What would your business look like if you were able to increase your retention rates by 10 or 15 percent? How much more profitable would you be? These are questions worth considering as you start fresh in 2021.
What Makes a Loyal Customer?
Customer loyalty is something that businesses have been after for decades. And in today’s competitive environment, it’s something that’s harder to obtain than ever before. Today’s customers – particularly younger consumers – are less brand loyal and tend to switch between brands they see as “basically the same.” However, loyalty is still something that can be achieved if you’re committed enough.
Customer loyalty is typically the result of a proprietary blend of price, value, experience, quality, convenience, notalgia, and expectation. And in the world of social media, there’s also a degree of social acceptance involved. (“What will people think?”)
By cultivating loyalty, you ultimately increase profitability and revenue. Research shows that increasing customer retention rates by five percent – which is basically a sign of loyalty – can increase profits by 25 to 95 percent. (That’s because it’s significantly less expensive to keep a customer than it is to go out and procure a new one.)
4 Tips for Increasing Customer Loyalty.
Every business has its own method of creating loyalty, but the following tips should help you improve in this area:
1. Gather Feedback.
You can’t develop loyal customers if you don’t first understand how your customers feel about your products, services, and brand. In other words, you need to gather feedback.
There’s a multitude of ways to gather feedback, including surveys, interviews, testimonials, reviews, basic website analytics, and even focus groups. But it’s important that you find a way to do it at scale.
Net Promoter Score software is one example. It can help you collect, organize, interpret, and act upon customer feedback by streamlining the process and helping you uncover powerful insights on which customers are most likely to recommend you to other consumers.
Social listening tools are also extremely powerful. They allow you to keep your finger on the pulse of what people are saying about your brand online. As you grow and become a bigger brand in your space, these tools become invaluable – basically allowing you to respond to positive and negative feedback in real-time.
2. Provide Superior Customer Service.
People don’t always remember the quality of a product or what features it has. They won’t always remember if they liked a product or loved it. What they will remember is how you treated them. And so much of how you treat a customer has to do with the ancillary service you provide.
Good customer service can amplify a good product. It also has the potential to right many wrongs with a product and restore confidence in the brand. Stop viewing customer service as something that’s nice to have and make it a priority by hiring talented people who embody your brand’s principles.
3. Deliver on Promises.
There’s a saying in business that you should under-promise and over-deliver. If you want to make customers happy, you should aim to exceed expectations at every step along the way. This includes pricing, quality, and the overall customer experience. To reiterate the point above: People remember how you treat them.
4. Utilize Social Proof.
Though most people assume that they act independently and make up their own decisions, the truth is that we’re all heavily influenced by our peers. You can use this to your advantage. By leveraging social proof – meaning positive reviews and ratings, testimonials, and endorsements – you can increase the chances of having other customers view your brand in a positive light.
Building a Sustainable Business.
A business with loyal customers is more profitable and more stable. For starters, there’s less turnover and more predictability. This makes it easier to project cash flow. Secondly, when a new product or service is released, the company can rest assured that customers will respond well. This makes it easier to grow a business over a period of years and decades, as opposed to hanging on and hoping that things work out.
Every customer doesn’t need to have a high degree of loyalty toward your brand, but the higher the percentage of loyal customers, the brighter your company’s future will be.