9 Ways to Build Customer Loyalty for Your Brand in 2023

“If people believe they share values with a company, they will stay loyal to the brand.” – Howard Schultz

Did you know that 20% of your current customers can drive 80% of your future profits? Here’s another interesting statistic – 80% of a company’s business is generated from 20% of its existing customer base.

These two statistics clearly indicate why it is important for businesses to focus on building a robust customer loyalty program as a means of boosting business profits. However, businesses are finding it increasingly difficult to hold on to their existing customers for several reasons. Let’s look at some of the primary reasons for the challenges that brands face with customer loyalty.

What Are the Challenges to Building Customer Loyalty?

Customers today have easy access to extensive brand information spread across multiple digital platforms including social. And they actively use this information when making purchasing decisions or deciding their brand loyalty.

This does not in any way take away from the fact that retail customers continue to endorse brand loyalty. In fact, brands that can optimize their customer experience and customer satisfaction will undoubtedly reap the benefits of customer loyalty.

According to InMoment, 75% of customers who are loyal to a brand will recommend that brand to their family and friends.

However, you cannot afford to make the mistake of assuming a customer will be loyal to your brand forever.

Furthermore, given the fact that customers have more buying options today than ever before and customer expectations are evolving at a rapid pace, it’s not surprising that a substantial percentage of customers won’t hesitate to buy from a competitor.

Especially if they are not happy with a particular aspect of the brand which could include either the customer service, or the quality of a product, or even pricing of the product or service.

The option of more buying choices has led to a generation of finicky shoppers and consumers who not only have more purchasing choices, but they also have fewer reasons to continue to remain loyal to a brand.

It’s important to note here that even big-name brands with huge advertising spend face the challenge of retaining brand loyalty and holding on to their existing customer base.

What makes retaining customer loyalty even more challenging is the fact the customers don’t shy away from sharing their disappointment in a brand with others. And they will do this over multiple digital platforms which can make it very difficult for brands to control the flow of any negative narrative.

In today’s hyper-competitive market space, where brands are pitched in a high stakes battle to attract new customers while retaining their current customer base, staying profitable and relevant without a strong pool of loyal customers can be extremely challenging.

This only reinforces the need for businesses to aggressively expand on their customer loyalty programs and initiatives if they want to continue staying competitive within their target markets.

9 Ways to Build Customer Loyalty.

While earning the digital loyalty of your customers can prove challenging, the fact remains that it brings in huge business benefits. Here are four top benefits of building a loyal customer base for your brand.

1. Drive Business Profits.

Research from Harvard Business School, “increasing customer retention rates by 5 percent increases profits by 25 percent to 95 percent.”

According to Econsultancy, 82% of businesses agree that retaining an existing customer is cheaper compared to acquiring new customers.

While it is important to focus on attracting new customers, what brands need to focus more is on boosting their customer retention programs to drive business profits.

Starbucks is a great example of a brand that runs a customer rewards program to drive customer retention. In addition to offering customers personalized offers, customers of the brand can earn free drinks and food.

2. Increase the Probability of Selling to Existing Customers.

When you engage with your existing customer base, your probability of selling to them is 60-70% higher compared to a selling probability of just 5-20% when it comes to a new customer.

One of the reasons for this is because your existing customers know your brand and they have both experience and knowledge of your products and services. So when you recommend new products or services, they are more likely to try it out compared to a new customer.

3. Decrease the Cost of Acquiring New Customers.

The cost of acquiring a new customer is 5Xs that of retaining an existing customer. Again, while acquiring new customers should be a business goal, your greater focus and a key business strategy should revolve around building customer loyalty within your existing customer base.

4. Increase Positive Customer Feedback.

Customer reviews and feedback is one of the most powerful brand-building tools available to brands today. Customers who are happy with your product, service, or brand interaction experience tend to connect more easily with your brand.

And if you have been successful in creating a bond with the customer, they will be far more willing to provide their honest opinion about their experience or respond to your queries when you ask them.

Brands can use these customer endorsements to effectively improve and grow their business.

Customer loyalty-building programs are a must for any business that wants to enjoy long-term success and strong brand positioning in their target market.

Check out this guide for strategies that can ensure customer retention and loyalty this year.

5. Offer Customers an Omnichannel Marketing Experience.

Continuity or seamless brand experience over multiple marketing channels is a great way of delivering excellent brand experiences to customers. So what exactly is omnichannel marketing?

Your customers use multiple channels to interact with your brand.

While some customers might use your mobile app, others might prefer walking into a physical store, while some might use your website or social sites to engage with your brand.

The focus of omnichannel marketing is to ensure your customers enjoy a consistent brand experience regardless of the medium they choose to interact with your brand.

A consistent brand experience across multiple touchpoints means you need to focus on ensuring your customers enjoy the same branding message across multiple devices and channels.

The user experience of a customer using your small business mobile site should have access to the same promotions and offers, messaging, and the shopping experience that you offer customers in-store.

Your omnichannel marketing strategy should also focus on delivering omnichannel loyalty programs that reach customers anywhere and anytime regardless of their channel of communication or engagement.

6. Build a Community of Brand Ambassadors via a Robust Customer Loyalty Program

“The way to a customer’s heart is much more than a loyalty program. Making customer evangelists is about creating experiences worth talking about.” – Valeria Maltoni

Loyalty programs can provide brands with a powerful way to connect and engage with their customers in a way that can help them build a community of brand evangelists.

Airlines and hotels have been running loyalty programs that offer customers with frequent flier miles and discounts on hotel bookings or stays as a part of their overall brand marketing plan for a long time now.

However, loyalty programs need to look beyond a simple quid-pro-quo equation – if they want to build a loyal customer base.

There is no doubt that offering discounts and offers are a great pull for any loyalty program. And whether an ecommerce brand, SaaS company, or local business, brands need to make a focused effort towards designing loyalty programs that integrate into the life of their customers. The programs need to address their pain points and add value to their lives in meaningful ways.

One such example is Amazon Prime.

For $99 a year, Amazon offers its members with value-added offers which include free shipping, faster delivery, a more personalized shopping experience, free music streaming, as well as movies and TV shows via Prime Video. The value of this offer far exceeds the $99 the customer pays for the one-year membership.

In exchange, Amazon has created a tribe of loyal customers who are willing to make purchases more often and are more willing to engage with the brand.

Another way to add more value to your loyalty program is by aligning it with a charitable cause. Take TOMS for example – they claim that for every $3 that they make, they give $1 away and the company and its community have successfully given close to 100 million shoes to people in need.

For a customer to know that their purchasing decision is impacting the life of someone in need is a powerful reason for the customer aligns with a particular brand.

Your mobile app is again a great platform for building customer loyalty and it should be integral to your customer loyalty program.

Design your mobile apps to score high on UX (user experience) and include an extensive menu of services and features that deliver a seamless brand experience through the entire buyer journey – from discovery to purchase.

Then conduct user testing and integrate mobile payment options and reward customers who use it regularly.

When you align your loyalty program to deliver customer value, not only does it keep the customer coming back for more, but it can galvanize your customers to proactively endorse your brand among their family and friends. In other words, they can become loyal brand ambassadors.

7. Incentivize your Referral Program.

If you were to carefully analyze some of the best referral programs, they would include three specific areas of focus;

• They use targeted promotions.
• They include personalized incentives for their customers.
• They have a robust network of brand advocates.

Before we move any further, it is important to understand the difference between a loyalty program and a referral program. While a loyalty program encourages customers to make repeated purchases from you, a referral program incentivizes customers to get their family or friends to buy from your brand.

In essence, this is one strategy that can be effectively used to retain existing customers while acquiring new customers.

Now there are several brands out there who have made a kill using creative and innovative ideas to drive their referral programs. Let’s take Bombas as an example.

Their “refer a friend” program says – “When you share Bombas with your friends and family and they buy some Bombas, they’ll get 25% off their purchase, and you’ll get $20 to spend on Bombas.

Riff Raff & Co. is again a great example of how effective a referral program can become if planned strategically. They offer a free toy worth $68 for every five referrals which results in the sale of five of their products.

It’s not difficult to imagine why this would encourage parents to share the referral link of the brand with five of their contacts – especially if their own child is happy and is able to sleep better!

There are tons of examples such as these where brands have effectively incentivized their referral programs successfully. What’s important here is that you plan and design your referral program keeping in mind your core customer and choose an incentive that aligns with your business.

How you choose to incentivize your referral program also depends on you – so you can either go with a “free product” similar to what Riff Raff & Co. offers, or you can offer a cash reward like Bombas, or opt for discounts and other freebies that work for your brand.

8. Use Customer Feedback to Strengthen your Brand.

Gone are the days of one-way marketing communication channels – where brands spoke and customers responded. Today, it is the customer who speaks and brands need to listen carefully.

One of the best ways of displaying that you value the opinions of your customers and that they are important to you is by asking for their opinion and actively incorporating those ideas into your products and services.

When you ask a customer for their opinion or to share their brand experience, it makes them feel like you care – knowing their opinion matters will encourage them to openly share their ideas and experiences and make them feel a part of the brand which in turn can encourage brand loyalty.

MiaoMiao features customer testimonials on their homepage

If they see you incorporating their ideas, opinions, or suggestions to improve your brand, not only will you have earned their respect and loyalty, but it can make them your strongest brand advocates.

Even a customer who gives you negative feedback can be converted – provided you can address their disappointment or grievance quickly. So always have an action plan on how you can deal with negative feedback and bring the customer back to engaging with your brand.

There are several ways in which you can collect customer feedback including via email, customer satisfaction surveys, over social, via your website, or online review sites. You can also use personalized email surveys to connect with customers – just make sure you have strong email deliverability.

9. Personalized Your Marketing Programs.

With so many brands competing for the attention of customers, one of the most effective mediums of speaking to your customer directly is via personalized marketing. It can attract the attention of your target customer and it can help build trust in your brand. At the end of the day, you want customers to be able to make a distinction between your brand and your competition.

To deliver personalized marketing messages, you need some amount of customer data – this customer intelligence which could include information about the customer’s shopping preferences, history of their buying decisions, the time they like to shop, or the time that they are most receptive to marketing messages can help you customize your marketing messages in a way that aligns with what customers expect or want.

Furthermore, if you have a loyal pool of repeat customers, they don’t want to be fed generic marketing messages – they expect personalized messages and content that speaks to them directly and caters to their needs.

Source: ReallyGoodEmails

Using personalized marketing brands can create offers, discounts, and promotions that encourage buying decisions. If you use email marketing, then personalizing your emails can help boost your lead generation compared to generic emails. In fact, emails that are personalized can deliver 6X higher transactional rates than generic emails.

Netflix is a household name today. Apart from its epic menu of content, the reason why the brand is popular among global audiences is that it uses an algorithm to deliver users with personalized viewing recommendations based on the kind of content the user browses and views.

The “Share a Coke” campaign from Coca-Cola is still a great example of how personalization can pull customers to a brand. By encouraging consumers to replace the drinks logo with the names of their contacts and friends and spread the brand message using the hashtag #shareacoke, the soft drink giant was able to regain a substantial chunk of its sales.

Wrapping It Up.

Brands that want to build a loyal customer base for their business need to actively invest their time and efforts in strategies that encourage brand loyalty.

It doesn’t matter how big or small your business is – by incorporating steps to drive customer loyalty you can effectively build a pool of repeat customers who could also become your biggest brand ambassadors.

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Guest Author: Rahul Sharma is a writer for ReferralCandy and CandyBar.