As a business owner, do you want to learn how to build customer loyalty to have repeat sales and generate more revenue for your business?
Repeat sales are essential to any business, and it only comes when customers trust your business/brand to deliver high-quality products/services constantly.
Hence the need for every business owner to know how to achieve customer loyalty.
It all starts with offering optimal customer satisfaction, adding value to the customers, and building a strong relationship with your customers.
In this simple blog post, you’ll discover;
- What customer loyalty is
- The Importance of customer loyalty.
- Factors that prevent businesses from achieving customer loyalty.
- Additionally, we will look at ways to build customer loyalty.
- How to measure customer loyalty
Let’s dive right in.
What is Customer Loyalty?
Customer loyalty is the measure of the probability for customers to patronize a business continually.
This could also be defined as a customer’s commitment to a business.
It’s a commitment and show of trust that makes them continually patronize a business.
Although customer loyalty and customer retention seem to be intertwined, they are achieved for different purposes.
Customer retention strives to get customers to purchase goods and services from a business more than once over a stipulated period.
Whereas customer loyalty aims to make, customers choose your business over other competitors voluntarily and repeatedly.
This is through the relationship of trust and commitment that they have built with your business.
Customer loyalty gives birth to “loyal” customers, as the name states.
However, it also allows you to acquire customers who serve as spokesmen/women who inform others about your business.
Importance of Building Customer Loyalty
Customer loyalty plays a major role in ensuring that a business achieves its goals and objectives.
Some of these roles are;
One of the major importance of customer loyalty is that it brings about company growth.
Loyal customers often provide feedback and information.
This helps companies to improve their products and services.
The improvement of these products and services brings about customer satisfaction which equals company growth and development.
Loyal customers are likely to spend more of their money patronizing a business’s products than others.
Not only do they spend more, but their patronage is also consistent.
It can be daily, weekly, monthly, yearly, and on different occasions and holidays in the year.
When a business has loyal customers, it experiences an increased output of revenue generated.
Loyal customers serve as brand ambassadors and advocates.
These spread positive remarks and review about a business to other people.
They also recommend the businesses to people in their network, such as their friends, family, coworker, former colleagues, etc.
These reviews boost the business’s reputation and help them to acquire new customers.
Reduction in Expenses
Another reason why a business must build loyalty with its customers is to save some marketing expenses for acquiring new customers.
This is because loyal customers help businesses acquire new customers through word-of-mouth advertisements and testimonials.
Striving in the Midst of Competition
The foundation of every business is its customer base.
This is because these customers are the reasons why these businesses can survive.
When a business has built loyalty with its customers, it does not only grow and expand.
It allows the company to stand out and strive through the constant rising competition in the business market.
How to Build Customer Loyalty – Factors that Might Hinder the Process
Certain factors can hinder a business or company from building customer loyalty.
When a business cannot build customer loyalty, all the benefits attached to customer loyalty will be lacking from such a business.
Some of the factors that hinder a business from achieving customer loyalty are:
Before achieving or acquiring customers who will consistently patronize your business, you need to ask yourself if your business itself is consistent.
Does your brand name, identity logo, or services keep changing from time to time?
If the answer is yes, then you cannot achieve or build customer loyalty.
This is because your customers will be confused by your constant changes and would no longer be interested in anything your business offers.
They may also be unable to recognize your business due to inconsistency.
Poor Quality of Goods and Services
A business will be unable to achieve customer loyalty if your goods and services are of low quality.
Also, if they do not give your customers satisfaction or meet their expectations as presented to them.
This also occurs when your products and services are pricey but do not give your customers the value they paid for.
Value occurs when your goods or services give your customers the value and worth of their money.
This too while also meeting their needs and their expectations.
Poor Customer Service
When a customer patronizes your business, your aim and goal should not only be to give them the goods and services they requested.
You should also strive to ensure that you treat your customer respectfully and politely during communication and conversation.
In other words, offer excellent customer service.
Poor customer service also involves unavailability to provide your customers with the assistance and guidance they need while patronizing your business.
Also, the inability to provide prompt answers to their questions and solutions to their problems may lead to customer dissatisfaction and disloyalty.
Poorly Trained or Bad Customer Support Team
Businesses will be unable to build customer loyalty if their customer support team are poorly trained, lack experience, or the required qualification.
They will have no ideas or information about the business that will engage them to help customers adequately.
Lack of Communication
A lack of communication or poor communication is another factor that causes you not to achieve customer loyalty.
Also, if your communication methods with your customers are always automated and robotic, you will lose customer loyalty.
This is because customers will not stay loyal to a business that does not care enough to address its customers by their names.
No Feedback Channels
If you do not make provisions for customers to give you feedback on your products and services, it would be difficult for you to know how best to meet their ever-changing needs.
Thereby making it difficult for you to satisfy them and gain their loyalty.
This is because there will be no way for you to monitor customer satisfaction.
Also, you won’t know the areas of your business that are causing your customers’ dissatisfaction and attrition.
Overall, a customer who is constantly displeased with your products/services can not be loyal.
No Customer Loyalty Reward
Your business can not build customer loyalty if there are no incentives for loyal customers.
Some businesses fail to send thank you messages, offer promotions, gifts, and discounts to their loyal customers.
In such cases, customers don’t feel valued or an important part of the business.
Hence, they quickly move on to other businesses that treat customers better.
Lack of Transparency
A lack of transparency or honesty will serve as an obstacle in achieving or building customer loyalty.
This happens when a business is not truthful or honest in its dealing with a customer.
For instance, not providing customers with all the information they need to know about a product/services and hidden charges.
It leads to a lack of trust and confidence that helps to build customer loyalty.
A lack of availability is not only a situation where your customers cannot reach you or communicate with you.
It also occurs when your operating hours are low and limited.
Hence making it difficult for your customers to do business with you.
This leads to a situation where customers cannot rely on you to attend to their needs when they need you.
This will make them easily move on to other reliable and dependable businesses.
Ways to Build Customer Loyalty
Customer loyalty, as we said, is a customer’s voluntary patronage of a business.
To ensure this, there are certain things that you must do as a business owner to ensure that customers stay committed to your business.
Some of these things include;
The first on the list of methods and tactics to building customer loyalty is consistency.
While a lack of consistency hinders the building of customer loyalty, consistency sets you on the right path.
Be consistent with everything that pertains to your business if you intend to build customer loyalty.
Have a consistent name, brand identity, logo, and a consistent product and services offered.
Offer Quality Goods and Services that Add Value
To build and successfully achieve customer loyalty, strive to offer quality goods and services that meet your clients’ needs and surpass their expectations.
Also, offer your customer value.
Every customer looks out for value when patronizing a business.
Hence, it should not be ruled out.
Value is not about placing high prices on your goods and services.
It is about offering your customers services that match the money’s worth of these goods and services.
Improved Customer Service Relations
The services you render to your customers determine the overall success of your business.
Improve your customer service by training your staff or customer care team members to provide excellent customer service.
This way, they will have the required knowledge/skills to treat customers appropriately and guide customers on using your products and services.
Also, they’ll know how to handle various customer complaints and problems.
Thus giving the customers a better experience with your products/services and encouraging customer loyalty.
To serve customers better and build a loyal relationship with them, start by building good communication.
Reach out to your customers and check upon them.
This should not just be because you want to encourage them to make another purchase.
Also, because they are the foundation of your business.
So, therefore, you must know how they are faring.
Communication not only shows your customers that you care, but it helps you to understand your customer.
Understanding your customer is not limited to knowing what they want and need.
It also involves knowing the best communication methods that work for your customers.
This is because customers vary from one another.
Also, you may need to employ methods that allow you to achieve effective communication with each of them.
This could be by selecting which platforms are best for communicating with your customers.
This could be phone calls, text messages, emails, social media platforms like Facebook, Twitter, Instagram, etc.
You can also offer language options that allow customers who cannot communicate effectively in English to communicate with you easily.
Personalize your Customer Relationship
Alongside building a good communication relationship with your customer, ensure that you personalize your relationship with your customers.
This involves avoiding the use of generic, automated, or robotic names and approaches.
Instead, use personalized names and keep records of your customer’s information when conversing with them.
Examples of this information could be their names, date of birth, occupation, and location, etc.
Another way to build customer loyalty is through feedback and reviews.
Always ask your customers for reviews and feedback.
This is a form of engagement that allows them to share their opinions.
This could be on their thoughts on or experience with your products and services.
It could also be on any other thoughts and opinions that pertain to your business.
Also, ensure that you respond to this feedback and review by first thanking them for their observations and information.
Most importantly, use this information to improve your products/services to serve your clients better and gain their loyalty.
Appreciate and Acknowledge your Customers
Most people like it when you appreciate/acknowledge their efforts.
Not only does this encourage them to do more, but it also makes them value and appreciate your efforts too.
So, ensure that you always appreciate customers and acknowledge their efforts and patronage.
This way, they’ll recognize that you value them and continue doing business with you.
Therefore, helping you build customer loyalty.
Offer Loyalty Rewards
In line with appreciating and acknowledging customers, a great way to compliment it would be by offering loyalty rewards.
These loyalty rewards could be in the form of gifts, discount offers, and promotional offers.
This is another factor that makes it difficult for businesses to build customer loyalty.
Lack of honesty and transparency causes a customer to doubt and distrust a business.
Whereas honesty and transparency help to build trust and loyalty.
So, give your customers all the information they need to know about your business.
Also, be honest enough to take responsibility for your mistakes.
Also, do not make promises that you cannot keep to your customers.
Instead, be honest, truthful, and realistic about your capabilities.
A reliable business is always available for business.
In essence, customers can always reach you when they have needs.
This way, customers will see your business as the go-to place when they need something.
Therefore helping you to achieve customer loyalty.
It could be by making use of communication platforms that allows you to respond to their needs promptly.
It could also be having a 24/7 customer care center to attend to your clients’ needs during and off working hours.
Consequently, helping you offer better customer service and achieve customer loyalty.
Overall, these are some of the ways you can encourage your customers to be loyal to your business.
However, how do you know your level of customer loyalty so that you can identify the areas you need to improve.
Even more, after putting these tips to practice, how do you know you have achieved customer loyalty.
Here are some ways to measure customer loyalty.
Methods for Measuring Customer Loyalty
Here are some metrics for measuring customer loyalty.
Net Promoter Score
Net promoter score (NPS), also referred to as a net promoter, is an index that measures the tendency or willingness of a customer to refer or recommend a business or company’s product and services to others.
It is also known as a market survey metric that rates and evaluated the possibility of a customer voluntarily recommend a business to others in their network.
Net promoter score often ranges from 0 to 10 or -100 to 100.
It is also in three different categories known as detractors, passive, and promoters.
Detractors is a lower score, usually between the range of 0-6.
They are customers who are not pleased with your products and services.
They are also not likely to use your products and services or recommend your business to anyone.
Passive, on the other hand, is a score that ranges from 7 to 8.
They are a little satisfied, and there is a tendency that they will consider trying out other businesses.
However, they will not spread negative reviews or remarks concerning your business.
The promoter is on a score of 9-10.
These customers are very satisfied, and they are likely to repeat purchases and patronage.
They will also be brand ambassadors who spread positive reviews and refer your business to others.
Churn rate is also known as attrition rate.
Customer churn is a metric that expresses and measures the percentage of customers leaving a business over time.
It is calculated as; Customer Churn Rate = (Lost customers ÷ Acquired Customers) × 100%
Customer Loyalty Index
It is a standard tool for tracking customer loyalty over some time.
It calculates, measures, and evaluates customer loyalty for a better understanding and improvement of a business.
This is based on the responses or answers from customers.
The customer loyalty index ranges from 1-6, while 1 signifies yes from a customer, and 6 means no.
Customer Lifetime Value
This is also known as lifetime value or lifetime customer value.
Customer lifetime value (CLV) is a tool that measures the value a customer will bring to your business or company in their lifetime.
It also describes the net profit contributed by a customer’s relationship with a business during their lifetime.
The calculation of Customer lifetime value is; Customer Lifetime Value = Customer Value × Business’s Lifespan.
It is a tool used to identify the number or percentage of customers who return to make repeated purchases over customers that purchase once.
Also, it measures the percentage of customers that make another purchase or place another order after their first purchase within a period.
It is calculated by dividing the number of repeat customers by that of the total paying customers.
Repurchase lifetime Repeat Customers ÷ Total paying Customers.
Conclusion on How to Build Customer Loyalty
Building customer loyalty is a great investment towards securing the future of your business or company.
The tips shared in this blog post are a great way to start building customer loyalty today.
Remember, customer loyalty is different from customer retention.
Customer retention is about achieving repeated purchases from customers.
Whereas customer loyalty is about earning the trust and long time commitment from a customer.
A loyal customer will choose you over your customers and represent your brand always.