So you want to build an overwhelming customer loyalty for your brand.

That sounds great!

But building customer loyalty is not an easy task.

As a matter of fact,

In the U.S., 78% of customers are not loyal to a particular brand. (Source: Nielsen)

But why?

Because, either the business does not take care its customers properly or does not give enough value to glue customers.

Now,

Question is how to build customer loyalty then.

In this article, we will discuss 15 factors here to improve customer loyalty.

15 ways of building customer loyalty:

1. Improve customer service

Are you serious about building customer loyalty?

Then, very first step is to improve customer service.

Because,

67% customers stop buying products from a shop/brand just for bad customer experience.

Moreover…

Only 1 out of 26 unhappy customers complain. – (Source: 32 Customer Experience Statistics)

So it is difficult to know how many unhappy customers you really have.

Make sure, customer service team is knowledgeable enough about your products to handle customers’ queries.

Every customer is different. Customer service team must be flexible to handle all kind customers.

Remember,

Customers are the most valuable asset of your company. You must nurture them in proper way.

2. Say Hello and Good Bye

It may look crazy but matters a lot.

Tell me where you feel good…

– You buy an item from a shop and after billing, shopkeeper thanks you and say ‘Have a nice day!’

– Or you buy any item without any interaction with shopkeeper

Obviously first scenario has a feel good factor, right?

Customers do more business when they are greeted well.

That is the power of a good gesture and greeting. It builds customer loyalty for a brand.

So,

Do you greet your customers properly?

Do you thank them for purchasing products or services from you?

What about a friendly smile?

All these matter….

Remember, every customer is special and they must be treated in special way.

“Hello” with a smile makes your customers comfortable to do business with you.

Also don’t forget to thank your customers for buying products from you.

3. Ask for feedback

Do you ask your customers to share feedback about your brand or product?

Your most unhappy customers are your greatest source of learning. – Bill Gates

To build sticky customers, you must listen what customers think about your products or services.

Why customer feedback is important in building customer loyalty?

• By analyzing customer feedback, you can measure customer satisfaction index. Your customers are the best advisers. Only they can tell you if your business sucks 🙁
• Listening to your customers is the best strategy to reduce churn rate. From customer feedback, you can identify your unhappy customers and reasons behind it.
• Customer feedback can give you new product and pricing ideas.
• Asking feedback from your customers shows that you care their viewpoint. This helps to build trust, create strong relationship and improve customer loyalty.

So get a thick skin and invite criticism from customers.

But

Getting feedback from customers is not an easy task.

Because…

Research says that only 1% of customers leave feedback unless business asks directly. (Source: Feedback and Loyalty)

So, ask for feedback using various channels but remember, it must be customer’s preferred channel.

Few common customer feedback channels are like –

• In person interview
• Social media
• Email
• Telephone
• SMS
• In-app feedback
• Usability testing
• Suggestion boxes

Another important point –

Customers take time out to provide their feedback. You must thank and acknowledge customer’s response. You can give incentives as well for sharing feedback.

(Source: Feedback and Loyalty)

4. Introduce a loyalty program

This is an important factor in building customer loyalty.

Because…

Source: Nielsen Global Retail Loyalty-Sentiment Report

You must reward your customers every time they do business with you. This encourages your customers to repeat their business.

For example,

An airline can run a loyalty program that allows customers to collect points or miles every time they buy tickets. After certain points, customers can redeem it to book a FREE flight.

Or

A coffee shop can offer a free drink after buying 10 cups of cappuccino.

Customers buy products to collect points and you reward them for doing so.

It’s a win-win game!

We will discuss more about introducing of loyalty program in a separate article.

But remember,

Before introducing a loyalty program, you must know where you currently stand and your business goal.

Most important rule to make your loyalty program successful – keep it simple and creative.

It is better to give 1% cask back on every purchase than putting some complex rules that customers never understand.

Now ask yourself…

Is your loyalty program/reward same as your competitors?

Introduce a creative way to make your loyalty program different from others. Even an amazing program name could make a difference.

5. Build a personal relationship

No one likes to do business with a robot, right?

You must build a mutually beneficial relationship with your customers. It helps your customers to trust you more.

You can assign a customer service representative for each individual to build a healthy relationship.

Also personalize all communications like emails, letters – ‘Dear John’ is more attractive to John than just ‘Dear Friend’.

Customers want to feel that you care about them.

6. Know your customers

This is another important factor to improve customer loyalty.

Do you know your customers well?

Source: IBM

Do you know your customers’ preferred communication channels?

Or their preferred payment options?

Or their involvement in social activities?

Think about it,

If a customer likes email and you send letter to introduce your new product, will it be effective?

Or

If a customer prefers online payment and you do not have this option, will that customer prefer to buy products from you?

To retain existing customers, very first step is to know them well.

You must capture customer details as much as possible.

It helps you to reach out your customers in their preferred way. It also helps you to understand customers’ buying pattern, their behavior.

7. Know your competitors

Knowing your customers well is not enough to make them loyal!

You must know your competitors as well.

Moreover, knowing your competitors is more important than knowing your customers.

Because, if you do not have good knowledge about your competitors, you can not implement a better loyalty program.

Many customers buy products from a single shop because that shop is more convenient for them or they do not find any competitor.

If they find similar product with better value from your competitor, you will lose them.

Lets see how well you know your competitors.

Can you answer these questions –

What your competitors do to retain their customers?

Do your competitors have any kind of loyalty reward program? How successful their loyalty program is?

What is their future product?

You must keep yourself update to date about your competitors.

There are many ways to know your competitors – follow social activities, read company newsletters, join trade show.

You must give something extra to your customers that your competitors do not. It could be discounted price or some extra services or better values.

8. Invest in a self-service channel

A recent survey, conducted by Nuance Enterprise, shows huge positive response in self-service.

What customers say about self service?

What is self service?

Self-service is a kind of electronic support that helps end users to gain information and perform tasks without or minimal involvement of live customer service representative.

It includes knowledge base, FAQ, self check out, interactive voice response etc.

Also self-service is the most cost effective and efficient way to address customers’ issues.

Gartner predicts that by 2020, customers will manage 85% of their relationship with the enterprise without interacting with a human.

So, create a FAQ or a knowledge base where customers can clear their doubts easily. This will improve customer satisfaction and loyalty.

9. Educate your customers

Do your customers or prospects know how your product can solve their problems?

If you sit back and wait for an overwhelming response, it is never going to happen. Rather you must educate your customers about your products or services.

There are many ways to educate your customers.

You can write an article that talks about customers’ pain points and show how your product can solve it.

You can prepare an eLearning course so that customers can take it as per their convenient time.

The point is,

You must show case your unique point of view to stand tall among your competitors by educating your customers.

10. Make quality a priority

Remember,

No matter how good your customer service is, if you can not meet customers’ needs, you can never build customer loyalty.

If customers feel that you have best product, they are going to buy it again and again.

Customers are ready to pay more if your product has something extra that your competitors don’t. It may be a ‘must have’ feature or quick delivery timing or high accuracy.

11. Social Media presence

You know,

Nowadays social media plays an important role in any business.

Social media gives you an opportunity to interact with customers directly.

Appreciate customers publicly, solve their issues, ask for feedback – all these help you to enjoy higher customer loyalty.

(Source: Convince&Convert)

But question is – why customers should follow you on social media?

Because,

You always give a reason to customers to follow your brand. Reasons could be anything like a contest or reward to follow you or quick solutions of customers’ issues.

More your engage your customers, more you earn customer loyalty.

12. Live chat

Do you offer live chat option to your customers?

If not, you must think about it.

Live chat plays as important role in building customer loyalty.

Web chat adoption among customers has increased significantly in the past few years.

Source: Forrester

Not only that,

Customers who choose live chat, are satisfied a higher percentage (92%) than other channels like email, call or letter. (Source: Zendesk)

13. Communicate using preferred communication channels only

Business must communicate with customers using their preferred communication channels only.

If the customer prefers emails and business sends letter, it will help neither customer nor business.

Even it could create customer dissatisfaction.

Do you want to know how it matters?

51% of customers are loyal to brands that interact with them through their preferred communication channels. (Source: Accenture)

14. Safeguard customer personal details (Strictly!!)

If you are serious about building customer loyalty, then you must protect customer personal information.

Make your customers confident that their personal details like contact nos, email ids, addresses will not be misused.

Because…

Research says that 85% are loyal to brands that safeguard and protect the privacy of their personal information. (Source: Accenture)

And last but not the least,

15. Walk an extra mile

Think out of box…

What can make your brand different from competitors?

How to keep customers happy always?

It could be anything like a personalized gift on birth day or a ‘Thank You’ note or just a cup of coffee.

Reward your customers something different, not just loyalty points.

How about this one – a monthly lucky draw to pick ‘Star customer of the month’?

Do the unexpected!

It will make your customer happy and improve customer loyalty.

Well,

Do you know –

41% of U.S. consumers are loyal to brands that offer them the opportunity to personalize products to create something that is bespoke to them. (Source: Accenture)

I didn’t…  😀

Before closing this article ‘Building Customer Loyalty‘, let me share an idea…

Once a customer (say Amelia) enters into a shopping mall, store XXX sends a personalized text to her –

Like: ‘Welcome Amelia! Special offer for your – enjoy 15% off when you shop with XXX brand.’

Do you think – this message will attract Amelia to buy from store XXX? Atleast she will think to visit this store?

Please share your thought below.

Previous article: Importance of Customer Loyalty

Next article: Customer Loyalty Statistics

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Research, done by PR Newswire, says that the Loyalty Management Market is expected to grow from USD 1.4 Billion in 2015 to USD 4.0 Billion by 2020.

Now question is – why companies are investing more on customer loyalty and retention? What is Customer Loyalty, exactly?

Well,

Before we jump in to customer loyalty definition, let’s take an example.

Suppose…

You want to replace your old iPhone with a new phone. Will you buy only newer version of Apple iPhone when you get other branded phone with same features and lower price?

Do you want to try other Apple products as well like Apple TV or Mac or iPad?

If you buy Apple products or services all the time, you may be a loyal customer of Apple.

Why ‘may be‘? – That we will discuss later.

So,

What is Customer Loyalty?

Customer Loyalty is an emotional bonding between an organization and its customers.

Loyal customers favor one brand or shop or service over all others, buy products frequently, spread good words and generate leads.

Now think about our Apple iPhone example.

You may replace your old iPhone with a brand new iPhone but do you have emotional bonding with Apple brand?

Do you recommend your friends and families to buy Apple products?

Do you frequently download or buy software, apps and songs from Apple’s Store?

All these activities decide that you are loyal customer of Apple or not.

The point is…

A business can not call a customer as loyal customer just because that customer buys products frequently from same store or brand. Customer must be emotionally attached with the brand to be loyal.

Customer loyalty is more about engagement and relationships between a brand and its customers.

Now question is…

Why does a brand or business need customer loyalty?

Because,

There are many benefits of customer loyalty. Let us discuss few here.

Customer Loyalty Benefits:

1. Repeat business

Repeat business is when a customer buys products and services from a same store or brand frequently.

It has huge impact in any business because…

80% of a company’s revenue comes from just 20% of its existing customers. (Source: Gartner)

Acquiring a new customer is five times costlier than retaining an existing customer. (Source: Forrester)

Above 2 statistics explain a lot why retaining existing customers matter for a company. To retain existing customers, business needs to build or improve customer loyalty.

Loyal customers are more likely to buy products and services again and again from the same store or brand because it has already won their hearts.

2. Cross and Up selling opportunities

This is another benefit of customer loyalty because…

According to the book Marketing Metrics “Probability of selling to an existing customer is 60 – 70% where probability of selling to a new customer is 5-20%.“

As existing customers trust you more than a new customer, it is easy to cross sell or up sell products or services to them without much effort. It increases sales volume as well as revenue without acquisition of new customers.

3. Reduce marketing costs

Tell us,

What do you trust more – friend’s recommendation or a TV advertisement?

In this digital age, Word of Mouth is still the most effective way to do advertisement.

According to Nielsen’s latest Global Trust in Advertising report, 92% customers trust earned media like recommendations from friends and family more than any other forms of advertising.

Not only that,

Second most trusted source of product or brand information is online consumer reviews.

Loyal customers talk about your products, give real feedback, recommend friends and families. Business can use feedback to improve services, launch new products and get better customer insights.

4. Stand tall among competitors

In this super competitive market, it is really difficult to make your brand separate from others. Only loyal customers can create the difference by doing repetitive business, recommend products and services and share feedback.

(To know more, read this – Importance of Customer Loyalty)

Loyal customers are the real asset of your business.

But the problem is…

78% of customers are not loyal to a particular brand. (Source: Nielsen)

So,

How can a business retain its existing customers?

How to build or increase customer loyalty?

There are 15 factors that can help business to build an amazing customer loyalty.

Factors to build or improve customer loyalty:

1. Improve Customer Service
2. Say Hello and Good Bye
3. Ask for feedback
4. Introduce a loyalty program
5. Build a personal relationship
6. Know your customers
7. Know your competitors
8. Invest in a self-service channel
9. Educate your customers
10. Make quality a priority
11. Social Media presence
12. Live chat
13. Communicate using preferred communication channels only
14. Safeguard customer personal details
15. Walk an extra mile

We have discussed these factors in details in another article. Read this – Building Customer Loyalty.

Now you know what is customer loyalty, its importance and how to improve it.

But, wait!

Here is the most important part…

Types of customer loyalty and customers.

Why it is important?

Because,

Before implementing customer loyalty program, you must know your customers and different types of customer loyalty. Otherwise whole loyalty program will fail DEFINITELY.

We can divide customers and customer loyalty in 5 distinct types.

Types of Customer Loyalty / Customers:

1. No loyalty

Few customers purchase goods or services from you whenever they feel to do so but never develop loyalty.

But these customers could be loyal to other brands.

For example, one of your customers goes to any shop to get a haircut where he does not need to wait. But he uses only Apple products and services.

Though that customer is loyal to Apple brand but certainly not to any salon.

It is very unlikely that even the best loyalty program can make these customers loyal to the business.

Frankly speaking, business should not target these customers as they bring very little value for the company.

2. Satisfied but Not Loyal

You will always have few customers who are satisfied and look like loyal to your business.

But in reality they are not loyal. They are satisfied with your products and services but it’s only satisfaction.

While they don’t dislike you, don’t love you either.

They will be with you until your competitors offer better service and customer experience.

However,

You can put extra effort to glue these customers with your business.

First find out this kind of customers and then ask what can make them happier and offer it.

3. Loyal to Low Price

Product or service cost plays an important role in customer loyalty.

Moreover,

61% Americans and 54% Europeans switch brands just because of price. (Source: Nelson)

Few customers are loyal to your business till you offer lowest price. If they find lower price elsewhere, they will leave you.

It also includes those customers who purchase products only when you give discounts.

Remember,

If you are competing in low price arena, then make sure you charge lower than your competitors. Otherwise you will lose these customers.

4. Loyal to Convenience

Few customers buy products from same store just because it is nearby their home / office.

Another reason could be that the customer has good personal relation with one of your business representatives.

It means, these customers are loyal to convenience, not your shop.

If these customers move their home or business representative quits the job, they will stop doing business with you.

You can make these customers loyal to your brand by proving that convenient is not always a reason to do business.

5. Real loyalty

These customers are your real strength.

They do repeat business, recommend your products, give valuable feedback and generate leads.

These customers will never leave your business unless they have very bad experience.

You must show extra care to these customers. You must talk to them regularly, listen their problems, try to fix it and must thank them.

The more you give, the more you receive from these customers.

Before closing this article, let us see couple of successful loyalty programs.

Customer Loyalty Examples:

1. Amazon Prime

Amazon Prime is one of the most successful loyalty programs.

Just for paying $99/year, prime members gets exclusive access of movies, ad free music, fast and free shipping, unlimited photo storage. It gives enough value to its members to do repeat business.

As a result, prime members spend on average $1500/year, compared to $625/year for non prime members. (Source: Consumer Intelligence Research Partners)

2. Starbucks Rewards

This is another example of best loyalty programs.

Every time you use Starbucks loyalty card to buy something from Starbucks stores, you earn a Star. You can redeem these Stars to get Starbucks rewards like a free drink or card upgrade .

Now,

It is pretty clear – What is Customer Loyalty and why it is important for a brand or store.

Here is an interesting fact:

Research shows that women are 22.19% more likely to buy the same product or services regardless of price, quality, convenience, or brand promise than men. (Source: Crowdtwist)

Want to know more about such interesting facts? Read this: 29 Exciting Customer Loyalty Statistics

And now,

It is your turn…

Let us know what you think about customer loyalty. What are those factors that make you loyal to your favourite brand?

Please share your feedback below.

Keep in touch, follow TechOneStop on Facebook / Twitter / LinkedIn / Google+.

Next article: Importance of Customer Loyalty

Now you know what is customer loyalty and little bit about its benefits.

In this article, we will discuss more about ‘Importance of Customer Loyalty‘.

Yes, it’s true that…

Investments in customer loyalty and engagement are booming.

It is expected that the loyalty management market will grow from $1.4 Billion in 2015 to $4.0 Billion by 2020. (Source: PR Newswire)

More than 90% of companies currently have some form of customer engagement or loyalty program. (Source: Accenture)

But why companies are spending more and more on customer loyalty than before?

Why is customer loyalty important for an organization?

Well,

Mainly there are 9 reasons that make customer loyalty so important.

Let’s see in details.

Importance of customer loyalty to a business:

1. Customer Acquisition And Retention
2. Repeat Business
3. Cross/Up Selling Opportunities
4. Reduce Marketing Cost
5. Minimize Service Cost
6. Forecast Accuracy
7. Improve Brand Image
8. Stand Tall Among Competitors
9. Honest And Quality Feedback

1. Customer Acquisition And Retention

Let me ask you this…

Is your business more focused on customer acquisition or retention?

If the answer is ‘Customer Acquisition’, then seriously you need to think about it.

Because…

Though the above research is quite old but it is clear that organizations are moving focus from ‘Only Acquisition‘ to ‘Equal focus on acquisition and retention’. (Source: Econsultancy)

There are many good reasons behind this shift…

• Acquiring a new customer is five times costlier than retaining an existing customer. (Source: Forrester)
• A 5% increase in customer retention rate can increase profit by 25% to 95%. (Source: Harvard Business School)
• Globally, the average value of a lost customer is $243 (Source: Kissmetrics)

Above 3 statistics explain a lot why customer retention is so important for a business.

Loyal customers stick to your business and buy more products and services.

Not only that, loyal customers speak about your business that helps to generate leads.

Bottom line is that,

No matter you are startup or mature organization, customer retention should be your highest priority. This can be achieved only when a business focuses on building customer loyalty.

Customer retention is not an option, it’s a need.

2. Repeat Business

’61 percent of the SMBs surveyed report that more than half of their revenue comes from repeat customers, rather than new business.’ – BIAKelsey

Loyal customers are more likely to buy products and services again and again from a same brand or store than new customers.

A study says that existing customers are 50% more likely to try new products than new customers. Also they spend 31% more compared to new customers.

Now question is – what can motivate your customers to do repeat business?

There are many factors that help business to build customer loyalty as well as repeat business.

Here are 4 key points to remember –

• Have you heard – ‘First impression is the last impression’?
  This is true for business as well. When you sell a product for the first time to a customer, make sure everything is in proper shape like customer greeting, product demo. This creates confidence and trust between you and your new customer. It helps to build customer loyalty and eventually it brings more business from that new customer.
• Always stay connected with customers using their preferred communication channel. Let your customers know that you are there with your new products or offers or solutions always.
• Improve customer service because 67% customers stop buying products from a shop/brand just for bad customer experience.
• Introduce a loyalty program – every time customers buy products from your business, give them loyalty points or incentives. Customers can accumulate these points and redeem for a free product or loyalty card upgrade. This will motivate your customers to spend more in your business and collect points.

3. Cross/Up Selling Opportunities:

‘The probability of selling something to a prospect is only about 5-20%, while the probability of selling something to an existing customer is 60-70%.’ – Marketing Metrics.

Loyal customers already have a relationship with your business. They trust you more than a new customer.

This gives you a great opportunity to cross sell or up sell products and services. It increases sales volume without much effort on acquiring new customers.

4. Reduce Marketing Cost

This is a huge benefit of customer loyalty.

Why?

Because we trust our friends’ feedback more than a digital fancy advertisement.

Source: Nielsen

In this digital age, word of mouth is still the most effective marketing tool. It is considered as the most credible form of advertising.

But,

What marketers think about WOM marketing?

Source: The State of Word of Mouth Marketing Survey

Word of mouth is an important tool in marketing. It helps to increase brand awareness, engage customers and generate prospects.

Loyal customers play a vital role in WOM marketing. As you have already won the trust of your loyal customers, you can influence them more than new customers.

Loyal customers talk about your brand, share feedback, refer their friends and families, like or share your post on social media.

Do you know?

72% of consumers take some sort of action after reading a positive review. (Source: BrightLocal)

5. Minimize service cost

Loyal customers are most cost effective to serve.

They are already familiar with a company’s products and services. This helps them to solve their issues by themselves or using self-service like knowledge base or FAQ.

Not only that,

Loyal customers can help to solve other customers’ problems as well.

First,

Build a community where your customers can share their experiences, issues, solutions.

And then engage your customers more and more in that community.

Even you can give some incentives or loyalty points to those customers who solve others issues successfully.

There are many benefits of creating a community –

• Customers get effective and faster resolutions of their queries as solutions come from experience of other customers
• It increases customer loyalty as customers get incentives for giving solutions
• Minimizes service cost
• 24 X 7 support without huge investment
• It creates cross sell or up sell opportunities

6. Forecast Accuracy:

Another importance of customer loyalty that business can’t ignore – Forecast Accuracy.

Forecasting is a crucial part in business planning and running. It enables management to get an overview of future expenses and revenue.

Accurate forecast helps business to decide expenditure, calculate growth rate, discounts and plan for the worst.

Without accurate forecast, it is difficult to attract investors as well.

But how loyal customers can help in forecast accuracy?

Well,

Feedback from loyal customers gives you valuable information about many parameters.

Like…

• Customers are interested in your future products or not
• Where your business sucks
• Product or service pricing

More loyal customers you have, more accurate forecast you can prepare.

7. Improve Brand Image

What is ‘Brand Image’?

Brand image is the customers’ interpretation about products and services of a brand. A positive image helps business to acquire new customers, cross sell and up sell, reduce marketing cost and attract investors.

A brand image is one of the most valuable assets that a company possesses. It tells customers what they can expect when they buy a product or service like quality, post purchase behavior.

But

Building a brand image is costly and time consuming process.

Customer loyalty and brand image are interrelated. Customer loyalty helps business to improve brand image. On the other hand, strong brand image helps business to glue customers.

Brand image is the reflection of customers’ mind. As brand has already won trust of loyal customers, they are more likely to share positive experience than new customers.

This eventually helps a brand to retain more customers and improve customer loyalty as well as brand loyalty.

8. Stand Tall Among Competitors

In today’s competitive market, it is really difficult to separate your products from competitors. Your most profitable product can be suppressed tomorrow by your competitors.

Customer loyalty can help you a lot here. Customer loyalty toward the brand affects the buying decision of customers.

If you and your competitors have similar kind of product but you have better customer loyalty, surely your product will have highest buying priority among customers and prospects.

This is an important factor that works behind Apple’s smartphone and table business.

Except Apple’s incredible product design and features, it has highest customer loyalty in smartphone and table business. It truly helps Apple to standout in this crowded marketplace.

And last…

9. Honest and quality feedback

Another advantage of customer loyalty…

70% of companies that deliver best in class customer experience use customer feedback. (Source: Customer Experience for Executives)

Loyal customers give honest opinion about your business, products or services.

Customers feedback helps to

• Improve products and services
• Launch new products
• Measure customer experience and satisfaction
• Retain customers and reduce churn rate
• Forecast accurately and take better business decision

Before closing this article on ‘Importance of Customer Loyalty‘, let me tell you…

Never, ever take your existing customers’ loyalty for granted. It is the most valuable asset of any business.

What do you think? Are you agreeing with this?

Please share your feedback below.

If you want to read more exciting stats, click here: Customer Loyalty Statistics

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Next article: Building Customer Loyalty

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