What Is Customer Loyalty and How to Build It
Customer loyalty can be defined as the inclination of a past customer to continue to do business with an organization…
February 11, 2022 | 7 mins read
Customer loyalty can be defined as the inclination of a past customer to continue to do business with an organization because of favorable experience in their dealings. Let us break down what is customer loyalty:
Any customer is likely to give an organization their repeated patronage for the following reasons:
Therefore, for a customer, customer loyalty involves choosing one organization’s products and services consistently over its competitors. They would rather pay more and ensure the same quality of service and product they know and love.
Consumer loyalty is when a customer frequents a business after intentionally foregoing other available choices. Consumer loyalty is an informed choice, made voluntarily and repeatedly and is a measure of the commitment a consumer has towards your product or service.
In building customer loyalty strategies and ensuring customer loyalty management, it’s important for a business to ask itself the following basic questions:
We’ll explore each of these in detail as we move ahead in this article and also look at certain customer loyalty examples.
These are the main stages of consumer loyalty:
Now, we’ll dig a little further into customer loyalty in the next section.
Customer loyalty is a cumulative result of multiple positive interactions. This kind of positive relationship is largely built on four elements:
Being familiar with all aspects of customer loyalty will help you build long-term relations with your consumers. Read on to know how.
For most organizations, onboarding new customers has a higher focus than retaining loyal customers and building customer loyalty. Therefore, it’s important for all businesses, regardless of scale, to build customer loyalty.
Let’s take a look at some customer loyalty strategies:
This is one of the most commonly used customer loyalty strategies. Brands such as Starbucks and Amazon often encourage customers to purchase products from, engage with, or use the services of their brands. Customers are then rewarded on the basis of the money they spend and earn points.
This strategy is often overlooked and passed off as being unimportant. However, a thorough and pleasant customer service experience goes a long way in retaining customers. Since customers relate the overall experience they had with a certain product to the brand, a positive customer service experience should be a priority for businesses.
It’s important to encourage customers to give feedback on the product or service being offered.
Personalized communication is key for customer retention. What this entails is sending a relevant email to the customer based on the interaction they have had with the business. Relevant email marketing based on the customer’s interaction is also useful in improving customer loyalty. Segmenting clients based on age, gender, geographic location, occupation, preferences, etc., helps in sending personalized communication.
Many businesses also have a reward-based referral program where existing customers get benefits such as discounts or loyalty points for referring the business to their friends or family. The new customer also receives similar incentives.
Repeat customers are vital for the growth of any business. Once the customer goes through the stages of becoming a loyal customer, it’s crucial to continually work on building and sustaining a positive relationship with the loyal customer.
Let’s take a look at some of these customer loyalty management strategies.
Product marketing and design cannot be undertaken without identifying the prevailing market sentiment. For example, when Henry Ford built the first assembly line for putting together cars, he solved a need that no one else was able to do, i.e., bringing down the time taken for assembling a car. It shrunk from a monstrous 12-hour task to a measly hour and a half. The innovation was undoubtedly for Ford’s own benefit, but the perceived value of a Ford vehicle was much higher for the intended average consumer.
Any point of contact that a business has with its customers is an opportunity to provide exceptional service that a customer would return for. This could be anything from the first cold inquiry to the handing over of a product or service or after-sales service. Any interaction that a customer has with an organization should be professional, backed by knowledge and full of extreme attentiveness. This may include anything from training the staff to a marketing campaign or simply designing a process flow around the customer.
Businesses would give an arm or a leg to become a household verb or a noun. “I am going to Uber over to Ajay’s house”. “I am going to Skype Marie and see what she’s up to.” Most businesses fail to structure their products or policies around the ease-of-doing-business concept. If a consumer can accomplish any task/s with a business without much fuss, they are highly likely to return to them in the future. This concept is fully utilized by social media companies and food aggregators when creating their offerings.
Any customer needs a certain sense of familiarity with a product for them to even begin considering it. Marketing campaigns that are well-researched and thought-out are the backbone of product design as well as sales. A capable product with a high outreach sales program can work wonders. Once you have established a sense of rapport with potential customers, it becomes a lot easier to onboard them.
In the age of online reviews and ratings, acknowledging and attending to consumer grievances as they arise can also make or break a business, no matter how good a product they sell. A consumer complaint is an excellent opportunity to figure out a solution and provide an exceptional service experience. Acknowledging and sorting out complaints also adds to the image value of the business in the consumer’s mind.
Once you apply some of these strategies, you can reap the benefits of customer loyalty.
Acquiring new customers is more expensive than retaining repeat customers. Apart from this, if the business exceeds the loyal customer’s expectations, they also advocate and promote the brand, either through word-of-mouth or positive reviews online and via social media. Loyal customers also provide the business with a competitive edge. Some of the most successful customer loyalty examples include Amazon Prime, Sephora, Starbucks and Uber Rewards. These customer loyalty program examples have been studied in detail for their incredible success among consumers. Other customer loyalty program examples include Expedia (travel), Hyatt (hotel) and Virgin Atlantic (airline).
The benefits of proper customer loyalty strategies, customer loyalty management and consumer loyalty, in general, are undisputed. This is obvious from the customer loyalty examples mentioned above. Businesses must ensure that adequate time and effort are put into building customer loyalty. Harappa’s Find Success with Clients pathway will allow you to build a positive and ongoing relationship with customers.