How to Generate Customer Loyalty

Many marketing strategies prioritise client acquisition, but how do you generate customer loyalty to keep those buyers coming back?

Acquiring one new customer can cost anywhere from five to 25 times more than retaining an existing one – a figure that clearly demonstrates the importance of creating loyal customers.

Online shopping, cheap imports and same-day shipping have all made competing on price point impossible for many retailers, while service industries are also feeling the pinch of low-cost offshore labour.

So before you can expect a customer to choose your brand over a cheaper or faster option, you have to first ask yourself why they would.

Recent reports have revealed 55% of consumers would be happy to pay more for a better customer experience, while experts forecast customer experience will be universally more important than price by 2020. 

And according to a study by McKinsey, 70% of the buying experience is based on how the customer feels.

In other words, it’s not the price that matters, but the value you offer.

Thriving brands are now employing a range of value-adding strategies to improve the customer experience and convert first time shoppers into loyal regulars.

Loyalty programs: The problem with discounts is most businesses already face fierce competition on costs, so cutting prices to win business often only serves to hurt your bottom line.

Loyalty programs can be as simple as a cafe punch-card offering the 10th coffee free. But one technique that is proving particularly successful for online retail brands is the offer of digital loyalty credit. A customer receives a percentage of their purchase back as credit in the form of a discount code to use on their next order. You set the reward level, and digital e-commerce software automates the program for you.

Australian natural beauty product retailer Nourished Life uses a loyalty credit program, offering members $1 in ‘Nourished Life Dollars’ for every $20 dollars they spend. The credit can be applied to their next order, and shoppers can see their balance when they log in to their account. They also receive automated emails to remind them of their rewards balance. The loyalty program works as an incentive to not only spend more on each order, but also to shop there again, and it’s just one of the growth techniques founder Irene Falcone has used to build her business from $100 in stock, to an annual turnover of $20 million.

Know your customer: Remembering customer experience is more important than price for many people, sometimes just getting to know your customer can be all the incentive they need to keep coming back.

In an increasingly digital world, there’s something nice about arriving at your favourite coffee shop where the barista knows your name, or heading out to Friday night drinks where the bartender knows exactly how you like your margarita.

And this personal touch is achievable for larger businesses too. In Episode 9 of Marketing Matters, we talk to Michelle Grand-Milkovic, co-owner of popular Sydney restaurant Love Fish, which uses technology to help staff deliver a personalised and consistent customer experience.

Feedback and data analysis: We start out in business with a preconceived vision of our target market, but sometimes our actual customers paint a very different picture.

It’s important to understand who your customers are and what they want to ensure you’re meeting their expectations.

The simplest way to do this is to ask your customers for feedback. That might be via a customer feedback form, an emailed survey or even a focus group. Online businesses can also make use of digital metrics to analyse consumer behaviour and tailor the user experience to their customer.

Staff training: There are so many digital tools and customer retention strategies to choose from, it can be easy to overlook the obvious.

The main contact point and driver behind most businesses is still people – even online stores need someone to pack the orders.

So training staff to ensure delivery of a consistent customer experience is critical to the success of the work you do behind the scenes in strategising business growth.

And you’re not exempt from this if you’re a sole trader. Undertaking training to learn new skills will help to put you ahead of the competition and build your brand.

Create anticipation: Some brands do this without even trying. Popular English singer-songwriter Ed Sheeran has a following of fans dubbed ‘Sheerios’ who faithfully follow his every move on tour, flying from city to city and camping out for days to be the first in line at every show.  

And despite an Apple memo saying the days of lining up for its products were over, people still queued outside Sydney’s George Street Apple store for almost a week ahead of the latest iPhone release.  

That is a level of customer loyalty many of us could only dream of. But even small businesses can create anticipation for a new product or service, getting their target market primed and ready to buy when the time arrives.

Whether it’s a book, a new service or a company rebranding, social media is a great way to release ‘teasers’ of an upcoming release. This should be paired with a mailing list opt-in promising subscribers will be the first to know about your big news.

After Sales Support and Warranties: While in the market for a new television recently, I found all of the top electronics stores had price matched each other on the model I wanted to buy. For one week only, they all had the exact same TV for the exact same price.

I already had my mind made up on what I wanted to buy, so sales skills weren’t going to be the deciding factor here either.

A couple of the stores offered a price beat guarantee, and all I had to do was show the advertised price from another store and they would beat it by 5% to 10%.

But the real selling point for me came down to their after-sales support. The television came with a standard 12 month manufacturers warranty, but each store had its own add-on protection program, from a simple four year new-for-old replacement guarantee, to an elaborate ongoing care program with tech support, store credits and home installation. I was able to compare the value of these offers and determine which one best suited my needs.

For more ideas on how to generate customer loyalty in your business, catch Episode 9 of Marketing Matters