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You’ve worked hard to build a valuable, loyal customer base, and you don’t want to lose them – churn is never good. But sustaining loyalty and driving customer retention is not as easy as just providing good service. If you want to know how to measure and maintain customer loyalty effectively, we’ve got some tips.

What is Customer Loyalty?

Customer loyalty is a measure of how devoted customers are to the services, products and experiences provided by a supplier and the likelihood that their allegiance will remain steadfast. Importantly, customer loyalty is the product of consistently positive customer experience which is very much related to customer’s emotions.

Far more than just being good service, the connection of a customer’s emotional experience to the loyalty they feel towards a brand or company is paramount. The effect of forming an emotional connection to a customer – through personable service, going above and beyond, or offering surprise extras, is far more likely to stay in a customer’s mind and hopefully result in a true advocate. Happy customers will leave a pleasant review, delighted customers will tell all their friends about you.

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The importance of customer loyalty should not be underestimated. Customer loyalty and retention has a direct impact on the bottom line for all enterprises. Without satisfied, happy returning customers who provide great reviews and testimonials, many businesses would not survive. And it’s widely understood that the cost of acquiring fresh, new customers is far more than the cost of retaining existing, valuable customers. So an important challenge is how to sustain and build customer loyalty.

How to Improve Customer Loyalty

In order to improve customer loyalty you need to understand your current customer loyalty status. By considering the typical characteristics of loyal customers we can determine metrics that provide an accurate measure of loyalty. Here are some examples:

A loyal customer will continue to buy your products or services.

This can be assessed by determining the repurchase ratio. This is a measure of repeat purchasers over one-time purchasers.

A loyal customer is likely to refer your business to their colleagues, friends and family.

The likelihood that customers will positively recommend your business can be assessed by means of a simple Net Promoter Score survey. This technique asks the simple question: “How likely are you to recommend us?” Responses are classified as detractors, passives and promoters which provides a clear indication of how likely it is that customers will be brand advocates.

Loyal customers are interested in other products and open to other products or services on offer from your business.

This aspect of customer loyalty can be assessed by evaluating the upsell ratio. This is a measure of the number of customers who have purchased just one type of product or service compared with the number who have purchased more than one.

Loyal customers are not actively seeking alternative suppliers and are not enticed by offers from competitors.

This aspect of loyalty can be assessed by measuring your customer retention rate. Sometimes referred to as ‘churn rate’ or ‘customer attrition rate’, assessing the level of customer retention is a fundamental customer loyalty metric. It’s generally represented as the percentage of customers retained over a given period.

There are many additional metrics that are used in various industries to quantify customer loyalty, including:

  • Sales per customer
  • Customer lifetime value
  • Spend per transaction
  • Engagement index

Importantly, the measures you select to assess and represent your customer loyalty should be appropriate to your industry, your business and your specific business goals.

Having established your current level of customer loyalty you can look at how to make tangible improvements. Here are some tried and tested strategies that have worked well for many enterprises.

Recognise and Value Regular Customers

By firstly getting to know who your regular customers are and then providing them with extra special attention you will make them feel valued. Every customer is important, but by allocating special attention to those who are already loyal you are likely to consolidate their loyalty.

Reward Your Customers

One of the most effective techniques to drive customer loyalty is to establish an appealing customer loyalty rewards program. Statistics show that as many as 76% of women and 72% of men are more likely to shop at a business that offers a customer loyalty program.

Demonstrate Dependability

Never letting customers down is vitally important for loyalty and retention. Always provide what the customer expects exactly when they expect it, if not sooner. While it’s great to exceed customer expectations it can be enormously damaging not to fulfil promises.

Mistakes are a fact of life and of business, unfortunately – the good thing is that customer loyalty can be bolstered by service recovery after a failure. Face up to errors, offer efficient solutions and make amends, and customers will often br more impressed than without that slight bump in the road.

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Provide the Best Customer Service

By making customer service a priority you are presenting a clear indication of how highly your business values its customers. Aim to build a great customer-relationship that goes beyond being purely transactional. Getting to know your customers as individuals will make a significant contribution to ongoing customer loyalty.

There are many other ways to drive and create customer loyalty but these strategies have been widely recognised as effective.

How to Sustain Customer Loyalty

If you have worked hard to establish a valuable, loyal customer base what do you need to do to sustain it? Will your customers remain loyal if you simply keep doing what you are currently doing? Are they likely to be tempted away by competing offers?

Sustaining existing levels of customer loyalty differs from creating and improving customer loyalty. In order to retain existing customers and sustain their loyalty you need to anticipate changes and recognise signs that customer loyalty may be wavering. Here are some practical tactics that help identify changes in how customers feel about your business and what they expect.

Stay in Touch with Customers

Having established valuable relationships with loyal customers its important to be continuously in touch with them so that you can hear their concerns before they become issues. Regular and routine conversations and customer surveys will provide valuable insight that will help you ensure that their needs and expectations are always recognised, acknowledged and fulfilled.

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Monitor Your Industry and Competitors

Remaining aware of your market sector, your competitors, the services and products they offer, their advertising and promotional campaigns along with their development programs provides vital business intelligence. You need to always be aware of what’s on offer and what’s coming down the line as a surprise from a competitor could result in a sudden and serious impact on your customer base as they are tempted away by a better product, service or offering.

View Your Business as a Customer

Taking an objective view of all aspects of your business, as experienced by customers, is very valuable. Retail stores have traditionally used ‘mystery shoppers’ to derive unbiased, accurate representations of in-store customer experiences. The same or a similar approach can be taken to derive an objective assessment of all customer touch points which can then be used to improve customer experience and drive sustained loyalty.

Conclusion

Customer loyalty and retention is important to all businesses. As competition grows customers can be easily tempted by better offers or the latest new shiny things available on the market. Establishing and maintaining an awareness of customer loyalty levels and constantly striving to improve these while building great customer relationships contributes toward sustaining customer loyalty and retaining valuable customers.

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