It’s 2021 and businesses are changing the way they measure success. Soon the days of hustling to find new customers will be gone as companies become aware of the value of their existing ones.
Marketers understand that building connections with their audience will ultimately increase loyal customers. But how can they gain this loyalty, and how should they measure it?
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The importance of customer loyalty
Customer loyalty is an essential component of any successful business strategy. Remaining strong in this area will keep your clients coming back for more, ensuring your company maintains a consistent revenue stream.
Contrary to popular belief, it costs less to hold onto existing consumers than to source new ones.
A recent study by Bain & Company found a 5% increase in customer retention could increase a brand’s profitability by a whopping 75%.
Happy customers are also much more likely to leave positive reviews, recommend your products to others and even post about your company on social media, which could result in huge exposure for your brand.
Here are some best practices to gain customer loyalty.
Value your existing customers
A study conducted by invespcro.com found businesses have a higher chance of selling to an existing customer (60-70%) than a new one (5-20%).
Ensuring people feel valued will go a long way to keeping them coming back. Personalised emails and birthday discounts are a simple way to achieve this and there are plenty of marketing automation services that can trigger these emails.
Another way to show your consumers they are important to you is to keep them in the loop about what’s happening within your company. From a new CEO to a delay with shipments, being transparent builds trust and engagement.
Maintain strong customer service
Consider what will make your consumer’s experience better. Free shipping could make all the difference according to a study commissioned by Metapack. The statistics showed convenient delivery options increased conversions for brands by 38% and cost was the main factor for UK consumers when considering a purchase.
Ensure your company website and social media profiles display your contact information clearly to make it easy for customers to get in touch.
Encourage customer feedback
Customer reviews and loyalty are closely integrated. Good reviews will attract new customers, while great service will make sure your regulars return.
Ask for feedback and listen to it, whether positive or negative. Use the comments to hone your business’ customer service or improve your products.
If your company is launching a new product, ask your consumers for their opinions. What do they like or not like? What could make the product more user-friendly? What would they like to see next from the brand?
Dan Conboy, Shopify expert at Statement says: “Your aim should be to become a brand that people want to buy into, a brand that people feel a connection with. Bring the customer into your conversations so they can be part of that journey – they’ll be more likely to buy into it if it’s a product they’ve had the opportunity to shape.”
How to measure customer loyalty
Customer loyalty can be measured in a variety of ways:
- Number of customer referrals – With the right marketing tools, you’ll be able to track the progress of each customer from referral to first sale.
- Churn rate – A tool used to measure the success of your business in relation to retaining existing customers.
- Net Promoter Score (NPS) – A score from 1-10 that determines the likelihood of your customer recommending your brand to others.
- Customer Lifetime Value (CLV) – A tool used to measure the value your customer has to your business, based on their entire relationship with your company.