communication with your customers: Make it easy for them to reach you and encourage feedback
- Providing a personalized service: Make all communications personal so as to make the customer feel valued
- Simplicity in your services: Provide quality services to your customers. Also, ensure your processes are simple enough to save the customer unnecessary inconveniences when using your product or service.
- Think ahead of the customer: Identify any weakness that has the possibility of causing a hitch in proper service delivery. For example, making sure your inventory system is up and running to avoid disappointing the customer due to abrupt lack of stock.
- Measure customer service levels: Monitor customer service key performance indicators and make adjustments if necessary.
Benefits of Customer Loyalty programs
Loyalty programs may take time and resources to create but once implemented, as can be seen above, will be a great asset in boosting customer loyalty. Here are a few benefits of having a customer loyalty program:
1. Attracts new customers
Customers will be tempted to try your brand when they realize you have rewards which are easily within their reach. Also if your program offers discounts, a new customer is likely to try the product just to take advantage of the discounted offer.
2. Increased sales and revenue
Your existing customers are likely to spend more because of the incentives you are offering them. By gathering consumer-related data, you can suggest certain products to them which increases the likelihood of them purchasing the item.
3. Customers feel appreciated
A personalized loyalty program makes your customers get attached to your brand by creating an emotional connection. You can be sure in case of a hitch, they are likely to be more patient as they wait for the issue to be resolved.
4. Reducing cost
If you invest in a customer retention strategy such as the loyalty programs, you will save on cost as the process of onboarding new consumers is altogether more expensive,
5. Gather valuable data
When you request consumers to sign up to your loyalty programs, you can use the data they provide to personalize customer experience and bond more with your customers. You can also use this data to prepare targeted marketing campaigns.
In conclusion
Here’s a quote that made me think twice about customers, “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” – Sam Walton
Never ignore their voice. They use your product and services so they know best what can be improved. This is key in ensuring that the next new customer, will be a loyal one.
Read more: Sustaining Customer Loyalty