What is the importance of customer loyalty programs? Every business wants to have loyal customers (obviously), but what does that mean exactly?
Successful entrepreneurs often emphasize the importance of converting first-time customers into brand advocates, and for good reason. Smallbizgenius reports that increasing customer retention by a mere 5% can increase profits by 25% to 95%. In addition, 65% of a company’s profits come from its existing customers.
We know that businesses have ambitious sales goals in the upcoming year. These numbers show that you should be targeting your existing customers to accomplish your objectives.
Shifting your focus to customer loyalty may seem complicated, but in this blog post, we’ve compiled the best resources to help you understand its importance and find ways to make your customers loyal too.
Customer loyalty describes the positive feelings a customer has towards a brand and their willingness to continue doing business with that brand over and over again. A brand can develop customer loyalty by consistently providing a positive customer experience, delivering on promised value and forming an emotional connection with their customers.
If you still have some doubts, here are some reasons why you should shift your focus to driving customer loyalty.
Loyal customers encourage their peers to give your business a chance.
Since they enjoyed your products and services, they’ll likely tell their peers about it too. They’ll praise your business on social media, and ensure that their family will know about their experience.
Building customer loyalty not only keeps your customers coming back, but it helps you bring in new customers too!
Rather than search engine ads and online banners ads, 92% of shoppers trust recommendations from people they know. They also pay 2x times more attention to recommendations from their friends.
Not surprisingly, we’re more likely to trust recommendations from people that we know, as compared to online ads. That’s why your loyal customers are also your brand ambassadors.
Would you likely buy from a new brand or a brand that you’ve repeatedly used? This is where the true importance of customer loyalty becomes apparent.
Of course, we’re more likely to spend more with businesses that we have prior experience with. We know what we’re getting and we trust that the consumer experience will be consistent.
A study by RJMetrics discovered that you get more profits from loyal customers in the long-run. The top 10% of customers spend 3x more per order than the other 90%, while the top 1% of customers spend 5x more than the other 99%.
When customers have a positive experience, they’re more likely to return than to risk trying a new brand. Over time, their number of returns accumulate, which means more profits for your business.
Marketing and sales teams constantly worry about reaching their sales targets, but this isn’t stressful for most successful businesses.
Top businesses have a big customer base so they don’t need to fret about reaching their sales targets. They aren’t pressured to get more customers because they have a loyal fanbase who will likely purchase their products.
In contrast, businesses with low customer retention are under a lot of pressure. Since they don’t have a group of loyal advocates, they have to consistently get new customers down their sales funnel.
Sometimes they may even feel pressured to give big discounts and to host sales events to breakeven. Unfortunately, this isn’t a sustainable long-term strategy
Making the effort to develop customer loyalty lessens the pressure for your business. You don’t have to constantly create campaigns to attract more customers. Instead, you can market to your current shoppers who are more likely to make a purchase.
Now that we’ve proven the perks of customer loyalty for your business, the question remains: how do you build customer loyalty?
Here are some tried and tested ideas so you can try to gain brand advocates.
One of the most cost-effective ways to get repeat customers is to reward their loyalty.
Create a loyalty program that provides special benefits and rewards customers for their spending. The more purchases that they make, the more benefits they receive as time passes. These incentives will encourage your customers to continue patronizing your products.
Building a loyalty program may seem like a daunting task for ecommerce businesses, but it doesn’t have to be.
The best part? Since the data is aggregated in the rewards app, you can track customer spending, determine which products will likely be purchased, and find out the rewards that will likely bring customers back to your store. This information is valuable to growing your business.
The key to creating a successful loyalty program is to offer a variety of rewards.
Customers should feel that they’re getting something back in exchange for patronizing the brand. Otherwise, there’s no point in participating in the loyalty program and earning points. So, consider providing users with gated content in exchange for signing up.
For example, customers who join the Sephora Beauty Insiders loyalty program can enroll in makeup classes for free. They can visit the Sephora branches to attend classes and get in touch with other customers and get to know the staff.
Another tip is to implement a digital punch card loyalty program. After you’ve signed up to their Red Robin Royalty program, visit a store and make a purchase five separate times so you can avail of a $20 reward during your 6th visit.
This type of referral program will encourage first-time customers to develop a habit of returning to the store. Don’t be surprised if they come back for a 7th or 10th visit.
In short, offer customers rewards that are worth their effort. If customers feel like they’re getting relevant content or earning a significant benefit, they’ll love your loyalty program.
Customers are loyal to brands that provide them value.
Value is not limited to discounts, new products, and promos. If your business is on a budget, then invest in providing quality content for your target audience.
Launch a blog that provides your subscribers with valuable information related to your niche industry. Not only can this encourage customers to return to your online store, but it can also get more people to discover your business.
You can find blog post ideas by using tools like Answer the Public to determine the questions and queries that your consumers have. The tool aggregates long-tail keywords from Google and Bing searches.
If your business is a distributor of Nintendo Switch you can conduct research by simply entering the product name on their search engine. In a few seconds, you’ll get a visualized representation of the questions that customers have which can inspire future topics in your content marketing campaign.
You can also find potential article topics by checking out your competitors and subscribing to blogs related to your niche.
Feedly – a news aggregator application – compiles the latest stories from the publications that you’ve subscribed to. This lets you keep up with industry-related news all-in-one place.
All you need to do is subscribe to the publication through the Feedly application. Afterwards, you can find trending news by looking at the most recent publications and finding the share counts located beside the headline.
This technique is useful if you report industry news in your blog. You can also use it to monitor the content of your competitors which may inspire your future marketing campaigns.
For instance, Jamie Oliver’s website features his recipes, cooking tips, and restaurants. The valuable information encourages his customers to return to his website, and eventually discover information about his businesses.
Moosend – an email marketing software – has blogs, webinars, infographics, extra tools and educational resources that readers could use to build their website. Through quality content, the site encourages readers to keep returning to their website and patronize their products.
A core component of building customer loyalty is providing superb customer service.
Imagine that you want to learn more about the product. You contacted customer service and immediately got all your questions answered. While you might have hesitated to buy from the brand, the superb service gave you the extra push you needed to buy the product.
Very often, great service can encourage skeptical customers to make a purchase.
A study found that proactive help, teaching, and good service has a significant impact on repurchase or recommendations. Customers want to get consistently good service and receive proactive help so they feel like they’re getting the most bang for their buck.
Here are some tips for improving your customer service:
- Be approachable: Make it easy for customers to contact your business and report their problems. Be responsive to customer complaints and inquiries. You can integrate a chatbot on your website for easy communication and get customer service staff 24/7.
- Leverage customer data: Use tools like Acquire to streamline all customer conversations through calls, social media, and email. Having data on past consumer interactions allows your support agents to personalize their experience. Since they know the shoppers’ history with the brand, they can easily establish conversations.
- Follow-up: Once you’ve resolved a customer’s issue, then don’t forget to follow-up. This builds trust and shows that you want each customer to have a premium experience with your product.
- Listen: Train support agents to listen and empathize with your customers. If they’re having issues with the product, then customer support should accommodate their needs. Say words like, “I can understand how frustrating it is when…” and “I’m so sorry to hear that…” After all, the customer is always right.
According to G2, many customers seek support from social media. Businesses that want to offer a positive omnichannel experience should integrate live chat or respond to customer inquiries too.
For example, Airbnb has a Twitter account dedicated for customer help and it is available 24/7. They thank customers for reporting the problems of the site and get in touch with frustrated customers to offer their support.
Glossier’s customer service department, also known as the gTEAM, responds to each customer inquiry. When a customer experiences an issue, they go above and beyond to resolve the issue.
For example, here’s an email that a Redditor received from the Gteam:
Businesses regularly ask customers to provide reviews and feedback, but do they listen to the criticism?
Customers take the time to give criticism because they want the business to improve. They make the effort to complete the feedback form because they want to get a positive experience in the future.
You may think that you’re not getting a lot of complaints, but customers rarely complain. In fact, 67% of customers cite negative experiences as a reason for churn, but only 1 out of 26 unhappy customers complain. Additionally, 52% of people believe that companies act on feedback that’s given by customers.
Having said that, businesses should listen to criticism and use it to improve their business. Read reviews to find out how you can improve the customer experience.
Send a post-purchase email asking for a review to get feedback from your customers.
Here’s an example from Casper:
If you think that you’re not getting a lot of feedback, then incentivize customers to leave a review.
Tower provides customers with a 35% discount code for completing a review.
A study found that displaying reviews can increase conversion rates by 270%. Additionally, 91% of millennials trust online reviews as much as friends and family. So, make an effort to get reviews and continuously improve your business.
Loyal customers love to talk about the products that they love in everyday conversations.
They share a positive experience they’ve had at a hotel or restaurant. They also post their customer experiences on social media. A study found that 59% of consumers enjoy telling their friends and family about new products.
After all, when was the last time you saw a friend posting funky food that they bought? When was the last time you saw a friend talking about their favorite products online? I bet it was not that long ago.
What’s interesting is that shoppers listen to the buying experiences and reviews of people within their own network. That’s why 90% of consumers read reviews before they make a product.
One way your business can take advantage of this trend is by encouraging brand advocates to post their experiences on social media.
For example, Wayfair – a furniture and home goods company – launched a user-generated content campaign that encouraged its customers to post their home setup with the hashtag #WayfairAtHome and get featured on their Instagram as a reward.
By encouraging customers to share how they used the items they bought, Wayfair was able to get their business noticed by the network of their brand advocates.
Ecommerce businesses that enable shoppers to interact in multiple channels (i.e. mobile apps, live chat, social media) will undoubtedly get ahead.
Since there are so many digital and offline channels available to customers, they’ll want to begin their experience in one channel and seamlessly continue their experience in another.
Having a multi-channel presence may not seem like a big deal but studies show that it can significantly impact convenience and conversions.
ClickZ found that shoppers that used three or more channels to interact with businesses had a purchase frequency rate that was 250% higher than single channel users. Customers who used three or more channels also had an AOV (average order value) that was 13% more than those that did not.
For example, Burberry offers a premium omnichannel experience for their loyal brand advocates.
They collaborated with Apple to create R Message—a messaging systems that lets users book in-store appointments, contact store assistants and make payments. Meanwhile, store assistants can collect data on customers’ shopping behaviour, understand their preferences, and remember birthdays.
By personalizing the experience of their high-end clients, Burberry is able to boost customer retention and loyalty.
While you might not have the resources to create your own app, you can use omnichannel tools like Acquire to streamline customer conversations across chat, phone calls and emails. Plus, you can use it to qualify leads and offer customer support.
Increasing your number of loyal customers will have a multiplier effect for your business.
The more brand advocates you have, the more likely you’ll gain more word-of-mouth promotions and profits, which will ultimately help you reach your sales goals.
While turning a first-time into a regular seems challenging, you can get it done by doing the following:
- Reward customer loyalty by launching a loyalty program
- Create valuable content for your audience
- Use customer feedback to improve customer experience
- Reward customers for promoting your brand
- Create a premium omnichannel experience for loyal customers
Fostering customer loyalty may seem like an intimidating challenge, but it can be done. The key is providing a convenient customer experience, rewards and valuable content to your customers.