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You’ve worked hard to build a valuable, loyal customer base, and you don’t want to lose it. Churn is never good. But sustaining loyalty and customer retention is not as easy as just providing good service. Want to know how to measure, maintain and increase customer loyalty effectively? We’ve got some tips.

What is Customer Loyalty?

Customer loyalty is a measure of how devoted customers are. Specifically to the services, products and experiences provided by a supplier. Also, the likelihood that they will remain loyal over time. Customer loyalty is the product of a consistently positive customer experience. This, in turn, is very much related to customers’ emotions.

The effect of forming an emotional connection with a customer is to create a lasting memory. These can come through personable service, going above and beyond, or offering surprise extras. According to the ‘power of moments‘, these ‘moments’ stay in a customer’s mind and hopefully result in a true advocate. Someone who doesn’t just leave a pleasant review but tells all their friends and colleagues too.

Customer loyalty and retention has a direct impact on the bottom line for all enterprises. Without satisfied repeat customers, many businesses would not survive. They are a reliable source of revenue as well as positive reviews and testimonials. It’s widely understood that the cost of acquiring new customers is far more than retaining existing ones. So it makes commercial sense to try to increase customer loyalty.

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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.

Customer Loyalty and retention facts

Building customer loyalty begins with understanding your current customer loyalty status. By considering the typical characteristics of loyal customers we can determine 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 rate. This is a measure of repeat purchasers as a proportion of all customers.

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

Net Promoter Score (NPS) measures the likelihood that customers will positively recommend your business. These can be done very quickly, with just a single, simple question. Typically, “how likely are you to recommend us?” Respondents are classified as detractors, passives or promoters. The latter group is a good indicator of those most likely to 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. This is 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 used in various industries to quantify customer loyalty, including:

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

The measures you choose should be appropriate to your industry, your business and your specific business goals.

4 Strategies For Increasing Customer Loyalty

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

Make regular customers feel valued. Do this by getting to know who they are and giving them extra special attention. Every customer is important. However, give special attention to those who’re already loyal to consolidate and grow their loyalty. 

Reward Your Customers

Among the most effective techniques for driving customer loyalty is an appealing customer rewards program. Two-thirds of consumers say they enjoy them.

Don’t Let Your Customers Down…

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. It is important to respond to negative feedback in the right way.

Mistakes are a fact of life. The amazing thing is that mistakes can sometimes be the catalyst for newfound customer loyalty. This is a phenomenon called the service recovery paradox. Whatever you do, own up to errors, apologize and make amends – fast. Customers can end up more impressed having seen how you deal with a failure than without any bumps in the road.

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Provide the Best Customer Service

Making customer service a priority and you’re showing 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. Three-quarters of consumers are more likely to purchase from a company that knows their name and purchase history and recommends products based on their preferences.

How to Sustain Customer Loyalty

So you’ve worked hard to establish a valuable, loyal customer base. What exactly do you need to do to sustain it? Will your customers remain loyal if you simply keep doing what you’re doing? Are they likely to be tempted away by competing offers?

Sustaining customer loyalty requires a different approach to creating and improving customer loyalty. Crucially, you need to anticipate changes and recognise signs that customer loyalty may be wavering. Here are some ways to identify changes in customer expectations and how they feel about your business.

Stay in Touch with Customers

Relationships suffer without regular contact. Continuously staying in touch with customers allows you to hear their concerns before they become issues. Routine conversations and customer surveys can provide valuable insight. Do this non-intrusively so that you aren’t becoming an irritant or asking for too much of their time. That’ll help ensure their needs and expectations are always recognized and fulfilled.

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Monitor Your Industry and Competitors

Remain aware of your market sector and competitors. Keep tabs on the services and products they offer. Their advertising and promotional campaigns – along with their development programs – also provide vital business intelligence. You need to avoid the risk of competitive surprises and be proactive about managing their impact on your own customers. This can lessen the chances of them being tempted away by a better product, service or offering.

See Your Business Through Your Customer’s Eyes

Taking an objective view of all aspects of your business, as experienced by customers, is very valuable. Retailers have traditionally used ‘mystery shoppers’. These provide accurate, unbiased representations of in-store customer experiences. A similar approach can be taken to derive an objective assessment of all your customer touchpoints. Analysis of this can then be used to improve customer experience and drive sustained loyalty.

Gain More Loyal Customers

As competition grows, customers can be easily tempted by compelling offers or the latest new thing. This is where loyal customers are different. Customer loyalty and retention is important to all businesses. It starts with establishing and maintaining an awareness of customer loyalty levels. With this baseline in place, there are various ways to measurably increase it further. In parallel, as you build great customer relationships, you can focus on complementary strategies to sustain customer loyalty.

Measure Customer Loyalty

In order to improve customer loyalty, you need to have a way of measuring customer happiness.

The best way to gain customer feedback is to make it easy and fun for them. Customer Thermometer‘s 1-click survey will up your feedback game. Send yourself an example:

How did we do today example