Measuring and Increasing Customer Loyalty: 8 Simple Ways
Customer loyalty is an important part of a business’ success and turns one-time buyers into returning customers.
You can implement strategies to acquire the customer, but it’s your job to enhance their customer experience and keep them coming back.
In order to maintain customer loyalty, you need to actively invest in your customers and maintain your relationship with them.
It’s one thing to have a satisfied customer, it’s another thing to have a loyal one.
Loyal customers value their relationship with your business and know that they can rely on you to provide great products and services. No matter what, loyal customers stick with you.
This article will explain the different strategies and tactics businesses can use to increase their customer loyalty and retain customers for life.
But first lets see how we can measure and better understand where we stand.
How to Measure Customer Loyalty
I believe that when it comes to marketing, everything needs to be measured. How do you know if you are improving otherwise?
Our friends at Six Figure Mastermind created a video that explains it well:
Here are 6 Metrics You Can Use to Measure Customer Loyalty
- NPS (Net Promoter Score)
- Repurchase ratio – how many of your existing customers purchase from you again.
- Upselling ratio- to get this metric you divide the number of customers who bought multiple products by the number of customers with a single product
- Our Favorite: CLI (Customer Loylaty Index). Like NPS, you would need to send your customers a short survey with 3 questions. They then have to answer each of the following questions on a scale from 1-6. 1 being “Yes, Definitely!” and 6 being “No ,Definitely Not!”.
Your CLI score is the the average answer of those 3 questions (TIP: give each answer a higher number to make it easier for you to calculate the score, so for example 1=100 , 2=90, 3=80…).
How likely are you to recommend us to your friends or contacts?
How likely are you to buy from us again in the future?
How likely are you to try out other of our products/services?
If you decide to use CLI, make sure to send the CLI survey regularly to check your progress.
Your next steps are:
1. Choose 1 or 2 metrics only
2. Set a customer loyalty goal to measure yourself against it
3. Improve your customer loyalty with our 8 simple ways
Here Are Our 8 Ways to Increase Customer Loyalty
1. Build a Community
Sometimes a customer’s motivation to come to your business doesn’t have to be backed by a sale. Sure, you can make a sale, but connection is what is going to get them to stick around for the long run.
The more you build your community, the more you will gain loyal customers who come to your community to engage with one another. A community gives people a place where they can feel they belong.
Social media is a great platform to let customers know about sales and other promotions, but it’s also a great place to engage with your customers and start a conversation.
You can get your users to engage with your community by sharing photos or videos of them using your product or service. Consider making a branded hashtag so you and your customers can discover others involved in your community.
Create a business blog that takes a more in-depth look at different aspects of your industry to better connect with your customers. These can be easy to create as your customers can help you generate content ideas.
2. Educate Your Customers
Before any purchase, there’s some sort of research or education process behind it.
Provide your customers with great content that will educate them and push them that much closer to a sale. An FAQ and product information page can go a long way to helping customers solve issues on their own, while also taking some pressure off your customer service team.
Having a business blog is also a great way to educate your customers further.
For example, Hausera, a unique online kitchen and bath faucet supplier, caters to an audience interested in home improvement. Their blog posts aren’t just associated with kitchen and bath faucets, they provide their customers with other useful information such as how to prepare your home for kids.
They offer their community a place to come and learn, not just a place to make a purchase.
Educating your customers boosts your brand’s credibility within the industry, thus bringing you more returning customers.
3. Great Customer Service
Having great customer service is probably the most obvious, but most important component that contributes to customer loyalty.
Great customer service leaves you with a happily satisfied customer, which leads to an increase in customer loyalty.
Even if your customer’s feedback is negative, having great customer service can easily help change their mind about your company, thus leading to a potential returning customer.
Word-of-mouth marketing is still extremely effective today. It is more valuable and converts at a higher rate since the referral is coming from a trusted source.
Providing your customers with a great customer experience, even if the situation was negative, can lead to a decrease in negative word-of-mouth.
Problems arise, there’s no getting around them. Be honest and transparent with your customers and admit when you’re in the wrong. As the saying goes, the customer is always right, so put their needs first.
You must be dependable when your customers need you. That means responding to any emails, phone calls, comments, or tweets in a timely manner.
4. Ask For Their Feedback
Ask customers for their feedback after completing a purchase or interacting with your customer service team. New customers often turn to existing customers’ feedback to help them decide whether to move forward with a purchase.
Not only does gathering feedback from existing customers help you gain new ones, it also shows your returning customers that their opinion and feedback is valued.
Arnett Designs, a brand that specializes in creating event security products, features customer testimonials on their webpage. This helps guide the customer’s buyer journey, while showing appreciation for their loyal customers.
5. Incredible UX
Most customers’ primary source for purchases is online, so making a user-friendly interface is crucial. If customers can’t easily navigate their way through your site, it can lead them right off the page and onto another, possibly your competitor’s.
Components of great user experience include:
- Fast load speed
- Easy to navigate
- Responsive design
Make sure your site is optimized for search engines so customers can easily find you in their time of need.
The easier your site is to navigate, the more likely customers are to come back and engage with your content.
6. Understand and Listen to Your Customers
Your customers are the backbone of your business. They’re the ones keeping your business afloat. Understand your customer’s needs so you can better execute your marketing campaigns and increase your business’ success.
Your customers want to know that you understand their wants and needs, so make sure you put yourself in the eyes of the consumer so you can deliver the best possible service or products to them.
Be receptive to any feedback your customers have, good or bad. Listen to their concerns, understand their needs, and take action. Prove to them their business means more to you than just money.
7. Customer Rewards Programs
Keep customers coming back by rewarding them for their loyalty. Customers love having some sort of incentive to keep them coming back, so provide discounts or special services for current members or members who have been with you for several years.
Set up a customer loyalty program that offers customer discounts, rewards, and exclusive offers.
For example, Starbucks created a mobile app which includes their customer reward program. Customers earn stars, or loyalty points, for every purchase they make.
They offer their members free drinks for every 60 stars earned and even a free drink on their birthday.
Customers love to feel appreciated, and offering these rewards is your way of saying Thank You for their continued loyalty to your business.
8. Hire Great Employees
Your employees are at the core of your customer service team and are your key players in improving customer loyalty. Good employees know the value great customer service has on your business.
Not only do you want to make sure you are hiring great employees, you need to have employees who are engaged and motivated. Engaged employees have a more positive attitude and a positive attitude attributes to a positive customer experience.
If your employees can provide your customers with a memorable experience, it will increase your sales and ensure your customers keep returning.
Creating a foundation built on trust can increase your customer loyalty and bring more profit to your business.
Your effort shouldn’t only be to make a sale. Take the time to build relationships with your customers and establish yourself as a trusted brand.
Make your customers a priority and watch their loyalty for your business continue for years to come.
1. Amazon Moments (at no extra cost to your customers) Loyalty programs are not applicable to all your customers or potential customers, as not every customer has the economic buying power or ability to make use of a loyalty program. It is therefore recommended that a loyalty program is put in place primarily to target the ‘frequent flyers’- these are the customers who frequent your stores, with the higher purchasing power. As a general guideline, 55 – 65% of your customers should be targeted for your loyalty program. This consists of the top 20% in terms of value, plus the next 35-45%, which represents the greatest potential. The remaining 35-45%, which are occasion buyers, should be targeted through market promotions. Yes, they do! In fact, 73% of customers on your loyalty rewards program are more likely to recommend your brand to other people. Read the full article for more useful information on Loyalty Marketing.
Frequently Asked Questions
What are the best customer loyalty programs?
o You set up the moment and reward for you customers
o Customer engages and completes the action
o Amazon delivers reward to customer
2. Nordstrom: The Nordy Club
o Implemented a tiered loyalty program, in which customers could unlock new tiers of rewards and benefits by spending across all their subsidiaries.
3. Sephora- Beauty Insider
o Use a very successful loyalty point system, where customers decide how and when to use their acquired points for different rewards.
o Offer loyalty rewards through their app, integrated with other services to offer a unique brand experience.
5. The North Face VIPeak:
o Have a very successful tiered reward loyalty program, offering different, curated retail discounts so that each customer has a personalized rewards experience. They also reward customers for downloading their app.
What segment responds to customer loyalty programs best?
Do Loyalty Programs help in marketing?
1. Amazon Moments (at no extra cost to your customers)
Loyalty programs are not applicable to all your customers or potential customers, as not every customer has the economic buying power or ability to make use of a loyalty program. It is therefore recommended that a loyalty program is put in place primarily to target the ‘frequent flyers’- these are the customers who frequent your stores, with the higher purchasing power. As a general guideline, 55 – 65% of your customers should be targeted for your loyalty program. This consists of the top 20% in terms of value, plus the next 35-45%, which represents the greatest potential. The remaining 35-45%, which are occasion buyers, should be targeted through market promotions.
Yes, they do! In fact, 73% of customers on your loyalty rewards program are more likely to recommend your brand to other people. Read the full article for more useful information on Loyalty Marketing.
Starbucks Rewards Program: https://www.starbucks.com/rewards/
The Right and Wrong Way to Add Testimonials to Your Website: https://themes.artbees.net/blog/add-testimonials-to-your-website/
Blogging for Business: https://www.lyfemarketing.com/blog/blogging-for-business/
Employee Engagement and Customer Loyalty: https://recruitloop.com/blog/the-link-between-employee-engagement-and-customer-loyalty/
About the Author: Corey Doane is a contributing editor for 365 business tips. She has a B.S in Public Relations from San Jose State University and has experience in PR, marketing and communications.