Customer loyalty measures how likely existing customers are to do repeat business with your company. While each industry has its own way of measuring customer loyalty, the simplest way is reviewing existing customer's lifetime purchases in your database. While they may not always be making large purchases, it's likely that over their lifetime with you, they will top revenue earned from one-time big buyers.
Why is customer loyalty important?
Since acquiring new customers can be up to 25 times more expensive than retaining current ones, building a loyal customer base is among your most cost-effective sales tactics. Plus, repeat customers may spend up to 67% more with you than first-time customers. In short, loyal customers are often better for your bottom line than new ones.
14 ways to build customer loyalty
Here are 14 simple ways to build customer loyalty.
1. Know your customer and let them know you
Customers are more likely to remain loyal if they feel valued by you. Things like remembering their birthdays, the ages of their children, and the last item they bought from you are all little things that go a long way in customer retention. Implement a trigger email program that sends a birthday email and offers discounts during their birthday month.
It's also important to be transparent about your business with your customers. Are shipments delayed? Send an email letting them know so they know when they can expect their product. Did you just release a new product or hire a new CEO? Send a personalized message to your customer base announcing the exciting news before they hear about it from another media source.
When applicable, assign a customer service rep to new customer accounts to help them through the initial set up process and stay with them throughout their customer life cycle. This allows a rep to get to know that client, understand their company, and learn their business goals so they can better assist them. Sending "Welcome to XYZ Company" cards to new clients from their rep is a great way to make them feel valued right from the start.
2. Reward loyalty with a customer loyalty program
Loyalty programs are a great way to reward existing customers for their loyalty and attract new customers at the same time. There are several ways to do this, including:
- Credit Cards - Industries like retail stores and airlines are known for rewarding loyal customers with credit card perks and cash-back savings like $200 back for every $1,000 charge to their card.
- Mobile Rewards - If you're not in the position to offer your customer base credit cards to earn rewards with, take Starbuck's lead and create an easy-to-use reward program for loyal customers to use. Using just a rewards or gift card and smartphone, existing customers can start earning points each time they make a purchase, and you can track their order and payment information.
- Punch Cards - If credit cards are too much of a commitment and you don't have the technical means to establish a mobile rewards program. You know those punch cards at your local bakery where after 10 purchases, you get the 11th for free? That’s the rewards portion of the bakery’s customer loyalty program. This approach gives customers a big reason – a future freebie – to keep coming back.
3. Make customer loyalty easier
Increase customer loyalty by continuously making their experience with your company more user-friendly. Many fast food and coffee shops let customers order and pay for their purchases from their smartphone while online retailers have started to offer one-touch ordering that pulls customer credit card information up, allowing them to complete their purchase without having to dig out their wallet.
Cable and internet companies are known for using automation to improve their customers' experience, directing them to the correct representative based on the phone number they are calling in from. From there, reps can pull and see the necessary information to help address the issue, including scheduling technicians coming out to fix the problem. Have the same rep follow up with a call once the issue is resolved to make sure the client is happy and doesn't have any other questions. These simple steps can help companies ensure positive customer experiences, improve customer retention, and increase positive customer feedback.
4. Be the best at what you do
It sounds almost too simple to be true, but a simple tactic for increasing customer loyalty is to be the best around. Customers have many brands to choose from, but most likely can't afford to shop with them all. Focus on delivering a quality product at a price point that works for your customer base. Develop a value proposition for your brand and use it to promote your product. When individuals can connect with your company, they are more likely to become and remain loyal customers.
5. Welcome customer feedback
Customer feedback goes hand-in-hand with customer loyalty. Positive reviews will help attract new customers, providing excellent products or services will convert new customers to loyal customers, and happy customers leave good reviews.
Make sure everyone in your company who is client-facing pays attention to customer needs and actively works to resolve any issues. You can also provide customer service through social media platforms like Facebook, Twitter, and Google My Business. If you have customer email addresses, send a follow-up email asking them to leave a positive review.
It's no secret that it costs more to attract new customers than it does to keep loyal customers happy. Take time to learn what's relevant to your customer base and identify ways to increase customer retention.
6. Prioritize customer service
A great customer experience strategy – which is key to building customer loyalty – is incomplete without robust customer service options. You should ensure that your customer service agents are regularly available through email, phone, and live chat and always use positive language. Continuous training and education will help your team succeed as well. To learn more, read the SmartBiz Loans blog Customer Service Tips and Tricks.
7. Use social media to drive customer engagement
Social media marketing and customer service go hand in hand. A great example comes from Slack, which often uses its Twitter channel to field and quickly respond to customer feedback, questions, and more. As a result, Slack’s existing customers feel cared for, and Slack shows potential customers what they get if they sign up.
8. Implement a referral program
Referral marketing is unique in that it both keeps your existing customers happy and acquires new customers without all the usual costs. Typically, a referral program gives your current customers a discount or free item when they refer new customers. These discounts aren’t just great rewards – they also incentivize repeat purchases, meaning they build loyalty among your current shoppers. Plus, they give new customers a reason to buy from you, in turn building brand loyalty with a new base too.
9. Build a community
Online communities are well known to drive customer engagement in ways that lead to long-term loyalty. In these spaces, which include Facebook groups or Subreddits, customers can educate one another on how they’re using your products or services. This word-of-mouth awareness empowers your current customers to feel like advocates for your brand while making one-time shoppers more likely to buy from you again.
You can also build a community in your backyard through the power of local marketing. To learn more about using local marketing to build great customer loyalty programs for your region, read the SmartBiz Loans blog Local Business Marketing.
10. Offer customer payment plans
To understand why payment plans are great for customer loyalty, put yourself in the customer’s shoes for a second. Let’s say you need to regularly buy expensive items, perhaps musical instruments if you’re a professional musician. In that case, wouldn’t you be more likely to buy from a company that lets you pay in small installments rather than all at once?
Surely, the answer is yes. That’s why customer payment plans help you build brand loyalty. If you’re the only company in your footprint offering such plans, customers are extremely unlikely to go elsewhere for their repeat purchases.
11. Target existing customers in your marketing efforts
Far too often, small businesses – especially newer ones – prioritize getting their ads and other marketing content in front of new eyes at the expense of existing customers. In doing so, they lose out on chances to remind their current customers that they exist. Each of these missed opportunities decreases the likelihood that existing customers will become repeat buyers. And since presenting yourself to existing customers requires far less education about your products and services, there’s no good reason to overlook your current base.
12. Hire the right employees
As mentioned earlier, customer service is a key component of customer loyalty. However, not all potential hires with a strong background in customer service are well-suited for all customer-facing activities. Someone with years of experience handling email or live chat may be ill-prepared to pick up the phone when a longtime customer calls. Likewise, experts at phone service may struggle to meet your customers’ needs via live chat.
The solution is to fill customer service openings with employees who have consistently obtained positive customer feedback via the same customer service method. With these key players on your team, customer satisfaction with your support will increase, leading to stronger loyalty.
13. Be consistent
Consider how you might feel if you saw a company you buy from change its logo often in its emails – that would be weird, right? So too would a cold, distant email from a company known for its friendly, enthusiastic customer communication. Such variations in your branding or communication style can confuse your customers and lessen their trust in you. To avoid these pitfalls, be consistent in your branding, communications, and everything you do.
14. Be transparent
No matter how much work you put into perfecting your customer service and building customer loyalty, mistakes will happen. When they do, neglecting to apologize or rectify your mistakes can earn you a negative reputation among your customers. Instead, you should apologize, explain what happened and why, and show how you’ll make up for it. Customers know nobody is perfect, and showing that you’re willing and able to correct your mistakes makes you more trustworthy than competitors who never hold themselves accountable.
Ways to reward loyal customers
None of the above ways to build customer loyalty is complete without a rewards program. The rewards comprising your program could include:
- Highlighting your customers. In your website’s testimonial page or on your social media channels, you should highlight customer reviews that mean a lot to you. Similarly, if you run a B2B company, post blogs or social media content highlighting clients’ stories of how your services helped them. In doing so, you’ll forge meaningful relationships with the people already driving your bottom line.
- Forming business partnerships. Through business partnerships, you can offer your local customers perks with both your company and others. If joining your business’s rewards program also leads to discounts at a similar or nearby business, customers may be more likely to sign up. If the other business has its own loyalty program that includes discounts with you, then you also get access to an entirely new customer base. In this way, focusing on retention can also mean achieving a major goal: acquisition.