Every business wants loyal customers. As it’s less costly to keep existing customers than to acquire new ones, increasing the value of your existing customers is a great way to drive growth and maintain profit margins.
But despite the fact that making a sale to an existing customer is up to 70% more likely than acquiring new prospects, figuring out how to build a loyal customer base can be tricky. Especially when companies fail to grasp the importance of building customer loyalty and instead focus on growing the business almost exclusively on new sales.
With competition becoming more fierce every year, you need to have a good understanding of your customer’s experience with your company and know how to form positive connections with them to take the first step towards creating and nurturing a lifelong relationship.
We’ll take a look at how you can improve customer experience, better serve your current customers, and create customer loyalty programs to build a loyal customer base. But first, we'll go over some of the main reasons why loyal customers are so crucial to your growth potential.
How Customer Loyalty Impacts Your Growth Potential
Before we go through the specific strategies you can use to improve the customer experience and boost customer retention, it's important to understand the different ways customer loyalty plays a vital role in your business’ growth.
Makes Selling Easier
One of the primary reasons customer retention is essential is that it makes selling much easier. When you already have a pre-existing relationship with a customer, you have overcome many roadblocks that could potentially make a new customer hesitant to commit to a purchase.
Since these customers know that you delivered on your promises before (if you didn't, that's something you should address first), you have earned their trust and established a positive connection that will set the tone for and accelerate future purchase decisions.
Create Brand Ambassadors
When you sell to the same customer more than once, you're not only driving more revenue for your business – in that customer's mind, you're also becoming an important part of their success and identity.
There are many ways to convert current customers into brand ambassadors, which means that they can not only contribute to your sales directly with recurring purchases but also help attract new customers from similar backgrounds who are likely to be interested in your products.
As loyal customers are more likely to become brand advocates, spreading positive messages about your brand via word-of-mouth on various channels, such as social media, web forums, review sites, you will no doubt benefit from the positive word of mouth which will add speed and energy to all of your sales and marketing efforts.
Protect Your Market Share
Competitors are always on the hunt for your customers. Just as you are for theirs. And unfortunately, even if someone’s purchased from you once, that does not guarantee that they won't make the next purchase from your competitors or even switch to a different brand altogether.
However, those odds become much smaller once you turn customers into repeat purchasers, as that indicates a relationship built on more than just a single transaction.
As customers buy more from you, managing customer expectations will become easier as well because you will know what they want and they will trust your brand to deliver. Being able to better understand their needs can significantly reduce the chances of losing their business to competitors who don't know nearly as much about them.
Make More Sales
Finally, repeat business from the same customers means more sales overall. While that may seem straightforward, the compounding effect of repeat sales and higher customer lifetime value can have a revolutionary impact on profitability which in turn will allow you to prioritize growth opportunities.
Instead of having to rely on a single purchase from one customer, you can nurture your existing relationships to encourage repeat purchases which means once you acquire a buyer for the first time, if you plan strategically, you will be able to get the amount you spent to acquire them back, and then some. And that alone is a significant advantage when setting marketing budgets and determining your acquisition costs.
Strategies for Building Customer Loyalty
Improving customer loyalty is achievable for any business. But to make it happen, you need to have a structured plan that helps you make gradual improvements and understand what your customers need.
Let's look at some of the strategies you should consider below.
Get to Know Your Customers
The only way to become better at providing a good customer experience is to truly listen to customer feedback.
Whether through customer service interactions, interviews with your customer base, surveys, or even social media interactions with potential customers, there are countless opportunities to discover what your audience wants.
You should have a structured process for collecting and analyzing voice-of-customer data, which can show you what both unhappy and satisfied customers think. Your relationship with customers is your biggest asset, so it only makes sense that talking to them and listening to what they’re saying should be at the forefront of learning how to provide a positive experience long term.
Run NPS Surveys
NPS surveys are a specific method for discovering how loyal your customers are - in other words how likely people are to recommend your business to their friends, family, and colleagues. Even though it's a one-question survey, it can be incredibly effective at telling you just how many customers are happy and likely to remain with your business.
Since the NPS survey uses a rating system of 0 to 10, you can see whether the majority of your customers are satisfied and likely to recommend you in an easy-to-measure way. You can then implement changes to boost the score or compare it with your industry benchmark to see how you perform against your competitors.
It's a good idea to implement NPS surveys during various stages of your customer's journey, asking them to rate you after their initial purchase, after a second purchase, or when they haven't bought from you in a while.
Focus on Customer Service
The occasional bad customer experience is almost impossible to avoid. The truth is that things will sometimes go wrong, and often it will be entirely out of your control.
However, if you can address the issue quickly and provide assistance that can make a huge difference and turn a potentially angry customer into a loyal brand ambassador for life.
Having an omnichannel customer support system available will aid that process and make it much easier for customers to reach you.
Whether it's on social media, on your site, email, phone, or anywhere else, you need to have a process for capturing and quickly addressing those messages. For hours when a live person is not available, you should consider implementing chatbot solutions that can direct customers to helpful resources and provide more common answers for a truly extraordinary customer experience.
Create a Loyalty Program
If you want your customers to become loyal brand ambassadors to spread the message about your company, you should consider offering an incentive for doing so.
For instance, you could create a points system, rewarding valuable customers for every purchase they make. These points could then be used for discounts on future purchases or even to claim free items.
The great thing about loyalty programs is that they not only make the transaction seem more worthwhile for the buyer but that they can also be used as an incentive to make additional purchases. For example, if you have a one-time buyer who hasn't bought again, you can send them an email reminding them about their loyalty points which they could use to get a discount on their next purchase.
Highlight Your Brand Values
Today's consumers care about more than just the price and availability of the products they want. If that weren't the case, it would be all but impossible for small brands to compete against Amazon, Walmart, and other eCommerce giants who are known for their difficult to beat pricing models.
But the truth of the matter is that people want to connect with the brands they work with–they want to identify with companies that share their vision, values, and goals, which is why it’s not uncommon to see customers paying a premium for products that fit their worldview.
The best thing about having a strong brand that your audience connects with is that these types of customers tend to stick around for a very long time. Just look at Apple and its global army of supporters, some of whom have been buying Apple products for decades.
To accomplish that, you must have a very deep understanding of who your audience is, what they care about, and how to distinguish yourself from others in their eyes. Then, you can use that information to create a brand that truly speaks to them and a product selection that uniquely caters to their needs, providing a unique brand experience your customers will appreciate and love to support.
Loyal customers are the backbone of any business. While bringing in new leads is essential for any business, having a loyal customer base will allow you to sustain growth and ensure that you always have a stable stream of sales.
With the strategies listed above, you should be well on your way to making strategic decisions about how to make your buyers come back for more, and turn them into vocal ambassadors of your brand.