When I was a lowly intern at a digital marketing agency, I was allowed to sit in on client calls to “absorb” all the data and strategy being tossed around. One of our clients, a large retailer, was experiencing a spring slump, something that happens to many retailers after the holiday season. The client was concerned because, in the low season without any big flash sales, the only people we saw making purchases were those who had been customers in the past. This audience was considered their loyal customer base—and it was small.
Your loyal customers are the ones who are going to buy your products even if they aren’t on sale and recommend your offerings to friends, and you always want that audience to be large enough to keep you afloat.
What is Customer Loyalty?
Customer loyalty is a measure of how likely your customers are to do repeat business with you.
Different industries have various ways of measuring loyalty, but the most basic way is to look at the number of purchases over a customer’s lifetime in your database. Repeat buyers are your most valuable customers. Though they may not be big purchasers, it is likely that over time, the revenue from them will top revenue from big one-time buyers.
In fact, only a 5% improvement in customer retention rates yields between 25% to 100% increase in profits across industries—happy customers spend more money, more often. There are tons of other benefits to having loyal customers as well—free advertising by word-of-mouth, positive online reviews—so here’s a list of ways to help you build your loyal customer base.
Customer Loyalty Tip #1. Know Your Customer and Let Them Know You
One of my favorite things is when I meet someone once, and the next time I see them, they remember my name and a detail about our last conversation. This is what companies should strive to do with their customers! Admittedly, it is easy to say, but much harder to do.
Send “Happy Birthday” & Other Personalized Emails
Customers are more likely to be loyal if they feel valued; do you remember their birthdays, or their kids’ ages, or the last item they purchased? Many retailers have implemented triggered email programs which will send birthday emails and discounts during a customer’s birthday month and customized pregnancy planning emails/first year of life for new and expectant moms. Everyone loves a birthday treat!
It is almost as important to be transparent with your customers about your business. Are you going through a rough patch with getting shipments out on time? Let them know. Did you just hire a new CEO or release an awesome new product? Send a personalized announcement to your customers, giving them a heads-up before the news gets to the media. Even better, release it to your engaged, loyal customers first in beta to get honest feedback.
At WordStream, we assign customer service reps to specific accounts to assist through their initial transition onto our platform through the customer lifecycle. This allows a rep to get to know the client’s business and business goals, to better assist them. We also send hand-written “Welcome to WordStream” cards from our reps to all new clients! These clients are important to us and we want to let them know.
Customer Loyalty Tip #2. Reward Loyalty with a Customer Loyalty Program
Card-Based Customer Loyalty Programs
Confession: I have way too many credit cards. Every time I’m on an airplane or in a retail store and they ask if I’m part of their customer rewards program, I cave. Spend $ 1000 in the first month and get $ 200 back! What a deal! And then I’m stuck with a credit card that needs to rack up a $ 1000 charge. It sounds like a tricky way to lock in your customer, but if you are honest about the implications, credit card rewards programs can be great.
If you’re not into credit cards, take a page out of Starbucks’ book. Customers earn stars with their purchases, with opportunities to double their rewards certain days of the month and graduate to tiers of loyalty. All you need is a Starbucks gift card and a smartphone. This rewards program also helps Starbucks get to know their customers better by storing all their order and payment information in the app—never have your name misspelled on your Starbucks cup again!
Try Punch Cards
If credit cards are too much of a commitment, an easier way to reward loyal customers is through punch cards. At WordStream, the café in our building has stamp cards. After you get 10 stamps from 10 purchases, you get something free! I find a lot of frozen yogurt and consignment shops like Plato’s Closet do this as well. It’s a good way to keep customers coming back to your specific store as opposed to the café down the street.
Customer Loyalty Tip #3. Make Customer Loyalty Easier
Store Customer Data
Another aspect of Starbucks’ reward program is the option to order and pay on your mobile device. I love when I’m purchasing yet another book for my Kindle and I don’t have to put in my credit card information. This one-touch ordering tells me that Amazon knows who I am (they probably don’t) and they’re kindly helping me out by getting me offline as soon as possible!
To look at it from a different perspective, Apple also does this. With each upgrade, the iPhone strives to make the user’s life a little simpler—anything from the easy-access to the camera on the lock screen, to the accessibility double-tap on the home button for people with small hands. Apple is very public about presenting their new changes and how much work went into the updates, despite not offering discounts, resulting in a loyal following.
Make Use of Automation
Personally, my favorite “make it easier” experience is with my cable company—shocking, I know. I called them to complain about our internet speed and I was directed to the right person by my phone number—didn’t even have to type in a long account number! The customer service representative made it clear that she saw and understood the problem, which resulted in a technician coming to replace our router at a conveniently scheduled time later that week. After he left, the same representative called me to make sure everything was working. That’s great! I barely had to do anything but pick up the phone and dial!
Customer Loyalty Tip #4. Be the Best at What You Do
An easy way to build customer loyalty is to simply be the best out there. There are so many brands that I love, but I just can’t justify the cost of shopping with all of them. Or, it’s cheap but doesn’t last. When I asked my co-workers, which brands they considered themselves to be loyal to, the response was a resounding: “TJ Maxx!” That makes sense to me! Not just because we’re in Boston, headquarters of TJX, but because TJX offers great brands at affordable prices, and they are also one of the only companies out there that have mastered that. We’re all Maxxinistas!
Make Your Value Prop Part of Your Brand
Another brand mentioned was Patagonia. Patagonia has competition, like REI and Eagle Creek Outfitters, but they have a great story and provide a good shopping experience—good return policies, a founder and employees who truly love the outdoors, even a unique business model that was popularized through the publication of Let My People Go Surfing.
Nobody is perfect, so a great alternative to being the best is showing your customers that you are constantly striving to improve. Everyone appreciates the effort, which leads me to…
Customer Loyalty Tip #5. Encourage Customer Feedback
Customer reviews go hand-in-hand with customer loyalty. Good reviews will drive prospects to your business, good service will convert prospects into customers, and satisfied customers will leave good reviews!
The first step in this chicken-and-egg cycle is good service. Make sure anyone in the company who is client-facing is paying attention to their needs and acting to work through any snafus. You can also provide great customer service through channels like Twitter and customer portals. After an issue is resolved or a transaction is complete, reach out to ask about your customer’s experience.
Ask for Reviews by Email
Another way to ask for reviews is through automated email programs like the birthday triggered emails. Once a customer has made a certain number of purchases, send a prompt to review the company for a special discount. If you work with clients, include them in your NPS surveys.
If you have tried and true ways to generate customer loyalty that we forgot, please let us know!Business & Finance Articles on Business 2 Community