Any business’ success depends greatly on the loyalty of its customers. It puts more of an emphasis on nurturing and keeping current consumers than it does on attracting new ones. A brand’s advocates refer others to them, spread good word of mouth about the company, and make repeat purchases of goods or services from them. In this article, we examine the value of customer loyalty and highlight techniques for building and sustaining long-lasting client connections, which will ultimately fuel sustainable business success.
What is customer loyalty?
Customer loyalty, as the name suggests, is basically the trait of your customer being loyal to your product/brand/service when compared to your competitors. In simple terms, suppose you go to the market and ask for a particular brand’s toothpaste. The shopkeeper says it is out of stock at the moment, so instead of getting another brand’s toothpaste, you ask him when it will be restocked. Also, you do not go to another shop to ask for the same product as you regularly buy from that same shop. This way, you are being a loyal customer to both the toothpaste brand and that particular shopkeeper.
But, as a shopkeeper/brand, how do you get such good customers? There are several brand loyalty examples present and it is rightly said that loyalty can only be attained by being loyal in the first place. But is it just about being loyal to your customers that you get it in return as well, or are there a few other things that can be done to achieve your goal? Undoubtedly, there are many such things. Some of them are mentioned below.
Bring customers to your plate
The very first step, without a doubt, is to bring customers to your doorstep and show them what you have in store for them. This is basically the onboarding process. Suppose the customer is not that aware of your brand or product, so you make a quick introduction. For example, you have just begun a shop and a customer comes and asks for a box of chocolates. You tell them what else your shop has got and what the timings of your shop are. But keep in mind that this should be done once the sale has been made. Do not just keep bragging about your service before you actually hand them over what they asked for. If you run a company, the sales team is responsible for carrying out this onboarding process well.
Ask, Improvise, Repeat!
Getting feedback from the customers works like magic. It may sound like a very common hack, but never underestimate the power it carries. You are the provider, and thus, only the consumers can let you see the loopholes in your product or service, and by getting feedback from them, you are actually looking at your product or service from their eyes. Almost every business/website keeps asking for customer feedback in order to improve their service. For example, TripAdvisor not only engages in their customers’ reviews of their service on social media but also keeps organizing various surveys to get customer feedback and are aware of how their service is doing in the market. Also, be ready for all kinds of feedback, whether sweet or bitter. Your ears will have to accept it and accordingly fill the loopholes present.
Offer offers!
The moment we see an offer/sale/coupon available on any product/service, we immediately check it out. The right kinds of rewards and offers from time to time can really make your customers get glued to your brand. According to recent LoyaltyOne research, 94 percent of consumers who received an unexpected surprise or special acknowledgment felt more hopeful about the company/brand, and 34 percent stated that the experience prompted them to do more shopping from the same brand. Thus, offering unexpected offers can offer you unexpected results.
Personalization is important!
A personalized gift is way more special than a normal gift. A personalized email or message is very different from a normal email or message. Thus, making things personalized for your customers can make them feel valued. Send personalized emails on every occasion, thus speaking about your ongoing offers. Also, keep things relatable, add humor and make everything creative. This attracts your customers to at least check out what you have got to offer them. No doubt, this is why we are all fans of the emails Zomato sends to their customers from time to time. Zomato definitely makes their customer’s day better, and they, in turn, make their business better!
Don’t underestimate the power of referral programs!
According to various research, including Neilsen’s, consumers prefer recommendations from friends or family members over other types of marketing when purchasing a product. That is why it is critical to keep entertaining the customers by introducing different referral reward programs in which customers are rewarded for referring the business to others, and both parties get rewarded.
Consumers like getting special treatment
Make all your loyal and regular customers feel like they are very important to your brand by attaching VIP tiers to their purchases. Forever 21 targets its VIP customers with a one-of-a-kind 50% discount via an email campaign. You can start by giving small discounts on the purchase and also let them know about the bigger discounts/gifts on big purchases or more frequent purchases. This will not only boost loyalty among the already loyal customers but will also tempt not-so-regular or new customers to engage with your brand more often.
Increased Customer Lifetime Value
The income and profitability of a company are directly influenced by customer loyalty. Loyal customers frequently explore other goods from the business, make more frequent purchases, and spend more money on each transaction. Their customer lifetime value (CLV) is larger than that of one-time buyers as a result. Businesses can maximize the CLV and boost profitability and long-term financial stability by concentrating on cultivating client loyalty.
Positive word-of-mouth advertising
Loyal customers promote brands by telling others about their satisfying experiences. They spread the word about the company’s products to their friends, relatives, and coworkers, expanding its market and drawing in new clients. Loyal customers’ word-of-mouth advertising is particularly powerful because it conveys a level of credibility and authenticity that encourages new customers to interact with the company. This organic promotion can produce worthwhile leads and conversions while dramatically lowering marketing expenses.
Improved Customer Retention
Retaining current customers often costs less money and takes less time than acquiring new ones. The prevention of client turnover is achieved through customer loyalty. Customers who are loyal to a brand are more inclined to stick with it through competition or minor setbacks. Businesses can decrease customer attrition rates, boost customer retention, and build a solid client base that contributes to recurring revenue streams by putting a priority on customer loyalty.
Reliable Feedback and Insights
Reliable feedback and insights from loyal consumers help firms enhance their goods, services, and general customer experience. Thanks to their ongoing interaction, brands can collect information, gauge customer satisfaction, and pinpoint improvement areas. Businesses may improve their offers, hone their tactics, and keep a competitive edge in the market by actively listening to devoted consumers and acting on their suggestions.
Can customer loyalty be measured?
Customer loyalty can be and should be, measured. There are several ways of measuring customer loyalty in order to know how your relations are with your customers and thus improve accordingly.
Measure the repurchase ratio
The repurchase ratio is calculated by dividing the number of regular or loyal customers by the number of first-time buyers. According to Adobe research, returning or repeat purchases account for 40% of income in the United States, despite accounting for just 8% of all visitors. In Europe, the numbers are similar, with returning or repeat customers accounting for 38 percent of sales and 10 percent of visits. You may accordingly alter your marketing plan based on the insights you get about who your loyal customers are; this way, you don’t spend time and money on clients who are unlikely to buy from you and increase your business.
Measure the NPS
NPS, or net promoter score, is measured by simply asking the customers how willing they are to recommend your brand/product to their friends or family. Based on the points they give, ranging from 1–10, the customers are divided into three categories. This way, you can keep track of the negative, positive, and neutral replies of the customers, thus understanding how loyal your client base is.
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Calculate the CLI
The customer loyalty index can be calculated by asking the customers a set of questions similar to those asked while measuring NPS. The average of the three scores is calculated to finally find out the CLI and judge whether the particular customer is loyal to your brand or not. This way, consumer loyalty can be measured and you will know how many percent of your customers are loyal to your brand.
Thus, there are metrics and different ways to calculate customer loyalty and get many more loyal customers. However, what one should focus the most on, is the quality of the product or service they are offering. Once that is established, you can be confident that all of your efforts to attract loyal customers will be fruitful because what they will consider is the quality of your offerings. If this article sounded interesting to you, or if you are someone who wants to opt for management courses, you can choose to study the PG Programme in Management from IMT Ghaziabad offered by upGrad.
Conclusion
Customer loyalty becomes a critical distinction in extremely competitive markets. A devoted customer base can give a company a competitive edge by making it more difficult for new competitors to enter the market. Customers are less inclined to move to competitors merely on the basis of pricing when they are happy and devoted to a brand. It is tough for rivals to entice them away because they value the complete experience, trust, and familiarity with the brand. Businesses may inspire loyalty, build enduring connections, and lay a strong foundation for sustainable success in an increasingly competitive market by adopting customer-centric strategies, actively engaging with customers, and constantly providing outstanding experiences.
How is customer retention different from customer acquisition?
uppose you start a business, and on the very first day, you manage to get ten customers to your door. This is customer acquisition, and this benefits you for a short time when you have just started out, because you feel like your business is going to bloom since the start is good. But whether your business will do well or not is determined by customer retention, which means whether those ten customers will keep on coming to your stop very often or not. Customer retention helps you in the long run by making you get loyal customers.
What is meant by AOV?
The average order value is calculated by dividing the total amount/sum of generated revenue by the total number of orders. This is measured in order to comprehend the spending habits of your customers and thus identify opportunities when you can sell your products, that is when they are highly likely to buy the products.
How can behavioural loyalty be measured?
Metrics that look at the status of loyalty programs may be used to quantify behavioural loyalty. This involves looking at how many of your customers sign up, the redemption rate, how engaged the consumer is in the loyalty program and the loyalty program's return on investment. Examining the total number of clients acquired and customer attrition rates may be part of the whole picture.
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