Why is customer loyalty important to your brand? Do you think your customers would remain devoted to your brand, no matter what you are up to?
Companies are learning how their relationship are with their customers, especially as consumers, we can feel the economy getting tighter than before. Unemployment rate in the country and around the world has increase due to the COVID-19 pandemic. This has caused many customers to limit their spending. These changes have been dramatic and record-breaking as they are finding it difficult to pay for their needs therefore their wants.
USA Today reported about 12 million United States workers started to receive unemployment as of April 4. It is the highest level recorded since the year 1967.
According to AP News, by the end of April, consumer spending has plunged by 7.5%. This has been the precipitous monthly plunge since 1959 when the records were first started being saved.
If your company is just like the most of the other companies, you need to continue adjusting to these massive shifts in consumer buying habits. Focus is the utmost important key point in helping your company to prepare for the economic rebound. The key area of your marketing should be focusing on how to increase and enhance customer loyalty.
Shoppers are rethinking about the when, where and how they spend their money. The brand loyalty offers a competitive edge in this. Customers are more likely to stick to a brand when their trust has been built, in good times and even bad times. The strength of the customer relationships with your company is measured to identify the customer loyalty. And then you can think of to reinforce the loyalty bond.
WHAT IS CUSTOMER LOYALTY
Customer loyalty is when a consumer constantly returns to your brand because they trust your brand from the quality of their experience. These customers are happy with their brand relations, and, according to Accenture, 57 of consumers spend a lot with brands they’re devoted to.
Your most loyal customers will help you increase your profit and grow your business. It costs way lesser to secure your existing customers than to find the new customers. But if customer acquisition is your goal, loyal customers can also help you attract new customers through product referrals and word-of-mouth. This is a much lower-cost way to acquire new customers than investing in lead-generation efforts.
It is obvious that customers who come back to spend further money in the good business, there’s other, more subtle, benefits to loyal customers. As what Sarah Chamber said in Nicereply blog, it’s like the old leaky bucket metaphor. Imagine a business as a bucket. Customers flow in and fill the bucket up. A successful business has a full bucket of customers and profits.
However, imagine the bucket has a hole in it. Customers who flowed into the bucket start to leak out the hole. Losing customers is called churn, and it has a large effect on business growth. Even if you can somehow start filling the bucket faster, you’re still losing valuable customers. Patching up the hole or improving customer retention means keeping more customers in the business bucket
Unfortunately, it’s much more expensive to get new customers into the bucket than continue to sell to existing customers. It’s estimated that new customers cost five times more to convert than existing customers.
You would need to spend more of your company resources on acquiring the new customers as of having many disloyal customers in your business. Loyal customers make it easier for businesses to grow.
Here are 10 customer loyalty benefits to your brand that you should keep in mind.
1. Customer Acquisition and Retention
For some time now, customers have continued to lose trust in brands and companies. The experts has point to the rise of misinformation, customer data breaches and the flood of branded content and ads as explanations for this dip in trust. In a recent HubSpot Trust Survey, 55% of respondents said they do not trust the brands they buy from as much as they used to.
The lack of trust and the high costs of marketing means that retaining these customers is critical for your successful business. In fact, many companies see customer experience as the key driver to retention and loyalty.
- How to Increase Retention? Is to Increase Engagement
- We know that convincing customers to return again and again takes a lot of courage to be focused on the effort to earn their trust, and keep them actively engaged with your brand. That’s why so many businesses are investing in quality loyalty programs and searching for the best programs.
Our Customer Service Excellence program can help you and your team to reach out for the best. Click on the link below to find out more:
Rewards and loyalty programs, special promotions, discount programs, even employee perks are all ways you can actively invest in customer retention. The most important thing is that you should not lose your existing customers in pursuit of new customers. It’ll definitely pay off.
2. Repeat Business
Not only loyalty is cheaper, but it has better returns. Since it costs five times more to acquire new customers, retention is important. And we know that existing customers affect the bottom line.
According to a research by Surveylegend, engaged consumers buys 90% more frequently, spend 60% more per transaction and are five times more likely to indicate it is the only brand they would purchase in the future. On average, they’re delivering 23% more revenue and profitability than the average customer.
The research states that the probability of selling to your customers is 60-70% compared to 5-20% with a new prospect. Also, existing customers are 50% more likely to try new products and will spend 31% more than new customers.
As much as the loyal customers are more profitable, do not take their loyalty for granted. Yes, it is true that they would be more open to price increases, but be thoughtful to not raise the prices as you wish to see how long they would stick around. Not just today’s revenue but lifetime revenue is the end goal.
3. Upselling and Cross-selling
Your customers are your growth opportunities. They’re already familiar with your brand and thus represent ideal upselling and cross-selling opportunities. All you could do is, introduce new products as part of a “customer loyalty loop”. These offers would recognize your customer’s individual buying habits and motivates, and then suggest new products they’re likely to find appealing.
Customers would be receiving a large incentive as a reward for each step they achieve at the end of their goal. Customers would also have the relevance they crave and also be introduced to your new products, which aligns both your customer’s pretensions with the business pretensions.
4. Reduce Costs
The internet is a big place. It grows continuously and expands each year. Here are some general internet data and statistics that you’re sure to appreciate as you make your mark in this competitive landscape and grow your business into a successful bone that your customers love.
Marketing and sales costs are rising. Trends on social media and search are making it more delicate for brands to reach new audiences. Social media has become a pay-for-play space, where algorithms prioritize user content over business content.
According to WPForms research, 71% of people don’t trust sponsored ads, 69% don’t trust advertisements, and 65% don’t trust press releases.
Also, Google’s new search updates have made it difficult for brands to market their websites and products to acquire new customers without a large financial investment, and 52% of product searches begin on Amazon. Meanwhile, organic search costs have increased by almost 50% in the last five years.
5. Improve Brand Image
Your brand image is how consumers perceive your products and services. It is known as one of your company’s most valuable assets. More than just logo and online presence, brand image incorporates all the touchpoints you have with individual consumers, including customer service, social media and company culture.
It definitely costs a lot to build your brand image, but if you’ve built trust and customer loyalty, your customers are more likely to share their positive experiences. Again, this would fall under the word of mouth category. The better your company treats your customer, the better the brand image would be. This is where we could come across the customers’ loyalty.
6. Honest and Quality Feedback
Feedback is critical to the success of any business nature. Customers who provides feedback are often willing to give brands the benefit of the doubt. It’s a way for your customers to tell you how to earn them repeatedly for your business. As research has shown by Insight6, people who have complained and seen their issue resolved are 84% less likely to decrease their spend.
Loyal customers can provide quality feedback in terms of online reviews, customer service surveys and customer comments. They understand your brand and its offerings, and they’re one of the best ways to gather honest responses to improve and learn how you’re doing.
Additionally, you can use this feedback to:
• Measure the success of your customer experience
• Launch new products
• Forecast better business decisions
• Reduce customer churn
7. Increase Customer Lifetime Value (LTV)
Customer Lifetime Value helps you estimate the net profit you could potentially gain over a lifetime of interactions with a given customer. Customer Lifetime Value isn’t anything new, as Forrester wrote in a recent report according to Formation, “but it’s gaining traction as customer insights professionals seek to maximize efficiency, demonstrate economic value and leverage advances in data management for strategic purposes like customer experience improvement.”
As brands move to a more customer-centric approach and focus on loyalty, they will also increase Customer Lifetime Value and customer retention by engaging with customers and giving them more reasons to continue buying from your company. Over time, customer loyalty are estimated to be worth 10x more than their first purchase.
8. Create Brand Advocates
You are turning your customers into brand advocates by focusing on brand loyalty. Brand advocates are valuable to your company. They spread positive word-of-mouth messaging to their entire social network, which can drive four times better results than paid media. This is critical because according to the research by Buyapowa, 92% of consumers trust online recommendations from friends and family compared to other branded content.
You’ll also improve your brand image, by having access to user generated content and reach out to a wider audience. Brands can increase their brand advocates through customer loyalty programs, building communities and brand ambassador programs.
9. Gather Valuable Customer Data
Customer loyalty programs are a great way to collect customer data for personalized experiences. According to Forrester, 80% of American adults are comfortable with sharing some kind of personal information about themselves in order to have a personalized shopping experience.
Brands that collect the customer data and leverage artificial intelligence (AI) and machine learning (ML) can analyze how customers interact with them. These insights can help brands understand customer motivations and what they find relevant to their shopping experience. It helps brands build on basic segmentation and offer true 1:1 personalization that speaks to a customer on an individual level, which will improve engagement and Customer Lifetime Value.
10. Stand Out from the Competitors
In a tight economy, competition gets fiercer to win a customer’s attention and business. Look at the brands with the strongest loyalty: Apple, Sephora, Amazon, etc. Each has a loyal customer base that willingly pays more because they believe these companies’ products are superior and they offer better customer experiences.