Creating a customer loyalty program that actually works
Most of the brands have been able to establish themselves just because of a loyal customer base. These customers won’t leave them even if they have to wait for some time to get the product. For example, you would never see a Starbucks lover in a line at a street coffee shop. These are some of the brands that have unlocked the secrets of customer loyalty.
WebMaxy eGrowth can help you enhance customer experience and build customer loyalty. Implement a rewards program on your website and encourage customers to stay with you.
Is it their quality or customer experience that brings people back to them? Or is it more than that? Here, in this blog, we will give you complete information about customer loyalty definition and how to increase customer loyalty.
What is customer loyalty?
Customer loyalty can be defined as when a customer repeatedly chooses or returns to a business for buying their products or services. This is mainly because they liked what they received and the experiences they had with that brand.
For creating a loyal customer base, a brand must offer experiences that encourage people to return to the brand again and again. A loyal customer definition is no matter the price and variety of alternatives, a customer chooses you.
Loyal customer also become your brand advocates who promote your products or services to their friends and family. They stick with you even during and after the tough times. For example, Maggie was banned in the year 2015 and when it was relaunched after 5 months, people still purchased it.
Customer loyalty in marketing
One of the main goals of your marketing strategy should be building customer loyalty in business. Happy and satisfied customers tend to become loyal customer in the long run. Customer loyalty is also directly related to customer retention.
As per the statistics, acquiring a new customer can cost five to seven times more than retaining an existing one. Thus, customer loyalty is an important metric for businesses. Customer loyalty marketing has many benefits that we have discussed below:
- Improved share of wallet: Share of wallet refers to the amount of money a customer spends on a specific brand in comparison to its competitors. Customers spend more time and money on the brands they’re loyal to. Increased customer loyalty means more share of wallet of your brand.
- Increased trust: When a customer repurchases from you it is because they find your relationship is worth investing in than your competitors. Every time a customer returns to you and gets the same experience, their trust in your brand increases.
- Word-of-mouth marketing: When a customer trusts your brand, they recommend your brand to their friends and family. Word-of-mouth marketing is more influential than any other form of marketing. This is due to the fact that people trust other people more than a brand.
What are loyal customers?
Loyal customers not only help maintain your sales but bring new customers that boost your revenue. Loyal customers are the ones who:
- Make repeat purchases from you.
- Have been with your brand for years.
- Don’t buy from your competitors.
- Engage with you on distinct marketing channels.
- Provide feedback to help you improve.
- Recommend your products or services to others.
For building customers loyalty, you should create exceptional customer experiences. You should try to establish an emotional connection with your customers to make them feel connected to your brand.
Different types of loyal customers
Customers are loyal to brands for different reasons like quality, convenience, or brand values. In this section, we will tell you about the different types of loyal customers.
- Truly Loyal Customers: Truly loyal customers are the ones who genuinely like your brand and would never ever leave you for a competitor. They frequently make purchases, give good ratings & feedback, and participate in your loyalty program. They recommend your products or services to their friends and family.
- Happy & Satisfied Customers: These customers really like your products or services and buy from you frequently. They are satisfied with the experience with your brand. However, they can be taken by your competitors if a better discount, deal, or experience is offered.
- Loyalty Program Customers: These customers are loyal to you for just getting the loyalty program benefits. They make repeat purchases to get offers, discounts, or freebies. But they will only stay with your brand till the time they’re benefited from the loyalty program.
- Convenience Loyals: These customers are loyal to you just because it’s convenient for them. It might be your location or shipping speed that’s appropriate for them. Convenience makes them stick with you for a long time.
- Convenience Loyals: These customers are loyal to you just because it’s convenient for them. It might be your location or shipping speed that’s appropriate for them. Convenience makes them stick with you for a long time.
- Low-price Loyals: These customers are loyal to you because you offer a low price or a better deal than other brands in the market. Low-price loyals will stay with you till the time you offer a low price. Once they find a better deal anywhere else, they will stop purchasing from you.
Why is customer loyalty important?
As you know keeping a customer is much easy than acquiring a new one. The survival of a business depends on its loyal customer base. Now, we will give you examples that exhibit why marketing loyalty is important.
- Loyal customers spend more: People who trust your brand make repeat purchases and spend more on your brand. According to statistics, 75% of customers are willing to pay more for products from companies that offer a good service experience. Once you provide an exceptional customer experience, people are willing to pay more to get it again.
- Loyal customers become brand advocates: Happy and satisfied customers improve your brand reputation by posting positive reviews and word-of-mouth marketing. These customers also tell their friends, family, and colleagues to try your products or services.
- Loyal customers have high conversion rates: The customers who have tried and tested your products have a higher conversion rate. This is because they are already aware of what they’re going to get from you. As per a report, the average conversion rate of a loyal customer is 60-70% while that of a new customer is 5% to 20%.
- Loyal customer base boosts profits: A loyal customer base helps your brand to remain sustainable and grow at the same time. According to a report, when customer retention rates are increased by 5% the business profits go up by 25% to 95%.
- Loyal customers forgive easily: Customers stay loyal to a brand due to repetitive good experiences. So, when even once they get a bad experience due to an error, they tend to let go of it. As per the statistics, 74% of customers say they’ll forgive a company for its error after receiving a good experience.
- Customer loyalty enables effective planning: With a loyal customer base you can predict your business growth. It can help you in doing financial planning effectively. Marketing teams can identify the customers who’re going to stay with the business and which customers they need to target.
As per research, 44% of companies still pay attention to customer acquisition while only 18% implement strategies to boost retention. This means focusing on increasing your customer loyalty can help your brand to get ahead of competitors.
Strategies to increase customer loyalty
Customer loyalty is not something you can work on once and expect things will remain the same. A customer relationship needs to be nurtured and built over time. To build customer loyalty, you need to understand what customers need & want and try to deliver them the same. Here, we have given some strategies that you can implement to increase customer loyalty.
1. Enhance your customer experience
We all know that no matter how hard we try, we can’t meet every customer’s needs and expectations. The key is not to build a perfect product but provide a great customer experience. You should try to create easy, convenient, and awesome user experiences. For example, you can make your packaging creative and crafty to add an element of excitement when the customer unwraps the product.
2. Provide good customer support
To foster customer loyalty, you must provide a good customer support service. Your customers should be able to reach out to you easily, in case of any problem or issue. You should provide different means of communication through which customers can connect to you.
Deploy chatbots that provide quick answers to any of the general questions of your customer. Hire a team of customer support representatives that can understand your customers and solve their problems. Try to build personal connections with people to make them come to your brand again and again.
3. Engage with customers on social media
You can use social media to engage and build strong relationships with your customers. To increase awareness and build trust, you should have a business profile on different social media platforms. You can post different types of content on social media to boost your reach and get more conversions.
Share behind the scene information with your customers like how you make products or ingredients you use. You can provide valuable insights to customers and create a strong online community. This way you can make people remember you and purchase from you again.
4. Segment your target customers
Customer segmentation in eGrowth can help you segment your target audience. You can create different segments of customers based on their attributes. You can segment customers based on geographic location, interests, preferences, engagement, etc. You can create distinct marketing campaigns that are relevant to each segment. This way you can create messages that make sense to each group and entice them to make the final purchase.
5. Personalize the customer experience
Having the same approach for all your customers will not make them feel special. Customer loyalty is affected by the quality and relevance of the experiences you provide them. By providing personalized experiences, you can make customers feel you understand them. For example, if a customer only buys apparel from you, then you can send them marketing campaigns on apparel only.
As per the statistics, 90% of customers will spend more on companies that personalize their experience. You can also personalize your customers’ experience by communicating on the channels they prefer. Try to offer relevant product recommendations to your existing customers and increase customer loyalty.
6. Take customer feedback
By taking customer feedback, you can show customers that you value them and are willing to make improvements. You can conduct surveys and ask them important questions. As per a study, customers are willing to invest in businesses that value their feedback. By listening to your customers you can know what they think about your business. This information can help you to make changes accordingly and improve their experience.
7. Build an emotional connection
The best way to build customer loyalty is by forming an emotional connection with customers. You can build their trust by sharing customer testimonials and taking feedback. You need to tap into customers’ human emotions to make them come back to you.
For example, when a teenager sees their mom bringing a specific product, they think of it as the best. When that teenager goes for shopping, they choose the same product as it reminds them that it’s a preferred product by their mom.
You can also build an emotional connection with customers by doing effective advertising. For example, you might have seen brands associated with kitchen items often use female characters to draw people’s attention quickly. It is because we associate kitchen activities with moms and wives.
8. Start a customer loyalty program
A customer loyalty program or rewards program can help you encourage customers to continue purchasing from you. You can decide a criterion for giving the rewards points. For example, if a customer makes a purchase of INR 1000, they get 1000 points which are equal to INR 10 when they redeem them.
Customers like it when they get something in return for the purchase they make. You can run different types of customer loyalty programs based on the profits you make. You can give extra discounts or freebies to your clients loyalty. This special treatment makes customers come back to you for additional benefits.
What is a customer loyalty program?
A customer loyalty program is one that companies run to encourage repeat purchases and retain customers for a long time. In a customer loyalty program, loyal customers are offered reward points, coupons, or extra discounts.
Most businesses are able to gain new customers but the real challenge is retaining them. A customer loyalty program can help you to retain customers by rewarding them for their loyalty. In the next section, we will discuss the types of customer loyalty programs that you can implement.
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Types of customer loyalty programs
Customer loyalty programs can be of different types. You can implement the one which best suits your business type and offerings.
1. Point-based loyalty program
This is one of the most commonly used customer loyalty programs. Each time a customer makes a purchase, they are rewarded points on the basis of the amount spent. The more they spend on your brand, the more points they earn.
Customers can redeem these points in the form of a discount or special offer when they make their next purchase. Points-based loyalty program is best for businesses that encourage frequent and short-term purchases.
2. Tiered loyalty program
A tiered loyalty program is one in which a loyal consumer is given small rewards initially. Later, they are given rewards of increasing value to keep them motivated to stay loyal. This customer loyalty ladder makes people stick to a brand for a long time.
A customer is made a part of the tiered loyalty program when they spend a specific amount of money. When their spent amount is increased, they are moved up in the customer loyalty ladder. For example from golden tier to platinum tier.
3. Paid (VIP) loyalty program
A customer loyalty program is meant to make customers stay with you for long. A paid (VIP) loyalty program is one in which you take a small fee from customers to provide them additional benefits. This is a one-time annual fee that is taken from the customers. It is just like a membership program. For example, when you opt for Zomato Gold, you get extra discounts and free delivery.
A paid loyalty program is a good way to make customers keep returning to you. When a customer pays an amount for enrolling in the paid loyalty program, they’re sure to get benefits. Also, people don’t want to miss out on something they’ve paid for. Therefore, they’ll definitely make more purchases to get benefits from the paid customer loyalty program.
4. Value-based loyalty program
You can foster a value-based loyalty program to encourage customer loyalty. Identify the needs and desires of your different target customers. Then, you can offer them discounts and coupon codes based on their desires. This way you’ll be able to build a unique connection with customers and increase their trust & loyalty.
In some cases, a value-based loyalty program also looks like a company donating a percentage of the purchase to a charity. For example, you purchase an organic soap then a small percentage of it goes to a charity for planting trees. This makes customers think that they’re doing charity by purchasing your product.
5. Partnership loyalty program
A partnership loyalty program can help you bring in new customers and retain the existing ones. Look for a company that offers the products or services that your customers need and want. For example, Colgate tied up with dentists in different areas to offer free oral health checkups to their customers.
When you provide customers with value that goes beyond your product or service, you show them you care. This increases customer loyalty as they get double benefits from you and your partner brand.
6. Game-based loyalty program
You can use a game-based loyalty program to increase customer loyalty. To make the loyalty program interesting and engaging, you can use games like the spinning wheel. Give different discounts on each strip of the wheel. When a customer makes a purchase, you can ask them to spin the wheel and get an offer for their next purchase. For example, Nykaa has a spinning wheel game for its customers. The customers need to spin the wheel and they’ll get the offer on which the pointer ends.
Customer loyalty programs examples
Customer loyalty programs have helped many brands to retain customers as well as draw new people in. Here, we have given examples of successful customer loyalty programs by brands.
1. Amazon prime
Amazon Prime is one of the exemplary customer loyalty programs. To enroll in this program, customers have to pay $139 a year. Amazon Prime users get many benefits like free, two-day shipping on all orders with no minimum purchase. This program makes sense for people who constantly make purchases and want fast delivery of products. Also, people without Prime have to pay for shipping and delivery on every order. Thus, Prime is a good way to offer customers free shipping and delivery benefits.
2. Sephora beauty insider
Sephora Beauty Insider is a popular rewards program. According to a report by Sephora, the program has more than 17 million loyal members. These members make up 80% of Sephora’s annual sales. From this, you can understand that customer loyalty programs can be a game changer for a brand.
As you know, Sephora products are at an expensive end. But Beauty Insider members can redeem their points and buy Sephora products at a cheaper price with gift cards and discounts. Loyal clients can also redeem points for limited-edition products.
3. Starbucks rewards
Starbucks Rewards program was started through the Starbucks app. This made it easy for customers to get and redeem rewards points through the app itself. They didn’t need to punch cards and log in again and again.
The customer data is stored in the app, which also made it easy for Starbucks to know their customer preferences, seasonal favorites, and locations visited. This also gives Starbucks the opportunity to create relevant promotional content and offers.
How to measure customer loyalty?
Many times companies measure customer loyalty by the length of time a customer was with their brand. However, there are many key metrics that can help you measure customer loyalty. We have mentioned these key metrics for your reference below.
1. Customer retention rate
Customer retention rate measures the number of customers that stay with a brand for a specific period of time. A customer loyalty program can help you to improve your customer retention rate. According to a report, a 5% increase in customer retention rate can lead to a 25% to 100% increase in the profit of a brand.
2. Net promoter score (NPS)
NPS is a customer satisfaction metric that helps to know the satisfaction levels of customers with a brand. You need to ask a simple question to customers like, How likely are you to recommend our brand to your friends and family? Next, you need to subtract the number of detractors (people who won’t recommend your brand) from the number of promoters (people who’ll recommend your brand) to get the NPS. The higher the NPS, the more will be your customer loyalty.
3. Customer effort score (CES)
Customer Effort Score is the measure of the effort that a customer needs to put in to get a problem resolved. To calculate CES, you need to ask customers, How much effort did you need to put forth to get your problem resolved with us? The customer effort score will tell you about your customer support service.
If your CES is high it means people need to put in too much effort to get their issue solved. This means they had a bad experience with your brand. A bad customer experience can impact your customer loyalty. As per the statistics, over 50% of customers will switch to a competitor after a single bad experience.
4. Customer satisfaction score (CSAT)
Customer Satisfaction Score is a KPI that can tell you about your customer experience and their satisfaction level. CSAT can be measured by asking customers, How satisfied are you with your experience with us? You can give a five-point scale where respondents can give their responses. If your customer satisfaction score is high, it means you’ll have higher customer loyalty.
5. Customer churn
Customer churn is the number of customers who left your brand. Customers might leave your brand for different reasons like lower prices somewhere, bad experiences, or didn’t like the product. But you can try to reduce customer churn by running a customer loyalty program and improving customer experience.
6. Social media mentions
Have a look at your social media mentions and see what people are saying about your brand. If people are talking positively, it means they’re happy with your brand. Happy and satisfied customers become loyal customer in the long run. By tracking your social media mentions and comments, you can evaluate your customer loyalty.
7. Purchase behavior
Check customers who regularly or frequently purchase from you-they’re your loyal customers. By tracking quantitative and qualitative data, you can easily know who your loyal customer are. From purchasing habits of customers, you can know if it’s just convenient for them or if they really like your brand.
How to create a customer loyalty program?
You can create a loyalty program with customer loyalty solutions like Webmaxy eGrowth. First, you need to set up your Webmaxy account. Next, you need to go to the Customer Loyalty feature in the dashboard. To start a customer loyalty program, you need to decide the ways through which customers can earn points. For example, you can give points to customers for sign-up, birthday, placing an order, etc.
Following that, you need to create ways to redeem points for the points earned by customers. Select the points currency and define when customers’ points will expire. You can also create customer tiers to offer benefits based on customer loyalty. Next, choose how the customer loyalty program pop-up will appear on your website. Select colors based on your brand and website to make it look perfect.
Get a free demo on how to create a customer loyalty program with eGrowth, connect with our experts on call, or email us at [email protected].
Customer loyalty: The conclusion
Customer loyalty is important for the long-term stability and growth of the business. Getting new customers to a business is much more difficult than retaining the existing ones. But how can brands improve customer retention? By understanding customers’ needs, wants, and expectations, brands can improve their offerings.
Creating customer loyalty programs can also help to make customers stick to a brand for a long time. Webmaxy eGrowth can help you to set up a customer loyalty program for your brand easily. eGrowth is an eCommerce management platform that comes with a wide range of features like:
- KPI Dashboard
- Marketing Insights
- Audience Segmentation
- Marketing Automation
- Social Campaigns
- Whatsapp Commerce
- Email Marketing
- Customer Loyalty
- Help Desk
Schedule a call with our experts to learn more about Webmaxy eGrowth, or email us at [email protected].
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Customer loyalty: FAQs
What is a loyal customer?
Loyal customer meaning is that they frequently make purchases and choose your brand over other competitors. Customers become loyal to a brand due to many different reasons like good quality, affordable pricing, positive experiences, etc. Loyal customer are important for a brand as they’re the ones who help in the brand’s sustainability and growth.
What is the definition of customer loyalty?
Define customer loyalty: Customer loyalty can be defined as an ongoing relationship between a customer and a brand in which the customer constantly keeps choosing a brand over their competitors. Customer loyalty is important as loyal customer become brand advocates and help in driving new customers.
How can you increase customer loyalty?
Customer loyalty is important for businesses as acquiring new customers is more difficult than retaining existing ones. You can increase customer loyalty by implementing the strategies given below.
– Start a customer loyalty program.
– Personalize your customer experience
– Provide good customer support.
– Take customer feedback & make improvements.
What are the types of loyal customers?
Customers are loyal to a brand for different reasons like convenience, low price, availability, etc. Below, we have mentioned the types of loyal customers.
– Truly loyal customers
– Happy & satisfied customers
– Convenience loyals
– Low price loyals
– Loyalty program loyals
What are the 3Rs of customer loyalty?
The 3Rs of customer loyalty are rewards, relevance, and recognition. It is meant to help brands to create strong and effective customer loyalty programs. A customer loyalty program can help businesses retain their customers by rewarding them for their loyalty. Through loyalty programs, customers are given reward points, discounts, coupons, and freebies.