Why You Need True Customer Loyalty

What defines customer loyalty? When every company promises that their product is the best–and most are indistinguishable from one another–the simplest answer is “making the customer come back for more.” Every business from large corporations to local food kiosks have loyalty programs designed to secure a customer’s favor. Unfortunately, businesses aren’t accomplishing customer loyalty as well as they should, and are missing crucial success opportunities as a result.

This article is about:

  • Developing a customer loyalty program that actually mitigates risks to your brand and diverts customers from competitors.
  • Substantially increasing profit (and reducing costs) through upsells and second orders when customers stick around–more revenue potential than the initial sale.
  • Using customer feedback data to proactively solve issues, create delightful experiences, and accurately iterate the vision of your product.

What does true customer loyalty do for companies?

Forrester analysts found customer loyalty programs aren’t creating loyal customers. Their research “shows that great customer experience correlates to loyalty metrics like retention, enrichment and advocacy” but that current “transactional benefits are more about increasing frequency and spend than influencing emotional loyalty and devotion.” Simply put: We’ve focused more on gamey point programs than how great experiences make a customer feel about a company.

During the “Age of the Customer”, true loyalty is an unbeatable tactic to mitigate risk, grow revenue, and reduce costs. The universality of mobile (and the internet generally) allow empowered customers to greatly erode a company’s brand reputation in a matter of days. Rewards points will not aid a company that has reputational risks or stiff competition in the marketplace. By contrast, 55% of consumers would pay more for a better customer experience, and 83% of consumers need some degree of support when purchasing. It is now savvy to treat customer service like a valuable loyalty and acquisition tool.

Why Prioritize Customer Loyalty and Support?

Customer acquisition cost (CAC) is one of the largest barriers preventing companies from scaling successfully. For example, when app developers spend a massive sum on advertising, design, and development, it’s financially devastating when only 26% of those app customers will remain loyal. Spending $200 on 100 customers means your cost per customer is $2–but if 74% of them churn, you’ve really spent that $200 on 26 customers for a cost of $7.70 each. Most apps see this horrible return on investment until the company bankrupts and dissolves.

Better loyalty through excellent customer experiences will effectively reduce that cost of acquiring customers. Additionally, each customer will provide a better lifetime-value (LTV) by seeking out your company more consistently. KISSmetrics found that second order revenue can make customer success more profitable than sales. The investment behind a real customer loyalty program will pay for itself when customers return time and time again.

More companies globally are picking up on this trend in the digital age. Gartner found that 97% of C-level executives believe customer experience is critical to competitive success moving forward.

How to Gain True Loyalty

While companies don’t necessarily have to scrap their point programs, gaining truly loyal customers requires a robust customer support initiative. Here are 3 main steps to begin your real customer loyalty program:

  • Get a deeper understanding of customer motivations using data
  • Develop more consistent interactions across organizational silos
  • Create adaptive strategies that keep up with customer demands

Your support team has one of the largest databases for why customers use your product. To understand customer motivations, dive into the feedback your customers give when they need help. Making it easy for customers to leave feedback will increase the amount of data you receive; Microsoft’s new Outlook app leveraged this strategy in beta to better align their product with professionals’ needs. Whichever medium you use to gather feedback, make sure the process is both friendly and blatantly obvious.

How to Keep Loyal Customers

Every department needs to have some form of customer interaction, either through direct contact or reporting from customer support. It can be easy to cite cold hard metrics as an excuse for not listening to customers, but you cannot get the full product picture without anecdotes from customers passionate enough to say something. Don’t underestimate the value of a customer that feels they are being heard. 1/3 of customers would recommend a company that responds quickly, even if their response didn’t solve the issue first pass.

Use your newfound data to create strategies that proactively keep up with customer demands. Remember: your customers walked in the door because you promised them that you’re the best around. Don’t use fake programs to keep them–market success means discerning their expectation and meeting (or surpassing!) it. The delight will encourage loyalty, and that loyalty will distinguish your company from the rest.

You can learn more about true customer loyalty from our free webinar: The Social Community That Converts.

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