In a world where your competitors are just a click away, customer loyalty is the new marketing. Customers nowadays have fast access to a variety of information about your organisation, and research shows that they’re ready and willing to stick with companies who go above and beyond to create a great customer experience.
This article will analyse how businesses can cultivate the kind of legendary loyalty that keeps them ahead of the competition. You’ll walk away knowing what customer loyalty is, why it’s important, what you can do to increase it, and how to measure your performance.
What does it mean to be loyal to a customer?
Customer loyalty is a measurement that determines the likelihood of a customer returning to do business with you. It reflects their overall happiness with your products and services, as well as each touchpoint throughout the customer journey.
Customer loyalty aids in the development of stronger relationships with your clients. You become more than just another website or online store when you improve the experience a customer experiences with your business. They place their faith in you because you offer them something valuable.
Correct customer loyalty tactics can aid in the development of these long-term relationships, hence increasing customer lifetime value, new client acquisition, and revenue.
Customers who are loyal to your firm refer others, stay longer, and spend more money with you.
How can you determine how loyal your customers are?
Customer loyalty may help estimate future activity to boost profitability, just as it can help you decide what things to sell, how to optimise your firm, and how to better serve your consumers.
Here are four alternative techniques to decide if your firm needs to take action to acquire more loyal consumers and brand champions.
A. Net Promoter Score
Looking at customer satisfaction level is one technique to track client loyalty. An NPS survey can be used to determine how likely customers are to recommend your products or services to others. NPS surveys utilise comparable wording and an 11-point scale:
Those that respond with a 9 or 10 are referred to as “promoters,” or devoted and satisfied consumers.
Those that say 7 or 8 are termed “passive,” meaning they are happy but unlikely to suggest your company.
Customers that react with a 6 or lower are referred to as “detractors” because they are unlikely to recommend your brand to others.
B. Customer Loyalty Index
The Customer Loyalty Index is used to gauge customer loyalty. It has many of the same features as an NPS survey, but it also gathers information on repeat purchases and increased sales.
A 6-point scale is used in a CLI survey, with 1 representing “Absolutely Yes” and 6 representing “Undoubtedly No.”
It assists you in determining:
- How probable is it that someone will recommend your product or service?
- What percentage of people are likely to buy from you again in the future.
- What percentage of people are likely to try out new products and services.
C. Customer lifetime value
Is one of the most important markers of SaaS and e-commerce customer loyalty. It examines the overall income generated by an average client over the course of their lifetime.
There are other methods for calculating client lifetime value, however, one easy calculation is:
Customer lifetime value = (Annual revenue per customer * Customer relationship in years) – Customer acquisition costs
Let’s imagine you’re a SaaS company that makes $2,500 per customer each year. The average customer relationship lasts seven years, and acquiring a new customer costs $3,000 on average.
This is how your CLV formula would look:
($2,500 * 7) – $3,000 = $14,500
A greater CLV indicates that your clients are more loyal.
CLV will help you track the effectiveness of marketing campaigns, focus your efforts on achieving loyalty goals, and, of course, better manage customer relationships to boost your company’s financial performance.
D. Repeat purchase rate
What percentage of your consumers buy from you again? You may evaluate your business’s retention rate by keeping track of how many purchases new and returning consumers make. The repeat purchase rate can be used to track client loyalty over time.
The simplest way to calculate the rate of repeat purchases is to:
Repeat Purchase Rate = the number of customers who made a repeat purchase over 365 days / Total number of customers over 365 days
You can choose from monthly, quarterly, or yearly time frames. Overall, knowing your repeat purchase rate can help you figure out how loyal your consumers are and how likely they are to buy from you again in the future.
How do you increase consumer loyalty?
Consider implementing these five customer loyalty-building techniques if you’ve taken the time to assess your current customer loyalty and found that there’s a lot of potential for improvement.
1. Set a higher standard for customer service
Poor customer service can have a negative impact on brand loyalty as well as your bottom line. Poor customer and employee engagement cost both large and small businesses every year.
Customers say continuous strong customer service is the most important factor in brand loyalty, with over 70% of customers willing to pay more to do business with a company that provides excellent service.
When it comes to marketing and customer acquisition, it’s difficult to compete with larger, better-funded organisations. While you may not be able to outspend your competition, exceptional customer service is one competitive edge that most big businesses just cannot duplicate.
Your initial users should consider joining you one of the best decisions they’ve ever made. You, on the other hand, should be racking your brains for fresh methods to thrill them.
There are countless strategies to improve your company’s customer service. Begin by ensuring that your team is using the appropriate tools, cultivating a business culture that values customer service, paying your agents a competitive rate, and making it simple for clients to request assistance.
2. Encourage your ideal customers to share your values
So, what exactly is brand loyalty?
There are three frequent myths about client loyalty that need to be addressed, according to CEB research:
|Customers desire to form bonds with brands.||77 percent of customers are uninterested in developing a relationship with a company.|
|The solution is always to increase the number of interactions.||Information overload is a risk for your customers.|
|Loyalty is earned by interacting with a brand on a regular basis.||Shared values are the foundation of brand loyalty.|
All of these fallacies are crucial to be aware of, but let’s focus on the last one.
Shared values were indicated as the key reason by 64 percent of customers in a study who claimed they have a brand relationship. That is by far the most important factor. Only 13% cited regular interactions with the brand as a basis for developing a relationship with it.
The only important motivator for brand connections with the few customers who desired one was having comparable values, similar ideas, or a common philosophy on a particular subject.
The majority of your clients are unconcerned with having a close relationship with your brand; those who are concerned are more concerned with the values you uphold than with how frequently you interact with them.
The most popular brands have built a loyal following by taking a strong stance on industry issues.
Your company’s values don’t have to be high, but you do need to stake a claim on an issue that matters.
The best method to build a true relationship with customers is to communicate your brand’s deeper purpose beyond making money.
3. Customers will appreciate it if you create a useful community for them
In a world where customer experience has surpassed price and product as a significant brand differentiator, you want to ensure that customers have positive interactions with your brand regularly.
These encounters don’t just happen during the onboarding process, on your website, or during the checkout process, they happen whenever a consumer engages with your business.
Meet the brand community: a collection of people who gather online under the banner of the brand. Members of these groups can be customers or prospects, and they can share ideas, insights, wins, questions, and experiences all without much participation from the brand.
4. Make strategic alliances with other brands
Your company’s customer loyalty strategy can be improved by forming strategic alliances with relevant companies. It gives you access to new customer data, new technology, and new revenue prospects in addition to giving unexpected and exclusive experiences.
Thinking beyond the apparent relationship such as a corporate grocery shop collaborating with local farmers to enhance exposure and sales is the key to brand collaborations. You want to form a relationship with your customers that will keep them coming back for more.
5. Make a customer loyalty program
You’re probably a member of several loyalty programs, including those offered by your credit card, gas station, preferred online retailer, and grocery shop. Whether you use punch cards in your wallet or shop online, these programs almost certainly provide you a cause to return to the retailer frequently.
A loyalty program can assist you in the following ways:
- Encourage daily participation.
- Acquire new clients or reactivate those that have fallen off the radar.
- Customers should be rewarded based on how much they spend.
- Improve consumer happiness in general.
To lessen the risk of loss, customer loyalty programs can help you discover what is important to your customers and interact with them through personal touch points like holidays, birthdays, brand anniversaries, and other key moments.
Increasing consumer loyalty in your company
Customers who are well-informed are no longer forced to choose a firm because it is their only option. Today, finding almost endless alternate solutions for everything is easier than ever. This is why you can’t put all your eggs in just one basket: scaling, user acquisition, and marketing. Will people remember you if you use marketing to get your name out there? Will first-time clients become devoted, long-term supporters?
You’ve seen the evidence that proves this is important if you want your company to succeed; now it’s up to you to apply what you’ve learned here to build a customer experience that delights customers while also getting them talking about you.
When you take care of your consumers, they will take care of your business.
FSP GLOBAL GROUP is an international group of companies present in many countries, with its headquarters in Cluj-Napoca. FSP Global, the main company in the Group, is a leader in Business Processing Outsourcing (BPO) sector and operates 24/7, 365 days a year. FSP Global provides exceptionally high-quality multichannel customer care experience and support through its call centers. FSP Global offers a wide range of services in BPO and is unique in its domain due to its impressive range of language portfolios, among which: English, German, French, Russian, Arabic, Hungarian, Italian, Romanian, Czech, Spanish, Dutch, Portuguese, Polish, Ukrainian, Kazah, Bulgarian, Albanian, Burmese, Malay, Africaans and other 10 South African languages, Hindi, Urdu, and others. It provides services for clients in more than 25 countries from 3 continents all over the world, like Germany, France, Italy, Switzerland, Netherland, Romania, Ireland, Arabic countries, Czech Republic, Poland, Australia, Malaysia, Myanmar, Kazakhstan, Kuwait, Pakistan, etc.