You’ve seen the statistics that scream that acquiring new customers is wildly more expensive than retaining current ones. You are probably aware of the link between customer loyalty and retention in business. But you might still ask: why are customer loyalty programs important? The answer comes down to word of mouth and reputation, through the channels that allow people to voice their opinions simply and digitally.
If you feel a little increase in retention and revenue is in order, read on for how to boost your business. This is the complete 2019 intro to how to boost customer loyalty.
Definition of customer loyalty
Customer loyalty is the likelihood that someone who purchased your product will be a repeat customer. It is no buzzword – all signs indicate that it is a solid foundation to build businesses on. Some still choose to ignore it though. Read on for a breakdown that includes the statistics of how expensive it is to gain new customers.
Business benefits of customer loyalty programs
You might think customer loyalty and retention are overrated trends. You might question the connection between the abstract emotion of loyalty and good business. Well the answer to that is word of mouth is as real as it was before we went digital. It is alive and kicking and amplified by the social media outlets and online forums people have at their disposal.
Whether it is through trustpilot, App Store reviews, or any other channels people use, they are voicing their opinions. According to the Purchase Influencer report in the US the opinions of friends are a leading reason for choosing a brand.
The report revealed that 78% of people who consult family and friends for brand advice trust the tips they get. By treating people well, you could be tapping into a business goldmine – because they can be vocal with how good they are being treated.
Your company’s most valuable player – the case for customer retention strategies
According to HubSpot, a retention boost of just 5% translates to a 25% revenue boost.
So while it may seem the grass is greener where the new customers are standing, maximizing and valuing the ones you have on your pasture might be a more profitable strategy. We’ve written about the importance of customer acquisition cost here.
Customer retention strategies are a way to lower this cost.
Does it really work? You might ask...
One take on building customer loyalty programs is through software. For example: Starbucks has a Reward program through their app. You can order your coffee digitally and pile up the points. But you might be asking "big deal, a coffee company has a customer app do they even get anything out of it?"
Is customer loyalty becoming a thing of the past?
That's when the Starbucks example gets interesting. By offering their services through their app, they have a digital database of their customers preferences. Giving their loyal customers a streamlined experience will make them more likely to come back and is something that can grow a buzz through word of mouth.
Implement today or risk losing your customers
In his 2011 playbook on consumer loyalty, entrepreneur Gary Vaynerchuk proposes a change to a benefits-driven “Thank You Economy.” He describes the kind of personalized business model that Starbucks uses as the way to go. In his words,
“How we cultivate our relationships is often the greatest determinant of the type of life we get to live. Business is no different.”
― Gary Vaynerchuk, The Thank You Economy
One of the biggest customer service miscues in recent memory was when a Southwest Airlines captain told film director Kevin Smith he was too fat too fly on their plane. While he decided to joke about it on social media, this is exactly the kind of foot in mouth behavior that will make people seriously reconsider being recurring customers. Southwest were forced into a quick public apology thanks to Smith voicing his opinion to the 1.6 million Twitter followers he had at the time.
Another example of someone who gets consumer loyalty comes in the B2B space. Backlink aficionado Brian Dean takes time to respond to many of his comments on his popular ‘backlinko’ blog. Getting this kind of personalized feedback and acknowledgment puts him in good favor with recurring readers.
Since customer loyalty and retention go hand in hand, you boost your revenue from existing customers by providing top-notch service. Click below to tweet this.
Good customer experiences result in them becoming evangelists for your brand and drawing new business in. Word travels fast – good or bad.
Don’t miss out on the great opportunities that come with prioritizing people. The challenge is to provide the value with your product and service that will keep your customers coming back. Accept it and excel!