One of the most crucial and hardest parts of establishing a thriving business is to attract new customers and retain the existing. Brands once emphasized more on customer service, but in today’s ecosystem, facilitating excellent customer service isn’t simply enough. The key to a successful business depends massively on the strategies that the brand exclusively formulates, to foster customer loyalty.
Not only does customer loyalty effectively increase engagement and improve sales growth, it also is equally efficient for sustainable growth. Several studies exclusively made in the field of marketing and loyalty branding states that over 60% of internet users feel that earning rewards is the most enticing aspect of retail shopping. The strategy that almost every loyalty program follows is to indirectly involve customers in an emotional commitment, through excelling customer service and rewards that particularly satisfy value seeking customers.
- Loyalty boosts retention and encourages repeat business- We are aware of how customer retention is convenient and cost effective than customer acquisition. To support this statement with a statistical report, a recent survey by BIAkesley mentions that more than half of the revenue are drawn from repeated customers and not new business leads. Retention can be easily achieved with the help of a loyalty program. Everytime a customer makes a purchase from your brand, reward them with enticing gifts or discounts. If your loyalty program follows a point based structure then, customers can collect points to ultimately redeem a free product or gift. This directly motivates the customers to be engaged in the business, which promotes repetitive buying.
- Cross Selling/ Up Selling Opportunities- The study from Marketing Metrics revealed that the probability of selling something to an existing customer is almost 60-70%, while the same product when sold to a new acquisition has only 5-20% chance of being bought. As loyal customers already trust your brand, cross selling or up-selling a product to them is comparatively easier. Loyal customers are also more understanding and often excuses a faulty transaction based on previous up to the mark customer service. Hence loyalty programs indirectly boost a brand’s capacity to up/cross sell to existing customers to eventually positively impact the sales volume, without having to spend extra resources on customer acquisition.
- Successfully reduces Marketing Costs- When a brand has a rock solid base of loyal customers, word of mouth marketing takes over and positively excels over all other forms of marketing. It is fundamental human nature to trust positive reviews that come from normal customers like us, and not from the brand itself. In case of referrals, we automatically rely on a brand, when close friends or familiar faces refer to us about a service or a product. Word of Mouth (WOM) is a crucial tool of marketing that ensures brand awareness, engagement of customers on a wider scale and generation of profits and revenues.
- Enhanced Brand Image- Excellent Customer Loyalty automatically enhances brand image, while a good brand image brings in more customers to the business, who holds the probability of being the brand’s loyal advocates in the future.
How do you analyze customer Loyalty?
Below mentioned are few ways through which customer loyalty can be successfully measured and estimated:
- Net Promoter Score– Through this simple metric, brands can successfully analyze their customer loyalty. The customers are only given one question, which is, “How likely are you to refer our service to the people you know”. On a scale of 1 to 10, customers have to give a point, which not only will say a lot about how satisfied they are with the product or service but will also state on what are the chances of them buying from your brand again.
- Repeat Purchase Rate– The Repeat purchase rate can be derived from the number of customers who shop from your brand more than once a year divided by number of customers. The repeat purchase rate gives us a clear insight to the data which denotes which customers have the higher probability of being a repeated customer. This metric is extremely useful as it can help brands change their marketing strategy to focus more on customers who will keep on coming back rather than focusing on customers who are one time buyers.
- Customer Lifetime Value– This gives statistical insights on the total amount revenue drawn from customers or the amount of profit that the brand has made from their customers throughout their customer lifecycle. This metric doesn’t only successfully help in the identification of the brand’s most valuable customers but also helps the business emphasize more on healthy and long term customer relationships. CLV is formulated based on the average purchase value, then multiplying that value with the average customer lifespan.
Benefits of Customer Loyalty Analysis
- Analyzing customer loyalty helps the brand have access over customer behavior data. This data can give a precise yet detailed insight on how much money the loyal customers are spending, which products entice them and how frequently they are buying.
- Clear and precise data help brands come up with the most efficient strategies that they can later implement in their loyalty or referral programs. Brands often have wrong assumptions about their most valued customers. With data and detailed records on customer behavior, brands can reach out to the most valuable customers, and focus on different strategies to entice the customers who are mostly inert.
- Customer Loyalty Analysis helps in the successful segmentation of customers based on certain important criteria. For example, rewards for your most valuable customers can include free subscription to a VIP program, while customers who are not frequently active can be successfully enticed with gamified loyalty programs. To efficiently implement these programs to the right group of customers, loyalty analysis is a must.
- The statistics and values provided by customer loyalty analysis can help brands reach out to valuable customers beforehand. When you know your customer and have a detailed knowledge about their contribution to your brand, you can surprise and congratulate them for achieving smaller milestones, which most customers feel that the brand will most likely not remember. This not only creates an excellent brand image, but also makes customers feel valued and indispensable to the business.
- Last but not the least, customer loyalty analysis plays a crucial role in showcasing the present position of your brand in the marketing ladder. With the marketing arena, getting more competitive each day, businesses ultimately rely on data and insights to frequently upgrade and improve their loyalty program. Without accurate data and insights, no program will succeed ever, no matter how efficiently planned.
For over 10 years, Annex Cloud has been the worldwide leader in technology and service solutions that transform customer loyalty experiences for organizations, extending valued customer engagements, and tracking valuable customer information for marking strategic decisions. Powered by the comprehensive and scalable Loyalty Experience Manager™ solution suite, Annex Cloud customers capture and use zero and first party data to seamlessly deliver hyper-personalized experiences across the entire customer journey – from awareness to purchase to retention, loyalty and advocacy. The company is recognized by industry respected organizations like Gartner and Forrester and integrates with over 100 market-leading technologies. Get in touch with us today!