How to Build Customer Loyalty (Part I) - Birute Birgelyte

Customer loyalty determines the financial success of brands. If customer retention improves only by 5%, it generates a 25% to 100% increase in profits. Repeat customers also spend more and make larger transactions. The average repeat customer spends 67% more in months 31–36 than in months 0–6 of their shopping relationship. Furthermore, facilitating customer loyalty is a cost-effective way of increasing return on investment (ROI): it is estimated that getting new customers can cost from 5 to 25 times more than selling to existing customers. These figures clearly demonstrate why customer loyalty should be one of the top priorities for any brand. To navigate through the complexity of building customer loyalty, here is a list of key steps that could guide you:

Step 1: Improve customer experience. Research shows that customers are willing to pay more if they have a satisfying customer experience. Customers remember well how they have been treated, and tend to share that experience with their family and friends, which in the end means more or less business. Therefore, it is important to identify how a shopping experience can be improved. You should get that information from your customers directly. Remember to ask for their feedback frequently, and pay special attention to their complaints. Constructive feedback and well addressed complaints can help you significantly improve a shopping experience at your company and gain more repeat customers.

Step 2: Personalize sales and marketing. With so many advertisements competing for customer attention, personalization is one of the most effective ways to get them noticed and improve customer experience. For better personalization, it is recommended using customer relationship management (CRM) systems to create detailed profiles of individual customers. Providing a 360-degree view of the customer, a CRM system gives you a lot of information that could be used for personalizing marketing campaigns, product recommendations and promotional offers. By doing so, you will be able to deliver the 3 Rs: the right product in the right place at the right time.

Step 3: Create a unique customer loyalty programme. Different types of companies have customer loyalty programmes that are used as a means to encourage customers to return. To gain a competitive edge, try to make your loyalty programme as creative and distinctive as possible. For example, do not just reward customers with your usual products, but try to reward them with bigger prizes once they have collected enough points. Another option is to give your customers the opportunity to donate their points to charity. You should also think of new ways of awarding points such as referring new customers or creating engaging games or competitions.

Step 4: Use e-mail marketing for updates. Despite consumers’ numerous complaints about the volume of e-mails they receive, e-mail is still an effective marketing channel. E-mail marketing generates more conversions than any other channel. E-mail marketing is significant as it can increase the number of repeat purchases as well as the number of subscriptions. Newsletters, thank-you e-mails, surprise e-mails, redemption reminders or exclusive deals are just a few examples of e-mails that can help engage customers. It is also worth stressing that e-mail marketing campaigns should be creative. For example, try to occasionally include point awards in your e-mail campaigns to increase e-mail engagement rates.

Step 5: Educate your customers. You should not connect with your customers only when you want them to buy your products / services. This purely transactional approach can in fact cost you customers. To avoid that, think of ways of educating them about your products / services. For example, you can share tips on how to gain more value from your products / services. By educating your customers, you will be able to show your expertise and build trust. You can also increase your sales as consumers are 131% more likely to buy from a company that educates them on their products / services. Customer education is only one way to build a lasting relationship which helps build customer loyalty and advocacy over time.

Read How to Build Customer Loyalty (Part II).