In a fast-changing world, where customers are exposed to numerous brands and products each day, surviving and thriving in this competitive era has become a bigger challenge. While customer acquisition may help with business expansion, loyal customers will help the brand sail through the sea of rivals and create a distinct identity of the brand in the market.
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What Exactly is Customer Loyalty?
Customer loyalty is the extent to which a customer symbolically pledges his allegiance to a brand by repurchasing from the brand solely and repeatedly. It is the product of an emotional connection that the customer develops with the brand over a period of time. Customer loyalty is a gradual process that involves exceptional customer engagement, customer service, and customer experience.
It is 5–10 times more expensive to acquire new customers than retaining the previous clientele. Existing and loyal customers add value to the brand in more ways than one. Let’s look at how building a loyalty program can help your brand grow exponentially.
Importance of Customer Loyalty
Building customer trust and loyalty offers a vantage point to brands:
- Increases Customer Lifetime Value – Customer lifetime value (CLV) is the total amount of money a customer is expected to spend with your brand during their lifetime. According to a retail study by Motista, “Customers with an emotional relationship with a brand have a 306% higher lifetime value and will recommend the company at a rate of 71%, rather than the average rate of 45%.”
- Gives You a Competitive Edge – Building a loyalty program helps develop a set of allegiant customers that remain loyal to the company and are unfazed by new brand launches and competitors’ marketing strategies.
- Brand Advocacy – These loyal customers act as brand advocates and help the company to garner organic, word-of-mouth marketing. They positively influence their network of peers, friends, and family and help to promote the brand effectively.
- Higher Profits – According to HubSpot, 93% of customers are brand loyalists and stick to purchasing from a specific brand over competitors, thereby bringing in a steady cash inflow. As mentioned above, customer acquisition is way more expensive than customer retention. According to a study by Bain & Company, “Most businesses need to retain customers for at least 12 to 18 months to break even on the cost of acquisition.” Hence retained and loyal customers consequently increase profit rates.
- Builds Brand Credibility – Brand loyalty helps in building trust between the brand and the consumer. A study by Rare Consultancy suggests “83% of customers said their brand loyalty stemmed from the trust.” Trust is the cornerstone of a successful brand and customer relationship.
Foundation of a Strong Brand Loyalty Strategy
- Customer Service – Customer service is the backbone of a loyalty strategy. Imagine you successfully sold your products, but the customer service is lackluster; there is a high probability that the customer might not return. According to American Express, “68% of American customers believe a great customer service interaction is fuelled by a pleasant experience, while 62% say a knowledgeable experience and only 42% say a quick experience.” Build a knowledgeable support team that bolsters your products and services to create a positive customer experience.
- Customer Engagement – “54% of people would like to see more video content produced by the brands they support”, a study by HubSpot reports. Engaging your customers through relevant and engaging content builds brand credibility and keeps the brand on top of the customer’s mind.
- Brand Values – Ask yourself, what does your brand stand for? What are your brand values? Strong brand values and ideologies help in attracting like-minded customers. The customer begins to positively associate with the brand if the brand’s ideologies resonate with his.
Important Strategies for Building Customer Loyalty
- Harness the Power of Social Media – Nowadays, social media is where everyone’s at. Use your social media handles and accounts to build a rapport with your customers. Replying to comments on posts, answering queries, and posting engaging content can do wonders for your brand image. Like Netflix, you could also engage in witty banter with your regular customers. This kind of content often goes viral, and customers appreciate a brand that takes effort to engage with them on social media platforms.
- Design Loyalty Programs – An easy yet efficient way to boost customer loyalty is through loyalty programs. Loyalty programs ensure repeat purchases, keep the customers engaged, and help in building trust and credibility. Leveraging the expertise of experienced agencies or strategists to create a custom loyalty program suited to your business can take a lot of the complications out. Request a call from Annex Cloud.
- Tell a Story – Customers are not looking for a run-of-the-mill brand that solely focuses on selling. Work on building a unique brand image and tell a story that reflects the company’s values. Be transparent about your brand ideologies and the social causes you may support; this helps build a stronger connection to your target group.
- Create a Fulfilling Customer Experience – Simply put, customer experience is how a customer feels after making a transaction with a company. Customer experience is a combination of many factors that include product description, the usability of the website, easy steps to checkout, and customer service. A customer that is dissatisfied with two or more of these factors is less likely to return. Good customer experience will help you build a robust database of loyal customers.
Why Building Customer Loyalty is Important in 2021-22
The pandemic and the consequent lockdown impacted businesses worldwide. It drove brands and companies to rethink their marketing strategies and realize the importance of loyal and recurring customers. Loyal customers are easier to sustain, even with limited resources and a restricted marketing budget.
The global lockdown also brought the power of the web and social media platforms to the forefront, since the Point of Sale (POS) saw a sudden shift from brick-and-mortar stores to websites. In the face of such a global anomaly, plus the lockdowns, customers began to fall back on companies they trusted and could rely on, specifically if they had an online shopping option.
2020 was a year of uncertainty, chaos, and doubt, during these unprecedented times, only brands and companies that connected with their customers on an interpersonal level managed to make profits. As the global economy is taking its first steps towards recovery, the uncertainty among customers still lingers. This is why building loyalty in business markets has been a prime focus of brands since 2020. Building a strong bond with customers will not only ensure sales, but also help in building a positive brand image.
The global lockdown also saw a paradigm shift in consumer emotions, influencing factors that drove sales. Customers today are looking for an emotional connection with a brand, along with shared values. Brands that are reliable, have a strong sense of social responsibility, stand for the right things, and lastly, that deliver reliable products and services, will have a strong head start in 2021 and for the years to come.
To sum it up, there is only one crucial thing to understand while building a customer loyalty program, which has been aptly mentioned in a study by Robert Half –
“When the customer comes first, the customer will last.”