The mantra to staying ahead of the competition and gaining traction in an overly saturated market is- Customer is King! All marketing gurus harp on the importance of keeping customers happy in order to increase customer loyalty.
Customer loyalty is the new currency, more valuable than dollars and pounds. Loyal customers dictate your brand value, market standing and brand credibility, in addition to supplying you those all-powerful dollars and pounds.
To learn more about Customer Loyalty, the factors that influence it, and strategies that could help you build a strong and loyal customer base, continue reading.
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What is Customer Loyalty?
Customer loyalty is the relationship a customer has with a brand. Customer loyalty depends on the customer’s inclination to repeat their purchases and consciously remains associated with a brand, that they are satisfied with. It a reflection of how much money the customer is willing to spend on your brand and its offerings. An increase in customer loyalty is the result of exceptional product quality, customer satisfaction, and a value for money experience. Consistently and effectively meeting customer expectations is one of the major drivers of customer loyalty.
Brand Loyalty versus Customer Loyalty
While customer loyalty solely depends on the customer’s propensity to spend on your brand repeatedly, brand loyalty goes beyond just purchase behavior and even product quality. It is easier to boost customer loyalty by offering discounts and rewards, whereas brand loyalty is a result of shared brand ideologies and brand values, continual customer engagement, and deep-rooted commitment to the brand and its extensions. Brand loyalty is developed on the grounds of how a customer perceives your brand as a whole and whether or not he decides to associate himself with your brand. Customer loyalty can be nurtured to develop into brand loyalty in order for the brand to enjoy lasting benefits and long-term gains. In simple terms, consistent strategies designed to increase customer loyalty will eventually help in developing and boosting brand loyalty.
Significance of Customer Loyalty
- Aids in Retaining Customers – Inculcating customer loyalty in customers ensures repeat purchases. It is relatively much easier to retain customers that already know and trust your brand. Selling to an existing customer has a 60%-70% success rate than to selling to new customers. An increase in customer loyalty has a direct impact on customer retention and together they are the most important factors that ensure business growth.
- Higher Returns on Investment – It is a known fact that loyal customers outspend average customers. According to a report by Accenture, “66% of consumers spend more on brands that they’re loyal to.” Investing in strategies that promote customer loyalty can help achieve long-term benefits and show great improvements in revenue and sales.
- Promotes Customer Referrals – Loyal customers are also inspired and motivated to share their experiences with other customers. Customer loyalty helps in bringing in more customers through referrals and recommendations and helps in improving conversion rates.
- Lays the Foundation for Long-term Relations – Customer loyalty also lays the foundation for a strong and long-term brand and customer relationship. Building a bond with your customers is imperative since it helps the brand to create a strong brand identity and a positive reputation in the market.
- Organic Publicity – Last but certainly not least, another major advantage of boosting customer loyalty is that it promotes organic brand publicity. Word-of-mouth marketing is one of the strongest means of gaining traction and loyal customers are greatly beneficial for this cause.
Factors That Influence Customer Loyalty
- Pricing – One of the prime factors that influence customer loyalty is pricing. Customers are always looking for experiences and products that offer value for their money. Research conducted by The International Council of Shopping Centers (ICSC) claims that price and value are the most important drivers of loyalty. If a brand offers quality products at prices that are deemed appropriate by the customers, it is bound to increase customer loyalty.
- Convenience – After pricing the next crucial criterion that influences customer loyalty is convenience. You cannot expect customers to go out of their way to purchase from a brand they hardly know and trust. Hence convenience significantly influences customer loyalty.
- Offers and Rewards – Customers are drawn towards brands that offer discounts and rewards. It is a great way of showing appreciation to the customers for trusting the brand. A rewards program can positively influence customer loyalty and ensure that the customer-brand relationship is a long-time association.
Winning Strategies to Increase Customer Loyalty
- Know your Target Group – The most important step for designing any marketing strategy is understanding and analyzing your target group. Understanding your audience’s preferences, purchase habits among other data will help you to implement strategies that increase customer loyalty.
- Loyalty Programs – One of the highly efficient strategies to increase customer loyalty is through the implementation of rewards or loyalty programs. According to eMarketer, “58.7% of internet users believe earning rewards and loyalty points is one of the most valued aspects of the shopping experience.” A loyalty program not only incentivizes customer purchases, thereby encouraging repeat purchases but also helps in keeping the customers engaged with the brand. Connect with Annex Cloud for bespoke solutions to boost loyalty.
- Referral Programs – Launching a referral program can be highly beneficial for companies. Companies with referrals have a 70% higher conversion rate, and they report a 69% faster close time on sales. A referral program will not only boost customer loyalty but also bring in more customers through organic publicity and keep the existing customers engaged by rewarding them for their referrals.
- Omnichannel Customer Engagement – Enhancing customer experience is a sure-shot means of boosting customer loyalty. Today, more and more companies are opting for omnichannel customer engagement. Omnichannel customer engagement entails improving customer experience at every touchpoint through consistent engagement. When customers have a pleasant and seamless customer experience it fosters customer loyalty.
- Look into Partnerships – Offer an additional incentive for your customers to stay loyal to your brand by collaborating with other brands. Business partnerships can be a win-win for both the brands as well as the customers. Brands can share their costs as well as profits and customers get to enjoy a wide range of brands and better incentives by remaining loyal to you.