Customer Loyalty

1. What is Customer loyalty?

Customer loyalty is positively linked to customer satisfaction as satisfied consumers overwhelmingly prefer products that suit their needs. Loyal consumers buy goods or services exclusively from a business and are not able to transfer their preferences over a competing company.

Brand loyalty comes from a firm's continuous commitment to producing the same commodity at the same rate of success each time. Organizations pay particular attention to customer service, aiming to maintain their existing base by increasing customer loyalty. They also offer loyalty plans and customer incentives to the most loyal customers as an expression of gratitude for doing repeat business with them.

2. Why should you strive to build a loyal customer base?

 

Here are a few reasons why:

Cost-effectiveness

Acquiring new clients is more costly than maintaining the ones you already have. If you have customers that are loyal to your company, you should focus more on enhancing your customer experience and your product/service than finding new clients.

In addition to acquisition costs, potential customers need a lot of help before they can appreciate the business processes. Customers who are loyal to your brand already know your business processes. Consequently, they would not require as much support, which eventually proves to be more cost-effective relative to the support costs borne by new customers.

Highly tolerant

Things are not always going well in a company. Often there could be technological problems or simple errors. Customers with brand loyalty would be more forgiving in such times and allow you time to fix the issue. If other customers start complaining, they might actually start defending your brand.

Similarly, if the bugs are triggered by the product you are implementing and checking, loyal consumers would be accommodating and share honest reviews.

Buffer against competition

If you have consumers who are loyal to the brand, you might be less concerned about competition. That's because loyal customers already love what you're offering, particularly if you're still making improvements.

Instead of having to resort to tactics like lowering rates just to retain customers, you should focus on ways to re-engineer your rivals' strategies and use them to your advantage.

Repeat purchases

Customers who are loyal devote more to your brand. They're going to join your promotions, bid, and even try to optimize discounts. The Pareto principle applies when it comes to consumers. Customers who have brand loyalty are likely to make up just 20 percent of your customer base but would make up 80 percent of your sales.

According to InMoment Retail CX Trends Research, 61 percent of loyal customers would go out of their way to purchase from particular brands. More than that, 60% of them make daily transactions. It should also be noted that Millennials will make 70% purchases and 50% of these consumers will buy more items.

Honest feedback

Customers that are loyal will send you timely and truthful feedback that you can use to enhance your products/services as well as your customer experience. New customers will not be able to provide truthful reviews. Most of the time, they're not even going to give any suggestions. They'll try your product, and if they don't like a small part of it, they'll try another one.

 

Referral source

Customers that are loyal tend to be happy customers, and happy customers share their positive experiences with other customers. These consumers are perfect for growing word of mouth and are more likely to become brand supporters.

This means that they can share their experiences with others and hopefully create fantastic user-generated content (UGC) for social media as well. In reality, depending on their popularity and experience in the niche, as well as how long they have been using your product/service, they may become a micro-influencer of your brand.


3. What are some Tips to Increase Customer Loyalty?

1. Share your values.

2. Provide excellent customer service.

3. Be transparent.

4. Create a sense of community.

5. Get their email addresses.

6. Use social proof.

7. Exceed expectations.

8. Don’t neglect existing customers.

9. Admit when you make a mistake.

10. Have the right employees.

11. Get personal.

12. Be an expert.

13. Say the right words.

14. Offer incentives.

15. Ask for their feedback.

16. Be reliable.

17. Spend more time with customers.

18. Make life easier for your customers.

19. Anticipate problems.

20. Be flexible.

21. Use automation.

22. Making it very convenient to connect with a real human.

23. Ask for a review.

24. Surprise them.

25. Offer a loyalty program.


4. 5 benefits of customer loyalty for a business


(i). Drive repeat business Push Company Repeat

While it may be self-evident, loyal customers are most likely to keep coming back to buy from your company. They may have a favorite product that they can't live without, or they may feel inclined to try out your new product or service because they have had a good experience in the past. Whatever their motivation might be, loyal customers are more likely to fuel repeat business, making it crucial to attracting loyal customers.

(ii). Increase profits

As mentioned earlier, returning customers spend almost 70% more money on products and services compared to first-time customers. The probability of paying more is associated with a sense of confidence that the consumer has built over time with their favorite brand. Essentially, if a consumer likes and respects the quality of your brand, they are more likely to buy in higher quantities.

(iii). Create ambassadors for the brand

Not only will loyal customers keep coming back, but they will also spread brand recognition through word-of-mouth marketing. Happy customers are likely to tell friends and family about your company and products, basically advertising and spreading good graces on your behalf. Current customer referrals help get new clients, making them loyal customer brand ambassadors of sorts.

(iv). Defend against the competition

When loyal customers invest their money with your brand, competitors lose out on future sales. To put it simply, any dollar spent on you is a dollar you don't spend on your rival. Be sure to keep your loyal customers satisfied with excellent customer service (and loyalty programs) so that they can continue to buy from your company and not from your rivals.

(v). Gain valuable feedback

Your loyal customers are also the ones who answer surveys and questionnaires distributed by your marketing team. Since they like your brand and are invested in whether or not you need to change (or remain great as you are), loyal customers won't mind taking the time to share useful input that you can then transform into actionable marketing strategies.

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