You may have heard the statistic: acquiring a new customer can cost five to seven times more than maintaining a new one. However, despite the importance of customer retention for your bottom line, many brands rely far more on acquiring new customers. As most consumers tend to buy from brands they already trust, it’s essential to have a customer loyalty and retention strategy. It increases the strength of your marketing efforts by making sure new connections stick.
Loyalty is a strong emotion comprised of faithfulness, honesty, trust, and competency, among other qualities. Brand loyalty is built through a combination of quality products, good user experiences, brand authority, and rewards. Loyalty programs play a large part in this process, rewarding customers for sticking by a brand.
But what’s the science behind it? Do most people just fall into a habit, or can you use specific strategies to improve customer loyalty?
One thing is for sure: customer loyalty will help you grow. Increasing customer retention rates by just 5% can increase profits by 25% to 95%. Here’s how to successfully incorporate customer loyalty marketing strategies into your approach.
How to Maintain Customer Loyalty
Customer loyalty is more than a customer’s likelihood of buying from a brand again, although that’s certainly part of it. Customers trust you with a lot: their time, money and often their personal information. They need reliable experiences in order to maintain their trust in your brand and just about every stage in the buyer’s journey can affect their perception.
For most customers, the quality of your product is the make or break factor when deciding whether they’ll purchase from you again. However, psychological factors are also at play, including the “feel-good” hormones like dopamine and serotonin, which are released when customers make a new purchase. Beyond the obvious and most important factor of providing a high-quality product, some strategies to improve customer loyalty include:
Provide exceptional customer service
Outstanding brand reputations are made not just on the basis of good products but on the quality of the customer service, too. Three in four customers will spend more money with a business that provides good service, but more than half will switch to a competitor after only one bad experience. It’s no surprise that so many companies are increasing their level of customer service to keep up with expectations. By listening to your customers’ needs and making them feel like you care about them on a personal level, you sow the seeds of an ongoing connection.
Provide loyalty programs
Loyalty programs offer rewards for repeat business, compelling customers to reciprocate your generosity. By offering games and rewards as part of their approach, loyalty programs appeal to the side of everyone who seeks pleasure and fun. They release dopamine and offer social proof, making the brand look more appealing to others. Your customers can accumulate points they can turn into shopping vouchers, discounted services and experiences, enticing other people in their social network to get in on the action.
Include user-generated content
User-generated content makes your customers feel like they’re part of your brand, fostering a sense of community. Social media is perfect for fostering user-generated content, with hashtagged posts and shared stories making for powerful marketing tools.
Get to know your customers
Before you can conceive an effective customer loyalty and retention strategy, you have to know who you’re trying to reach and retain. There are many different ways to get to know your customers, from surveys to social listening to contests and engaging with reviews. Knowing the demographics of your existing customers helps with finding new ones. The more you know about the people who buy your products and support your brand, the easier it is to foster a sense of community.
Why Is Maintaining Customer Loyalty a Good Strategy
While new customers are obviously essential for growing your brand, there are reasons why a solid customer loyalty and retention strategy is so beneficial:
It takes more effort to acquire new customers
Customers tend to buy from brands they trust, so it requires more time and resources to continuously attract new customers than it does to retain existing ones. You have to spend precious time identifying leads and promoting new strategies, and there’s often still a waiting period before a customer starts contributing to new profits. In an industry like software as a service (SaaS), a customer generally has to remain with a product for at least a year before a brand starts seeing a profit.
It increases brand advocacy
Loyal customers can become unofficial but dedicated brand ambassadors for your company. Most potential customers and clients trust recommendations from friends and family, while brands benefit from positive reviews and user-generated content. Social media makes it easier for customers to share these positive experiences with others in their lives.
Increased recurring revenue
Loyal customers spend an average of 67% more than those that are new to your business. Recurring revenue is when brands manage to turn a one-off sale into repeat purchases, and it leads to strong relationships and a reliable cash flow.
What Negatively Impacts Customer Loyalty
Like any other quality of your business, customer loyalty can be lost if you don’t take care of it. Some factors that decrease customer loyalty include:
Failure to meet customer’s expectations
Whether it’s the quality of the product, the customer service experience or the pricing, failing to meet your customers’ expectations quickly ruins any shot at loyalty. Market research and seeking customer feedback can help prevent this. So can promptly addressing customers’ concerns and difficulties.
Lack of personalised engagement
Customers want to be treated as the individuals they are, with personalised recommendations and highly relevant content. When brands treat customers as interchangeable and neglect to provide unique customer service experiences, it makes it a lot harder to build connections and loyalty.
Competition and oversaturation
Thanks to the internet, customers now have more options at their fingertips than ever before. With everyone offering the latest, greatest, most exciting deal, it becomes increasingly difficult to maintain a sense of loyalty. To stand out from the crowd, brands must offer exceptional customer service experiences, products that push boundaries and strong, unique value propositions.
Negative reviews
Online reviews are powerful tools for building a brand’s credibility and reputation, but they can also quickly tarnish it. To protect their reputation, businesses should respond to reviews in a professional manner and address any customer concerns promptly.
Build a Loyal Customer Base with Anchor
Anchor Digital is a creative and digital agency that can help you build a marketing strategy that retains customer loyalty while drawing new users to your brand.
Our multi-faceted approach includes both acquisition and retention planning, leading new customers to your business and making sure they come back. By providing every customer with a quality product and a pleasant customer service experience, we make every person feel like you’re meeting their needs.
Our marketing strategy services include identifying your unique selling proposition (USP) and gathering data on target demographics so you can continue to attract new clients. The broad range of strategies we’re across includes search engine optimisation (SEO), pay-per-click advertising (PPC), user experience (UX), graphic design, video, web development and a range of other methods. Our integrated, research-informed approach keeps your brand strategy front and centre.
To strengthen your customer loyalty and retention strategy, contact the Anchor team.
