Are You Loyal To Your Customers?


Customer loyalty is a customer’s willingness to repeatedly return to a company to conduct business. This is typically due to the delightful and remarkable experiences they have with that brand. One of the main reasons to promote customer loyalty is because those customers can help you grow your business faster than your sales and marketing teams. There are several other reasons why customer loyalty is critical to your success. Customers convert and spend more time and money with the brands to which they’re loyal. These customers also tell their friends and colleagues about those brands, too which drives referral traffic and word-of-mouth marketing.

Customer loyalty also fosters a strong sense of trust between your brand and customers — when customers choose to frequently return to your company, the value they’re getting out of the relationship outweighs the potential benefits they’d get from one of your competitors. When a customer is loyal to a specific brand, they are not easily influenced by availability or pricing. They are willing to pay more as long as they get the same quality product or service, they are familiar with and love. Other characteristics of a loyal customer include hey are not actively searching for different suppliers, being open to other goods or services provided by a particular business, and will keep purchasing from a business as long as there is a need.

All businesses should strive to improve customer loyalty to keep clients purchasing and make them promote their brand to new audiences. Even though 82% of U.S. adults say they are loyal to companies, many businesses focus on acquiring new customers. Research shows that 44% of companies still pay attention to customer acquisition, while only 18% implement strategies aimed at boosting retention. One of the things brands can focus on to build customer loyalty is meeting and even exceeding the expectations of their customers. A staggering 89% of businesses say that customer experience is critical for driving customer loyalty and improving retention.

A business needs to make its customers happy because happy customers will be willing to spend more money on its products or services more often. This and other benefits of having a good relationship with customers should make any business invest in building customer loyalty. A customer loyalty program is a program run by a company that offers benefits to frequent customers. Those benefits may be in the form of discounts, rebates, free products, or other promotions. An effective loyalty program rewards those who buy from a business regularly, encouraging the customer to return frequently. Some customer loyalty programs are: Point-based loyalty program, tiered loyalty program, paid loyalty program, value-based loyalty program, coalition loyalty program, and game-based loyalty program. This is arguably the most common loyalty program methodology in existence. Frequent customers earn points which translates into some type of rewards such as a discount code, freebie, or another type of special offer. Where many companies falter in this method, however, is making the relationship between points and tangible rewards complex and confusing. If you opt for a points-based loyalty program, keep the conversions simple and intuitive. Although a points system is perhaps the most common form of loyalty programs, it isn’t necessarily applicable to every type of business. It works best for businesses that encourage frequent, short-term purchases, like Dunkin’ Donuts. For a tiered loyalty program, finding a balance between attainable and desirable rewards is a challenge for most companies designing loyalty programs.

One way to combat this is to implement a tiered system that rewards initial loyalty and encourages more purchases. Present small rewards as a base offering for being a part of the program, and then encourage repeat customers by increasing the value of the rewards as they move up the loyalty ladder. This solves the potential issue of members forgetting about their points (and never redeeming them) because the time between purchase and gratification is too long. The biggest difference between the points system and the tiered system is that customers extract short-term versus long-term value from the loyalty program. You may find tiered programs work better for high commitment, higher price-point businesses like airlines, hospitality businesses, or insurance companies. For Paid (VIP) Loyalty Program, loyalty programs are meant to break down barriers between customers and your business … so are we seriously telling you to charge them a fee? In some circumstances, a one-time (or annual) fee that lets customers bypass common purchase barriers is quite beneficial for both business and customer. If you identify factors that may cause your customers to leave, you can customize a fee-based loyalty program to address those specific obstacles. For example, have you ever abandoned your online shopping cart after tax and shipping were calculated? This is a frequent issue for online businesses.

To combat it, you might offer a loyalty program like Amazon Prime — by signing up and paying an upfront fee, customers automatically get free two-day shipping on orders (plus other awesome benefits like free books and movies). For a value-based loyalty program, truly understanding your customer requires you to identify the values and desires of your target audience — in doing so, you can encourage customer loyalty by targeting those characteristics. While any company can offer promotional coupons and discount codes, some businesses may find greater success in resonating with their target audience by offering value in ways unrelated to money — this can build a unique connection with customers, fostering trust and loyalty. For coalition (partnership) loyalty programs, strategic partnerships for customer loyalty (also known as coalition programs) can be an effective way to retain customers and grow your company. Which company would a good fit for a partnership? The answer depends on your customers’ everyday lives, needs, and purchase processes. For example, if you’re a dog food company, you might partner with a veterinary office or pet grooming facility to offer co-branded deals that are mutually beneficial for your company and your customer. When you provide your customers with relevant value that goes beyond what your company alone can offer them, you’re showing them that you understand and care about their challenges and goals (even those you can’t solve alone). Plus, it helps you grow your network to reach your partners’ customers, too. For a game-based loyalty program, who doesn’t love a good game? Turn your loyalty program into a game to encourage repeat customers and — depending on the type of game you choose — solidify your brand’s image.

With any contest or sweepstakes, though, you run the risk of having customers feel like your company is jerking them around to win business. To mitigate this risk, ensure your customers don’t feel like you’re duping them out of their rewards. The odds should be no lower than 25%, and the purchase requirements to play should be attainable. Also, make sure your company’s legal department is fully informed and on-board before you make your contest public. When executed properly, this type of program could work for almost any type of company and makes the process of making a purchase engaging and exciting.

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