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Every business knows the importance of acquiring new customers: the more customers you get, the more revenue you bring in, all of which helps to keep the lights on and salaries paid.
But as businesses get caught up in finding the next customer–especially fast-growing brands focused on incremental sales or multiplying user rate–customer loyalty becomes a secondary goal. Inadvertently, not only do brands stop trying to ensure that their current customers are content, but they don’t take the necessary steps to increase customer loyalty for the long-term.
Increasing customer loyalty is a foundational element of long-term business success, because as you gain in new customers, your established processes to protect and grow customer loyalty will nurture these users over time, keeping them coming back for years to come. Here, Gladly breaks down the basis of customer loyalty, and shares the key strategies brands should follow to increase customer loyalty.
What is Customer Loyalty?
In the business world, customer loyalty reflects a stage in the buyer’s journey–and a corresponding set of practices–which focus on bringing customers back to your business or service repeatedly, over your competitors, time and again.
Very rarely does customer loyalty happen because of a single great interaction, or one standout product in your line—most of the time it’s because of a series of actions aimed at building customer loyalty that culminate into a feeling of trust and attachment.
And those positive experiences don’t have to be huge grand gestures like meeting a customer at the airport with a juicy Porterhouse (though that would go a long way with me)—it’s about providing consistently great service that they can rely on, and building connections with them outside of the sale and purchase.
It also means recovering well from a not-so-good experience. In fact, customers who had a bad experience with a brand, but the brand fixed it, are often more loyal than customers who never had a problem in the first place.
Shifting Your Customer Service For the Loyalty Economy
The Importance of Customer Loyalty
If the promise of repeat business isn’t enough to convince you, here are a few other reasons why building customer loyalty is so important.
Loyal Customers Are Less Price Sensitive
Your competitors’ prices are a just a few clicks away for customers. So if your competitor is selling what you’re selling for cheaper, you can be sure your customers will know it.
“82% of smartphone users say they consult their phones on purchases they are about to make in-store”
But that’s one of the perks of developing truly loyal customers—they’re willing to shell out that little bit extra for your goods because they’re loyal to you, not your price.
Loyal Customers Spend More With You
Besides being less sensitive to price, loyal customers also tend to spend more with you.
Your existing customers are 50% more likely to try new products from you and spend, on average, 31% more compared to new customers.
“Existing customers spend, on average, 31% more with a brand than new customers”
In fact, according to research done by Bain & Company and Harvard Business School, increasing customer retention rates by 5% increases profits by 25% to 95%.
They Are Your Biggest (And Most Trusted) Advocates
Your most loyal customers are your biggest advocates, and they’re more likely to recommend you to friends, family, and the (social media) world at large.
And what your customers say matters—of all the sources that consumers turn to for advice, almost all said they trust reviews from friends, family, or the internet over a company’s advertising.
“91% of consumers rely on reviews from friends, family, or the internet versus a company’s advertising (8%)” – Gladly 2018 Customer Expectations Report
So there’s definitely an ROI here in investing in your customers.
They’re Likely to Stay Loyal
Just like the classic Boyz II Men song, your most loyal customers are more likely to stay with you through the good times and the bad.
When it comes to a poor experience, 51% of consumers said they’d churn from a brand (i.e. stop buying from them) after 1-2 bad experiences.
But your loyal customers are a lot more likely to give you that second, third, or fifth chance (just be careful not to push your luck)—75% said they’d forgive a company they were loyal to for a bad experience.
Your Shareholders Will Love You for It
Customer loyalty also does great things for your company’s share prices.
According to research by Harvard Business Review, companies with the highest Net Promoter Scores or satisfaction rankings for three or more years grew their revenue 2.5x as fast as their industry peers, on top of which they delivered 2–5x the shareholder returns over the next 10 years.
There’s really no better business case for investing in customer loyalty than that.
How To Increase Customer Loyalty
There are a lot of metrics you can use to measure customer loyalty, like Customer Satisfaction or Net Promoter Scores. In this post, we’ll be focused more on how to increase customer loyalty versus how to measure loyalty, but we still recommend tracking where you stand right now so you can see how the processes you implement affect it.
Some of the methods you can use to increase customer loyalty include:
- Reducing customer effort
- Investing in your customer support
- Getting Radically Personal
- Finding common values
Reduce Customer Effort to Increase Customer Loyalty
The easier you can make your customers’ lives, the more likely they are to want to come back—after all, we’re all looking for ways to simplify our already busy lives.
There are a number of steps you can take to reduce customer effort, including:
- Making self-service relevant and readily available. Most customers want to help themselves. Make it easy for them to do that by making your self-service options easy to find, and capturing the most common questions your customers are asking.
- Not making customers repeat themselves. Customers get frustrated when they have to repeat conversations they already had when they reached out before. Give your agents quick access to a customer’s conversation history so they can get up to date themselves.
- Arming agents with information upfront. Pull key customer information, like their order history or loyalty point balance, into a single space your agents can easily leverage so your customers don’t have to go digging around for it.
Improve Customer Loyalty With Your Support Team
Your support team plays a critical role in how your customers perceive you. Allow them to put their best foot forward with customer support tools and processes that help reduce your agent’s effort, so they spend less time on the rote, manual work, and more time on building relationships that move the needle.
“We do things along the entire funnel where we encourage shoppers to reach out to our customer support team and engage with them. Because we just know from looking at the numbers that if they do, they’ll become a sort of brand evangelist and frankly just a higher value customer.”
Take chic online swimwear brand Andie, who actively look for ways to encourage contact between their customers and support team.
But to allow your customer service agents the space to create those connections, it’s important to optimize how your agents work in other areas. For example:
- Invest in self-service. Let self-service handle the easy, rote questions that come into your contact center, like what your shipping windows are and your return policies.
- Optimize your internal knowledge base. Make it easy for agents to find the answers they need from your internal knowledge base. That way they have the resources they need to help your customers faster.
- Eliminate duplicate tickets. 92% of companies say they suffer from duplicate tickets (when customers reach out multiple times about the same issue, creating multiple tickets that get assigned to different agents), which they say affects their agent’s productivity. Invest in a support platform that consolidates every communication into a single thread rather than separate tickets, to eliminate the chances of tickets being duplicated and agents having to do more work than they need to.
Get Radically Personal to Increase Customer Loyalty
Nobody wants to feel like just another number—least of all your customers who spend their valuable time and money with you.
Make your customers feel known and valued by giving your agents important insights into who they are—that includes whether they prefer wingtips to loafers, or have an important anniversary coming up.
How to Enhance Customer Loyalty: Show Appreciation
Take JOANN’s social media team, who surprised one of their loyal customers (and frequent poster on their social channels) by calling her on their store’s intercom when she was shopping in-store, and going over to meet her in person.
“It was a wonderful experience for us to be able to just go over and thank somebody. It wasn’t a problem somebody had that we had to solve. This was somebody just excited about being a JOANN customer and us being excited to celebrate that with them.”
Director of Customer Operations, JOANN
Special moments like that can really seal the deal when it comes to loyalty.
Find Common Values
From climate change to Black Lives Matter, customers today want to align themselves with companies with the same values they do—and they’re taking to task the companies that don’t, launching mass-scale boycotts until action is taken.
Today, companies can’t afford to stay silent on the tough issues, with silence and inaction being increasingly viewed as complicity. It’s important for companies to find a cause that is authentic to them—whether it’s sustainability or civil rights—and take a stand and tangible steps towards making a difference.
When customers can feel a connection to a brand that goes above and beyond the sale, they have a reason to keep coming back and supporting you.
Cultivating Relationships for Life
For today’s companies, being able to move the needle from satisfied customers to loyal ones is going to be key to long-term survival. And it all comes down to building connections and relationships with your customers that makes them choose you over everyone else, every time.