Did you know that it costs five times more to acquire a new customer than it does to retain a returning one? The importance of customer loyalty is enormous. Focusing on improving your brand image to increasing cross-selling and upselling opportunities, a loyalty business strategy will increase your profitability and enhance recognition. You can improve customer loyalty with three easy steps.
Before we dive into practical strategies that will help you increase your customer loyalty, let’s expand a little bit more on the benefits it can provide.
Benefits of customer loyalty
- Customer retention: It has been recorded that 93% of customers are likely to make repeat purchases with companies who offer excellent customer service. The higher your customer retention rate, the bigger your company’s profits. To be more precise, a 5% increase in customer retention correlates with at least a 25% increase in profit. Earn your customers’ trust, and they will come back to you.
- Better customer communication: When you prioritize your customers and listen to their feedback, you will be able to better cater to their needs. According to a recent survey, about 50% of loyal customers have left a company for a competitor who was able to stay more relevant and better satisfy their needs. Remember that power lies in customers’ hands. Start listening to them to understand their problems and find effective solutions to them.
- Accurate sales forecasts: Customer loyalty enables you to understand your customers better and predict their future behavior. Their repetitive habits can help you create accurate financial projections that will also allow you to reduce risk in regard to cash flow, inventory management, and investment into the development of new products and services.
The three steps to improving customer loyalty:
1. Research your customers
It all starts with understanding your customers. After all, you must know your audience before you can have success with them. It is imperative to conduct user research to guide the development and direction of a product. Below, you will find some tactics you can implement to understand your customers better:
- Add a forum to your website. A forum is a great and simple way to do some research on your customers. You will not only be able to understand them better, but also engage in meaningful interactions that will boost your customer satisfaction.
- Check Twitter: Find out what conversations are happening online. By keeping up with recent trends and participating in Twitter chats, you will be able to build an authentic relationship with your customers.
- Collect feedback. To better satisfy your customers’ needs and increase customer loyalty, you need to know how you can improve your products or services. Ask them what you can do better to increase their satisfaction.
- Choose the right medium: According to a recent survey, 57% of Gen Z, 50% of Millennials, and even 46% of Gen Xers are working from home at least once a week. Is your business taking these facts into account?
Creating a holistic approach to connect with your customers through several digital channels can help leverage the modern workplace. When your customers see you where and when THEY want to see you, customer loyalty can grow.
2. Provide educational resources about your product
Customer loyalty increases when your customers understand the benefits of your product’s features. When you offer educational resources to your customers in different formats, you let them expand their knowledge of your product and find their own solutions. Knowledge is power, and the more experience your customers acquire, the more motivated they will be to use your product.
So, how can you ensure that your customers understand how exactly your product delivers value? Providing this information is achievable by paying attention to potential gaps in their knowledge and teaching them the many ways that your product can help them. Use how-to videos and blog posts to help improve their understanding of your product:
- How-to videos. According to HubSpot, 68% of people prefer to learn about a product through a short video. Make short videos to demonstrate your product features to ensure a clear understanding of your product value. Offer a comment section at the bottom of the page and invite your customers to ask any questions they might have.
- Blog content. Blogs are a great way to engage with your customers and deliver valuable information to them. First, conduct some keyword research to identify what your customers search for on Google. Then, answer some common questions they might have about your product in a blog post. Providing them with fresh, relevant content will boost their understanding of your product.
3. Reward your customers for choosing you
To give your customers a reason to stay loyal to your brand, you need to make them feel like they are a part of the family. You can do so through loyalty programs that are designed not only to encourage your customers to continue to shop, but also to establish a relationship with them.
Fully 87% of shoppers reported that they wanted brands to have customer-loyalty programs. Why? Because loyalty programs not only offer exclusive rewards to the members, but also create a sense of belonging. If implemented correctly, these programs can turn your customers into your biggest ambassadors. The more you appreciate their dedication, the more devoted they will be to your brand.
A few tips that will help you craft a successful customer-loyalty program that will increase your customer retention rate:
- Offer exclusive benefits: Aside from your general offers open to the public, shower your loyalty-program members with exclusive discounts and complementary products. This strategy will not only boost your sales but also get more customers enrolled in your program.
- Show appreciation for referrals: While a loyalty program is a great way to retain your current customers, it can also help you bring in new buyers. Offer special rewards to your members in exchange for a referral, and draw in new customers.
- Give loyalty points: Let your customers gain points for every purchase they make and redeem them afterward for a bigger prize. Eager to earn more points, your buyers will spend more money to get the prize they want.
- Give them ownership: Not actual stock in your company, but the ability to provide guest posts, use cases, and rewarded feedback can all be valuable pieces to improve customer loyalty.
- Use tech to help you scale: User-friendliness and onboarding are just two examples where tech can help you scale customer loyalty.
- Engage all of their senses: It’s easier than ever to connect on many levels to improve customer loyalty. The more you can connect with customers on different levels and involve the senses, the better off you will be.
Looking to improve profitability and transform your business? Work on improving customer loyalty Why? Because 80% of your future profits will come from just 20 percent of your existing customers. Win the dedication of your buyers via the above-mentioned strategies.