10 Tips on How to Gain Customer Loyalty
If you’re like most small businesses, you grapple with the question of how to gain customer loyalty. You know loyal customers are an asset, and according to an Adobe study, when they return to your business, there’s a nine times greater chance they’ll convert compared to first-time shoppers.
However, what you may not know is that their value goes far beyond continued patronage. Loyal customers often recommend your business to friends, family, and people in their social network. They’re the ones buying gift cards for special occasions so they can share the great experiences you provide with other people. Also, loyal customers are more likely to share positive online reviews on social media or other platforms, which can influence other consumers to become your customers too.
Although building a loyal customer base is essential, it’s not a given. A SmarterHQ study found only 7 percent of millennials consider themselves loyal to brands, choosing to shop where they can get the best price and the best experiences.
Interestingly, it’s not just millennials that aren’t brand loyal. Shoppers from the baby boomer generation can feel overlooked and unrewarded — which translates to 93 percent of these once-loyal shoppers are also willing to spend with competing brands.
Even across these generational gaps, one thing is clear — customer loyalty is earned. Let’s take a look at ways your business can win customers’ loyalty and make a lasting impression.
1. Know your customers
The first step in how to gain customer loyalty is understanding your customer base. After all, how can you retain customers if you don’t know who they are and what they want?
The biggest advantage brick-and-mortar businesses have over their ecommerce counterparts is being able to regularly engage customers in conversation, put a face to a name, and observe how customers shop. Sometimes a simple discussion can quickly reveal insights that may take months to uncover in an online environment.
However, since time usually limits what you can learn through observation and conversation, you’ll want to capture customer information (name, email, phone) to use for future marketing purposes.
The best way to do this is by leveraging your Point of Sale (POS) system and asking customers for their contact info at the point of purchase. The POS system will collect and store the data so you can use it to understand customers’ shopping habits.
Refer to a customer’s purchase history for clues on how to personalize service and make relevant offers. For example, if you notice particular customers only come to your restaurant for dinner, send them a promotion to come in for dinner on an off-peak night to try and drum up some business on a slow Tuesday night.
On the flip side, if you’re a retailer and notice a group of customers that tend to buy items by a specific designer, offer them an exclusive discount on items under that label.
Regardless of the type of business you own, take the time to let customers know you recognize them as regular customers and you appreciate their business.
2. Invest in the right customers
Once you have data on your customers, you’ll need to use it to identify your top customers. You will probably find that the Pareto Principle, which states, in general, 20 percent of causes result in 80 percent of effects, applies to your business as well. In other words, 80 percent of your revenues are probably coming from 20 percent of your customers; this makes retaining that 20 percent one of your top priorities.
Focusing on your top customers will make marketing less complicated and more effective. It eliminates trying to be all things to all people. It also helps you plan and, budget – social media marketing platform SumAll advises devoting 25 percent of your marketing budget to campaigns to retain your VIP customers.
3. Make doing business with you convenient
Is doing business with you simple and convenient? Research shows that convenience is key to customer loyalty. The University of British Columbia conducted a study in which subjects in two groups had equal amounts of money to spend. One group spent money on things while the other group spent money to save time.
Researchers concluded that people are happier saving time – and once they discover how to do it, they’ll continue. A common example of convenience is Amazon Prime. Customers will pay more than $100 per year to have free, two-day shipping on just about anything Amazon sells. People crave convenience, and they’ll find businesses that offer it — whether it’s yours or the competition.
4. Provide top-notch customer service
It’s no surprise that customer satisfaction plays a big part in customer loyalty, but in a fiercely competitive climate, you may need to step up your game. You’ll need to find ways to go above and beyond the service offered by your competitors and be the best at what you do.
Restaurants need to offer prompt, friendly service — customers won’t be loyal to an eatery that makes them wait 10 minutes for a drink refill or condiment. You also need to be accommodating to diners’ special requests for seating and food prep. Similarly, retailers must provide fast, efficient, and personalized service, whether assisting a shopper on the sales floor, in the fitting room, or at the checkout. Moreover, all merchants should make payment transactions as quick and easy as possible, allowing customers to use their preferred payment methods.
Since a lot of customer service responsibility falls on shoulders of your employees because they’re in customer-facing roles, make sure they’re adequately trained and capable of finding resolutions that please customers – and maybe even win their loyalty.
Don’t be afraid to give an upgrade or comp if a customer is not satisfied with a product or service. The Aspect Consumer Experience Index states that 76 percent of consumers believe customer service reflects how much you value their business. Deliver more than expected, and your customers will remember your brand.
5. Offer rewards
Loyalty programs have been around for a long time, but a punch card program probably isn’t going to be enough to win a customer’s loyalty these days. Loyalty program software integrated with your POS system will automatically track the number or dollar amount of purchases and award points.
It will also make redeeming points easier for your customers. Your loyalty solution can also enable customers to track and redeem their points online or with a mobile app. A loyalty program powered by technology also opens the door to gamifying your loyalty program or creating a community of loyal customers, both of which can be incentives to keep customers engaged with your business.
Make sure you are strategic about the rewards you offer and remember what we previously talked about — know your customers. Customers need to perceive rewards as valuable for them to be effective at encouraging repeat business. The information you learn by analyzing customer data from your POS system will be invaluable here. Give customers rewards they will appreciate – let them know you know what they like.
6. Train your employees to put loyalty-building first
Whether your employees are waiting tables, assisting customers in the aisles, working a checkout counter or answering the phone, they should always remember they are talking to a VIP. The customer may not be loyal yet, but it’s your employees’ job to make that happen.
Develop a training program that includes education on your business’ standards for loyalty-building customer service. What promises will you and your employees keep regarding experiences? How will you treat people? What are your beliefs or mottos you’ll follow? Assume every customer will be a loyal customer and treat them that way.
Insist employees that have one-to-one interaction with customers have the right skills. They should be personable, patient, knowledgeable, efficient, and good communicators. Don’t compromise on this; there’s too much at stake to have the wrong employees in these roles.
7. Be honest and reliable
Now that consumers can freely share their experiences online and on social media – in addition to word of mouth – your business will always be under a microscope. Your customers will insist on transparency, honesty, and reliability.
A bad experience can have long-term adverse effects. An American Express study found that more than half of Americans have decided not to make a purchase or abandoned a transaction due to lousy service. Moreover, 33 percent of consumers say they would consider switching companies after just one instance of subpar service. On the other hand, a customer motivated to draft a post about a good experience or provide you with a testimonial can boost your business. A study by user-generated content (UGC) solutions provider TurnTo Networks found UGC influences up to 90 percent of shopping decisions, even encouraging consumers to wait longer and pay more.
Follow the golden rule and treat others how you would like to be treated (or in business talk, be the business you’d want to do business with). Keep promises and show customers you respect them, and you’ll increase customer loyalty.
8. Ask for feedback
Another excellent strategy is to occasionally check the pulse of your customers with polls or surveys. These are great ways to confirm that customers are happy with your merchandise mix or menu, and the level of service they receive. Ask for customer feedback about product quality, customer service, prices, how you compare to the competition, the experience, and how they feel about your brand.
Also, don’t be afraid to ask for suggestions or what your business can do better. Customer surveys can also reveal where your business is missing the mark. Remember, as Bill Gates famously said, “Your most unhappy customers are your greatest source of learning.”
Take customer feedback to heart and find ways to correct issues that could be creating negative experiences. Don’t be shy about reaching out to individual customers and making it right — it could turn a dissatisfied customer into a loyal one.
9. Form a sense of community
It’s instinctual for people to want to belong. If your customers feel like they belong to a community of shared values and interests built around your business, they are more likely to be loyal to it. Engage customers through content marketing, social media, and face-to-face interaction.
Easy, low-cost ideas include responding to social media posts or pictures with your hashtag, inviting customers to participate in your loyalty rewards program or current promotion, and recognizing their birthdays or anniversaries. You can even build a physical or online community where people of shared interests can meet – like a foodies group sponsored by your restaurant or a book club sponsored by your bookstore.
10. Give back
In addition to building a sense of community around your brand, you can also get involved in your actual neighborhood community. Participate in community events, sponsor youth activities, and, volunteer your time. The members of your community will recognize your commitment and may choose to do business with you because of it.
Also, consider supporting causes that your customer base believes in and that you’re passionate about too. This connection can influence customers that choose to spend their money with merchants that share their values.
How to Measure Customer Loyalty?
As with any business strategy, it’s important to set goals and measure your progress as you perfect how to gain customer loyalty. Valuable Key Performance Indicators (KPIs) include customer retention rate, which is the number of customers at the end of a timeframe (E), minus the number of new customers acquired during that time (N), divided by the number of existing customers at the start of that timeframe (S):
Customer Retention Rate = (E-N)/S X 100.
For example, if your business had 2,500 customers at the beginning of 2018, and you acquired 500 more during the year, but had a total of 2,600 at the end of 2018, your customer retention rate is 84%:
(2,600-500)/2500 x 100 = 84%
The Bottom Line
Now that you know how to gain customer loyalty and probably already have some of the right tools and resources you need to create loyalty-building customer experiences, what are you waiting for? There’s no better time than now to build a faithful following of customers.