Selling more to the same consumers, receiving referrals and having revenue predictability are advantages of customer loyalty
Customer loyalty consists of retaining the conquered customers, who continue to buy your products or services thanks to the positive experiences they had with your company. For that, a set of satisfactory interactions is necessary, which will develop a trusting relationship with the clientele in the long term.
Did you know that retaining customers can cost up to 5 times less than acquiring new ones? Still, 44% of companies focus on acquisition, and only 18% focus on retention. The data, compiled by Invesp, show that retaining customers can bring benefits to businesses, but that, despite this, actions of this type remain underexplored.
One of the main ways to retain customers is through customer loyalty. In times of crisis, such as that caused by the covid-19 pandemic in 2020, this is even more important. After all, all lost revenue is harmful.
If you don’t know where to start or think that customer loyalty is a difficult thing to do, we’ve prepared this complete article for you to stay on top of the subject, from theory to practice. Follow up!
What is customer loyalty?
Customer loyalty is a process that consists of developing a positive relationship between consumers and the company so that they return to buy your products or services.
A customer is loyal from a set of satisfying interactions with your business. In this way, a relationship of trust is gradually developed, which needs to be nurtured over time in order to be maintained.
One of the main reasons why it pays to invest in customer loyalty is the fact that selling to existing customers is faster and cheaper than doing the entire acquisition process, from marketing to sales. But there are many other reasons to bet on this strategy. That’s what we’ll talk about in the next topic.
Why is customer loyalty important?
Sell to the same customers
A loyal customer will certainly buy from your company again when they need it. After all, if he has had a positive experience with your product or service, why take chances with the unknown? And the best part is that the acquisition cost of this customer, which is already in your base, is much lower compared to that of a consumer who buys for the first time.
Be suitable for friends and family
Your loyal customer has great sales potential. That’s because, if he had a good experience, he will recommend his products and services to friends and family. This is called referral marketing.
Have more revenue predictability
Which company wouldn’t want predictable revenue? Know that one of the ways to do this is through loyal customers. This can be done by studying how often current customers buy, how much they spend and how many people they refer.
Receive suggestions for improvement
A loyal customer is more willing to share opinions with the company. Since loyal customers often consume your products and services, they can help by giving feedback and suggestions for improvement.
Customer Loyalty in Practice: 5 Tips to Get Started Now
Now that you know, in theory, what customer loyalty is and what its advantages are, see how to implement this strategy in your company in 5 steps.
1. Invest in customer service
Did you know that 9 out of 10 customers wouldn’t mind paying more for a product if they received better service? The data is from H. Interactive, compiled by the Cloud Shop in the infographic Customer service in Brazil.
The service can be the first step to loyal customers. Still, there are companies that still do not pay due attention to this strategy.
To differentiate itself in terms of service, it is necessary to have a trained team that understands how the customer would like to be served, adapting its approach according to the needs of the clientele.
In addition, it is important to offer several channels, such as chat, telephone, email and social networks, to facilitate contact and respond quickly.
2. Customize communication
Not all customers are the same. So, invest in personalization. Not only in customer service, but at any point of contact with the clientele, use the data you have available to your advantage.
In this way, it will be possible to improve the relationship, humanize your brand and establish a closer relationship.
3. Know how to listen
Another way to retain your customers is knowing how to listen to them. This can be done in the service, but also in specific actions, such as:
- market research
- A careful reading of comments on social networks and on sites such as ReclameAqui
From this cross-channel feedbacks, you can work even harder to meet needs and build customer loyalty.
4. Create loyalty programs
Going beyond the loyalty card, there are several customer loyalty programs that your company can use. One of them is the points system, which allows the customer to exchange points for rewards, be it a discount or other exclusive benefit.
Another tip is to choose, among your customers, those who can be considered VIP. This clientele can receive special treatment, with discount coupons and other advantages in a loyalty club. Also, they can receive first-hand their upcoming releases to test, for example.
5. Help the customer to get the most out of your product or service
Your relationship with the customer should not end the moment he or she has purchased. After the purchase, actions must be taken to ensure that he is making the best use of the purchased product or service. It is only in this way, seeing that the acquisition makes a difference in their daily lives, that this customer can buy again.
How can the company act here? Educating the customer about the product. This can be done through content production, sending useful materials for customers to explore as much as possible what the product or service offers.
How to monitor customer loyalty?
If you measure all of your company’s actions, customer loyalty should be no different. With monitoring, it is possible to constantly optimize the strategy and know if it is giving results.
Here are some metrics that help measure the effectiveness of this work:
Net Promoter Score (NPS)
NPS is that super famous metric that lets you know quickly if your customers are satisfied with their purchase. For that, they just need to answer the question: “on a scale of 0 to 10, how much would you recommend our company to a friend or colleague?”.
So, you can divide your customers into notes:
- 0 to 6: detractors
- 7 to 8: neutral
- 9 to 10: promoters
Then, just apply the percentages of customers in each of these categories in the following formula:
Net Promoter Score = % of promoting customers – % of detracting customers
The repurchase index lets you know how many of your sales in a period were closed by someone who already purchased your product or service. Let’s say you’ve made 100 sales in one month. If 40 of them were made by new customers and 60 were made by those who have already bought at least once, then your repurchase rate is 60%.
You don’t need to use only quantitative indicators here. An in-depth interview can also be done with some customers to understand how loyal they are to the brand and why.
In addition to these tips, there is much more you can do to retain customers: identify retention points, decrease turnover and improve long-term retention are some of actions. Many of these points can be mapped even in the purchase process, identifying the customer’s needs and adapting their after-sales.