The development of customer loyalty strategies is one of the most profitable customer-centric techniques in business. However, building customer loyalty is not an easy task, especially in a context of supply growth. We discuss the top 10 best strategies for building customer loyalty.
Customer loyalty strategies are probably more important today than ever before. Organizations operate in a market where supply and diversification are constantly growing and, therefore, the probability of losing customers is now greater than years ago.
That is why customer-centric companies not only focus on attracting new customers, but also on building customer loyalty.
What is customer loyalty?
Customer loyalty —also called customer retention— is the combination of those strategies and actions that organizations carry out to retain their existing customers.
This type of actions do not only seek to turn consumers into regular clients, but also to build a relationship of trust with the customer in order to turn them into promoters of our own brand.
Customer loyalty strategies require marketing effort and are closely linked to customer satisfaction and a brand's added value. Thus, in addition to designing retention techniques, companies also need to measure their customer satisfaction index.
The importance of customer loyalty
Recent researches confirm that retaining existing customers is more productive than attracting new ones.
Acquiring a new customer costs five times more than building customer loyalty. Beyond the initial cost, retaining existing customers also has better results than acquiring new clients. Companies with above-average customer loyalty rates generate 2.5 times more annual growth than their competitors. What's more, a 5% increase in customer retention rate leads to a 25% to 95% increase in profit.
On the other hand, we must not forget that a loyal customer is much more likely to make multiple purchases than a new customer. Loyal customers already know the company, its products, its customer experience and its customer service. They trust the brand and have a higher Customer Lifetime Value (LTV) than other customers. According to research conducted by Invesp, , loyal customers have a sales success rate of is 60-70%, while that of a new customer is 5-20%.
For all these reasons, it is clear that customer loyalty or retention strategies are essential to generate profit, both in the short and long term.
Top 10 strategies to build customer loyalty
Now that we know what customer loyalty is and why it is important, let's see how to build it.
1. Know your customers
The first step in building customer loyalty is knowing our customers, which goes far beyond knowing their name, age, gender and place of residence. Today, it is essential that companies focus their efforts on getting to know consumers on a deeper level. This implies the development of a global data strategy focused on transforming customer data into valuable customer insights that generate marketing intelligence and promote better data-driven marketing decisions.
Generating customer intelligence from data is the first step in understanding who our customers are, what they need and what we can offer them.
2. Listen to the voice of the customer (VoC)
In addition to analysing customer data, companies must listen to their customers.
Listening to the voice of the customer (VoC) goes far beyond data collection. It actually is a type of market research based on techniques and processes that aim to acquire in-depth knowledge of the customer through active listening. Active listening means both paying attention to what our customers have to say and designing concrete actions that answer their demands or objections.
Market research is one of the most effective strategies for actively listening to the voice of the customer, as it involves initiating direct conversations with the consumer that, in addition to providing information to the company, makes our clients trust us.
3. Develop an optimal customer service
Customer service is one of the most important aspects of the customer experience. If we want our customers to stay with us, we must provide an optimal customer service. Customer service is the most direct connection between an organization and its customers. Therefore, it is crucial for companies to ensure that they are giving customers the kind of attention they expect.
4. Actively respond to your customers' questions and complaints
In relation to the previous point, nowadays customers have multiple channels through which to convey their concerns or disagreements. Consequently, organisations must pay attention to customer feedback at all touchpoints since customers are now likely to interact without reaching to customer service.
Digital marketing professionals have the responsibility to address these types of issues in online touchpoints. Users can express their opinion on the company's website, on social media or on any other touchpoint.
Beyond locating all touchpoints, it is important that companies give direct answers. In other words, responses must contain useful information and come with actions that solves customers' pain points.
5. Honesty and transparency
Transparency and credibility are one of the most valued aspects by millennials, which represents 73% of decision-makers.
Given the context, companies must now be more transparent than ever and provide information to build trust among the most skeptical customers.
One of the most effective techniques to create credibility is to take advantage of customer-generated content and leverage it to make customers brand advocates. A study by Forbes concludes that 97% of millennials read online reviews before making a purchase and, of these, 89% say they trust the opinions of other users.
6. Focus on what the customer wants
It is not surprising that customer segmentation techniques are becoming increasingly popular in the corporate environment. Customer segmentation is a much needed exercise to understand the specific needs of each customer segment.
Classifying customers into groups according to their interests and/or behaviors helps companies to obtain valuable information and to generate specific strategies for each group of customers. Personalization is one of the most relevant marketing trends. Customers now want companies to talk to them face-to-face and provide them with information related to their interests. To achieve this, companies need to identify the different types of consumers in their customer base.
Undoubtedly, the most effective technique to do so is the Buyer Persona method, which can later be expanded with more sophisticated segmentation techniques.
7. Take care of the customer experience
Customer experience has become decisive. Beyond the product or service offered, consumers value their experience throughout the customer journey and the purchasing process.
Customer experience is also an opportunity to generate added value and differentiate from the competition, with more and more companies creating personalised customer experiences.
Delivering an optimal customer experience is one of the most profitable forms of building customer loyalty. According to McKinsey, a good customer experience increases customer satisfaction by 800% and reduces churn by 60%.
8. Design a social media content strategy
Nobody doubts the power of social media, one of the most influential communication channels of the 21st century. In today's times, having a comprehensive strategy for generating content on social media is almost imperative.
Social media has become the ideal space to build stronger relationships with our clients. A customer who follows us on a social media is a customer who is up to date with our activity, who is interested in what we can offer and, most importantly, who is much more likely to make recurring purchases and become a regular customer.
9. Don't underestimate the power of email marketing
Due to the growing influence of social media and the multiplication of communication channels between corporations and users, many organizations make the mistake of underestimating the power of email marketing. However, important entities such as Forbes point out that email marketing is more relevant today than it has ever been.
Email is still one of the most effective channels to distribute personalized content, create mailing campaigns, build customer loyalty and generate conversion.
10. Invest in the right technology
Finally, we cannot ignore specific technologies that promote the building of more meaningful relationships with our customers and the management of these relationships. Investing in the right technologies can greatly minimize the effort and investment dedicated to customer loyalty, automating processes and guaranteeing better results.
Right now, the Customer Data Platform (CDP) is the most comprehensive customer relationship management technology on the market. Find out how it works and what benefits it can bring you in the e-book "Customer Data Platform (CDP): A step closer to customer-centricity":
In short, customer loyalty is essential for increasing profit margins and sales revenue. While customer acquisition is essential to ensure growth, customer loyalty strategies are just as important.