Did you know that it is 5 to five times more to find new customers than to keep current customers? Did you know that your customers who are already loyal to you are 50 percent higher likely to test a brand-new product you offer and invest 31 percent greater than brand-new customers?
If you do or don’t have a loyalty plan that makes your customers want to return and drive more business transactions with you, these numbers clearly illustrate the importance and value of a well-designed client loyalty plan.
In this article, the digital marketing agency in Mumbai will provide everything you should be aware of about loyalty to customers.
Let’s begin by defining loyalty to customers.
What is customer loyalty?
A customer’s loyalty is the desire to return to a business to carry out repeatedly. It’s usually because of their pleasant and unforgettable experiences with the brand.
One of the significant motives to build loyalty among customers is that these customers will assist in growing your business more quickly than the marketing and sales teams. There are numerous reasons why loyalty to your customers is essential to your business’s success.
Why is customer loyalty important?
Customers’ loyalty should be something that all businesses should strive for due to their existence. Creating a profitable business is to find and retail satisfied customers who purchase your products and services to generate revenues.
Customer loyalty is something that all businesses should strive for. Here are the top advantages.
A Boosted Share of the Wallet
Share-of-wallet refers to the amount that a consumer spends on a particular brand compared to the amount they pay for the brand’s rivals.
As a result, customers make more purchases spending more of their time and money on the brands they’re loyal to. This will mean more cash flow for you.
Better Word-of-Mouth Referrals
Customers make purchases to spend more money and time on the brands they’re loyal to. Customers also share with their friends and acquaintances about the brands they like, which increases referral traffic and advertising through word of mouth.
Customer loyalty also builds an enduring sense of trust between your business and your customers. If customers decide to regularly return to your business, the value they’re gaining from the relationship is more significant than any potential advantages they’d receive from a competitor.
- We all know that getting a new client is more expensive than keeping an existing client, and the possibility of attracting and activating your current customers to attract new ones — just by evangelizing your brand should entice salespeople, marketers as well as customer success managers alike.
- But how do you do it? How do you turn your happy, satisfied customers into brand ambassadors who are loyal to your brand? How can you leverage positive Yelp reviews as well as glowing tweets and Instagram mentions to boost the growth of your business?
Well, we’ve got a couple of ideas.
How to Retain Customer’s Loyalty
Make sure you are the same generous and helpful as your customers.
From the outside, customer loyalty programs may seem just an attempt to convince customers to spend more money. (Let’s admit it, we’re all cynics occasionally.) It’s the reason why generous loyalty programs stand out from all the others.
When your program for loyalty demands customers to pay a significant amount of money to receive a few discounts or samples that aren’t worth it, then you’re in the wrong.
Instead, be a leader and show your customers that you appreciate them by providing such appealing perks that it’s foolish not to join.
Thank you for your support.
According to the experts offering digital marketing services says it’s possible to think that you’re showing appreciation for their loyalty and business by providing a loyalty program. Don’t think so. Companies, including your competition, constantly bombard your customers. They may offer the same loyalty program.
What distinguishes you by keeping customers returning? Thanking them with handwritten notes or direct one-to-one communications. Include thank-you notes on your product deliveries as well as purchase confirmation emails or send cards of appreciation around the time of the holiday season.
Give your customers benefits with each purchase.
Develop loyalty by providing your customers with amazing benefits that are tied to your brand and your products or services with each purchase. The great thing about this method is that it does not require creating a loyalty program, although it is certainly an alternative.
For example, if your business is launching the development of a new service or product, A loyalty program might not be required. This simple approach is best for companies that market specific items or services.
This doesn’t mean that you offer the lowest price or the highest quality or convenient experience. Instead, it’s a sign that you are the only product available in the same class.
As a result, your customers will stay loyal because there aren’t many alternatives as amazing as you. You’ve demonstrated that you are the best from the first encounter.
Start completely. Program to the fullest extent.
With many companies offering loyalty programs, a unique strategy to stand out is to ditch the concept of using the term ” program” completely. Instead, create trust by providing customers incredible benefits related to your company and the products or services with each purchase.
This simple approach is best for companies that market exclusive goods or solutions. This doesn’t mean that you have the lowest cost, the highest quality, or even the most excellent convenient service; instead, I’m talking about changing the definition of an industry.
If your company is the first to introduce the development of a new service or product, A loyalty program might not be needed. Your customers will be loyal because they have alternatives as exciting as yours. You’ve established that importance from the very first encounter.
Create a helpful community for your clients.
Customers will always be able to trust the opinions of their friends more so than your company. With reviews on customer websites, forums, and so on, even the tiniest error can be documented and posted for all to be able to see.
However, you can change the negative into a positive experience by creating a community that promotes interaction between customers and their customers. One method to achieve this is to use self-service assistance resources.
If you’ve got an online information base and you want to create the option of a community forum. A community forum allows customers to talk to each other on various topics, such as troubleshooting issues with the product or sharing stories about their experience with the service.
Even if they give negative feedback, at the very least, it’s posted on your website so that you can address it and handle it promptly. A community forum can also help your business in many other ways; as in HubSpot’s HubSpot Ideas Forum, users can share ideas and upvote each other’s posts.
If the suggestion is viable, the team at product will look into it as a possibility for an upcoming sprint.
Our support team will devise solutions if the idea can already be accomplished with the product. Our team can provide both reactive and proactive customer service with one resource.
If social media communities develop, you could make them formal to ensure things remain in order. A consistent system that is in place will ensure an equal playing field and helps keep customers happy over time. This is where loyalty programs are helpful.
Effectively communicate with your customers.
Maintaining and building customer trust requires constant communication. If a client is aware that your company is honest, transparent, and trustworthy, they are confident that they will be satisfied with you.
This is an expectation, particularly in the case of customer service, if there’s an issue that needs to be addressed. A good communication system means that your customers are aware of the latest happenings in your company.
If you have any new product or service, a significant update to your company or a shortage, a change in working hours, or something else that customers should be aware of to ensure they aren’t shocked, the information should be made clear.
This is an aspect of providing excellent customer service, which is crucial to making customers want to do business with you.
Increase the effectiveness of your loyalty program to increase your customer loyalty.
We’ve previously recommended a detour from the loyalty program for customers, but it’s still a vital component of any customer loyalty project.
It’s among the most effective methods to increase loyal customers, especially when the company continues to add perks that ensure that it is impossible to let go.
Companies offer loyalty programs to their clients who frequent their services to increase loyalty and build long-term company growth by providing free items such as coupons, rewards, or even advance-released items. Keep improving your program by offering additional incentives and rewards over time.
Keep your business evolving.
The market and the preferences of your clients and customers are likely to evolve. Researching and staying current within your field assures your customers that you’ll always be up-to-date and provide the best solutions to meet their requirements.
This isn’t limited to emerging technologies, but. It should also include branding, culture, marketing, and product. Customers are more comfortable with their companies knowing that they won’t remain stagnant.
Knowing how to continually improve your business means you’re constantly improving. The loyalty of your business and the products you offer comes from customers being assured that they’re continually receiving top quality.
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Types of Customer loyalty programs
Point-Based Loyalty Program
This is probably the most widely used method of loyalty programs that exist. Regular customers earn points that result in rewards like coupons, discounts, or other kinds of offers.
However, the biggest problem that many businesses face with this process is that they make the connection between points and rewards complicated and difficult to understand.
“Fourteen points is equal to one dollar. Twenty dollars can earn you a 50 percent discount on your purchase by April! “. It’s not a rewarding experience. It’s a hassle. If you choose to go with the loyalty program based on points, make sure that the conversions are simple and easy to understand.
While a points-based program is the most commonly used type of loyalty program, it’s not necessarily appropriate for all kinds of business. It is best suited for companies that encourage frequent, short-term purchases, such as Dunkin Donuts.
Tiered Loyalty Program
Finding a balance between feasible and desired rewards is a problem for many companies that design loyalty programs. One approach to overcome this is to create an incentive system that rewards loyal customers first and encourages customers to make more purchases.
Offer small rewards as a precondition to signify your participation in the program. You can then keep customers returning to increase the worth of rewards as they climb the loyalty ladder.
This eliminates the possibility of customers forgetting the points (and not redemption) since the period between purchase and reward is far too long.
The main distinction between the point system from tiered systems is that the customers get the most value in the short-term and long-term from this loyalty program.
Therefore, tiered programs may best suit more commitment-oriented, high-price-point organizations like airlines, hospitality businesses, and insurance businesses.
Paid (VIP) Loyalty Program
The purpose of loyalty programs is to eliminate barriers between your customers with your organization … therefore, do we want to say that you should charge customers fees?
In certain circumstances, charging a once-off (or annually) fee that allows customers to overcome common purchasing barriers can benefit both the business and the customers.
For example, if you find a reason that might make your customers leave, they can tailor the program with a fee to tackle the specific issues.
Have you ever had to abandon your shopping cart online after shipping and tax were determined? Unfortunately, this is a common problem for businesses that operate online.
To address this, you could provide a loyalty plan similar to Amazon Prime — by joining and paying an initial fee, the customers will receive free two-day shipping on their orders (plus other amazing benefits like free movies and books).
Value-Based Loyalty Program
To truly understand your customers, you must determine their characteristics and needs; in doing this, you can build loyalty among customers by targeting these traits.
For example, while every company can provide coupons for promotions and discount coupons, some companies are more successful in connecting with their customers by providing something of value that isn’t related to money.
This could create an unrivaled customer relationship that builds trust and loyalty.
Coalition (Partnership) Loyalty Program
Strategic partnerships to build customer loyalty (also called coalition programs) are an effective method to keep customers loyal and increase the size of your company. Which business would be an ideal partner to work with?
The answer will depend on the customer’s daily life, needs, and purchasing procedures.
For instance, if you’re a company that sells dog food, it could be possible to work with a veterinary clinic or grooming salon to provide co-branded offers that benefit both your business and your client.
Suppose you can provide your customers with value that is beyond what you can offer them on its own by providing them with relevant value.
In that case, you’re showing them you are aware of and are concerned about their needs and objectives (even those that you cannot tackle on your own). In addition, it helps increase your reach to your partners’ customers, too.
Game-Based Loyalty Program
Who doesn’t love a good game? Make your loyalty program an incentive to keep loyal customers to return and, according to the kind of game you decide to play, strengthen the image of your brand when you participate in any sweepstakes or contest.
However, you’re at risk of having your customers feel as if you’re slapping the competition too to win business. To reduce this risk, ensure that your customers do not feel as if you’re cheating them out of the rewards they’ve earned.
The odds shouldn’t be less than 25%, and the minimum purchase requirement for participation should be achievable. Be sure that the legal department of your business is well-informed and on board before making the announcement.
If done correctly, This type of contest can be used by almost every kind of business. It can make the buying process enjoyable and thrilling.
How do you measure customer loyalty?
Like any other initiative you take, you must be able to quantify the success of your initiative. Customer loyalty programs must boost customer happiness, delight, and retention as well as it is possible to measure these things.
Different programs and businesses require unique analytics; however, here are some of the most popular statistics businesses use when launching loyalty programs. Check out our packages for search engine marketing for small businesses in Mumbai.
Customer Retention Ratio
The retention of your customers is an indicator of the length of time customers stay with your company. When a loyalty program is successful, it is expected that this number will rise in time as the membership of the loyalty program increases.
As per The Loyalty Impact, a 5 percent increase in retention of customers can yield a 25 to 100% increase in revenue for your business. Test your loyalty program against members of the program and non-program customers to assess the efficiency of your loyalty program.
Churn among customers is the percentage that customers quit your company. Negative churn is a measure of customers who perform what they would typically do: upgrade or buy additional services.
These can help reduce the natural churning that goes throughout most businesses. Based upon the type of company and your loyalty program, particularly in the case of an e-loyalty program that is tiered, This is a crucial measure to keep track of.
Net Promoter Score
NPS(r) is a measure of customer satisfaction that determines, on a scale of 1-10, the extent to which customers would be willing to recommend your business to others.
The NPS calculation is done using the percent of detractors (customers who do not want to suggest your products) by the proportion of endorsers (customers who would be willing to recommend you).
The fewer complaints, The fewer detractors, the better. The goal of improving your net promoter score is a way for you to set benchmarks and evaluate the level of loyalty among your customers over time, and determine the impact on your program for loyalty.
Customer Score for Effort
Customer Effort Score (CES) asks the customers, “How much effort did you personally spend to resolve an issue within this company?” Certain companies favor this metric over NPS since it measures what the customer experiences rather than the emotion of the client.
In this manner, customer service can affect both the acquisition of customers and retention of customers when your loyalty plan addresses customer service problems, such as speedy requests or personal contact, as well as free shipping, which could be a way of measuring the success of your program.
Here are some examples to help you design your customer loyalty program.
What is the time it takes customers to purchase another item from you? What percentage of your customers return items after buying them from you? These purchasing habits allow you to determine whether your customers remain loyal to your brand — or go to competitors.
It is essential to know the root of what can be causing a return or causing a delay in a purchase. It’s the reason it’s essential to carry out satisfaction surveys for customers at least every quarter or as needed.
You can send one to a potential customer following the time they had a chance to test your product, for instance, or after they’ve returned the item.
Referral traffic refers to all visitors to your website from sources other than search engines (such as Google). Websites that are social media, news websites, and other internet-based properties can all be considered referral traffic.
Display ads don’t count. The most important thing is the percentage of your customers who have a link to your website or mention your business through their Facebook and Twitter pages. Using a tool like Google Analytics, it is possible to measure the amount of referral traffic.
Social Media Mentions
What do people say about your profile via social networks? Are they saying it positively? Are they spreading the negative word? Although this isn’t as much of a measurement in terms of numbers as others on this list, it’s still a good method to measure the loyalty of your customers.
You can monitor mentions on social media with a tool like HubSpot. Monitoring mentions is an essential element of an effective social listening plan and is among the most effective ways to determine whether your customers are loyal.
It is also possible to find out what they’re saying about your business when compared to your competition.
Prioritizing the client experience must come first when developing a customer loyalty program. A loyalty program is merely a more engaging way to say “thank you, come again.” It won’t magically resolve all of your customers’ problems.
Once you have earned your clients’ confidence, they will compete for the chance to receive benefits for using your brand. After all, they have been devoted customers; don’t they deserve to be treated like royalty?
If you want to read, check out our previous blog E-commerce Marketing: Tips & Strategy to Succeed In 2022 E-commerce Business.