With the marketing arena drowning with buzz words like ‘customer advocacy’, ‘customer loyalty, ‘customer affinity’, it is understandable to have questions. Especially when you are on the fence about some of these concepts and want to be absolutely sure before investing in loyalty strategies and programs.
Here, we attempt to answer some of the most frequently asked questions you might have about customer loyalty, its attributes, how it works, what you need and needn’t do to nurture loyalty among your customers and key learning from the companies with the highest customer loyalty.
Table of Contents
What Triggers Loyalty?
To understand customer loyalty, you must first understand the psychology behind trust and loyalty. Many studies on consumer psychology and marketing have highlighted the inherent need of humans to ‘belong’. Maslow’s Hierarchy of Needs and Aristotle’s Seven Causes of Human Action stress the importance of a person’s requirement to have a sense of belonging and that humans are creatures of habit, compulsion, reason and passion.
When nurtured, a customer connects with a brand on a personal level, just like he does with other material or immaterial things. He finds a sense of belonging in groups with other loyal customers. This is why 80% of brands say that their community-building efforts have resulted in increased traffic – Hubspot. A healthy customer-brand relationship, brand image, shared values, customer experience and a strong emotional connect are some of the important factors that trigger customer loyalty.
Why Do Companies with Highest Customer Loyalty Thrive?
Customers are the backbone of a successful business. You can have the most amazing products but without loyal customers, your brand will struggle to create a niche in the market.
Loyal customers become brand mascots and brand ambassadors. They represent your brand on various platforms and significantly help in customer acquisition, helping you save millions in acquisition and marketing costs. Loyal customers are also quite forgiving and are undeterred by a few errors in your judgment. Most importantly loyal customers are passionate about their choices–case in point–your brand! They play an important role in influencing the purchase decision of their network of family, friends and peers.
Loyal customers are more than an asset, they are part of the community that will represent your brand, safeguard your interests, maintain a strong brand following for you, and influence a hundred others within their circle.
What You Should Be Doing?
- Invest in a Loyalty and/or Referral Program – A loyalty program will make customer engagement more lucrative and easier while also enhancing customer experience. You could combine your loyalty program with a referral program that incentivizes customers for bringing in new customers which is a win-win for you as well as your customers.
- Make Data and Analytics your Priority – Your data and analytics will give you all the information you need to enhance customer engagement, customer experience, support and sales. It will point out flaws in your marketing strategy and help you track trends as well as customer’s purchase patterns.
- Work on Customer Feedback and Grievances – PWC surveyed 15,000 consumers and found that 1 in 3 customers will leave a brand they love after just one bad experience, while 92% would completely abandon a company after two or three negative interactions. Grievance redressal could be your key to improving your relationship with your customers and forming a lasting bond. Most customers do not expect an outstanding experience with the brand at the first go. It is when they feel heard and important that they begin to trust the brand.
What You Shouldn’t Be Doing?
- Take Customers for Granted – Your customers should be as important to you as the business itself. One of the most common mistakes businesses do is to ignore customers that have been successfully retained for a period of time or have enrolled in the loyalty program. For customer loyalty to work, you need to periodically nurture and renew your relationship with your customers throughout their customer life cycle.
- Make Tall Claims – Another lapse in judgment is making tall claims that you simply cannot fulfill. Be honest and sincere with your customers. Communicate clearly what you are and what you can offer and leave no room for discrepancies. Making tall claims may help you gain one-time purchasers but to retain customers you need to be sincere.
- Make Frequent Changes in your Loyalty Program –A loyalty program is set in stone. Once you set your program in motion, it is recommended that you avoid changing the structure and rules, you may lose customers simply because the program seems tiresome or confusing to customers.
- Be Negligent – One of the gravest mistakes you could make is to let your guard down after you have won over a set of loyal customers. Companies with the highest customer loyalty constantly strive to satisfy and meet the demands of their customers. They are always on top of the game, analyzing the market, trends, competitors and offering top-of-the-line services to their customers.
Key Learnings from Companies with Highest Customer Loyalty
- Sense of Belonging through Sephora’s The Beauty Insider Program – We already explored human’s inherent need for belongingness. Sephora took this a step ahead by creating an exclusive and privileged community for its loyal customers. The tiered program is one of the most successful, granting its members entry to exclusive events, meet-and-greets and special offers on luxury cosmetics.
- Aspirational Factor through Apple’s Policy – What could be more aspirational than having the liberty to buy the best products without counting the cost? This is precisely what Apple represents. Apple has no loyalty programs, no referrals and never goes on sale. For the brand that sells some of the most expensive cell phones in the world, the aspirational factor has worked well for the brand despite offering nothing but the best products to its customers.
- The Feel Good Factor through American Express’s Reward Program – The feel-good factor that comes with doing a noble deed is unparalleled. American Express joined hands with causes like Black Lives Matter, the Innocence Project, the NAACP, the National Urban League and others. Members of the brand feel proud to be associated with a company that takes a stand for social causes and gives back to the community.