What does customer loyalty mean?
Customer loyalty refers to the tendency of customers to repeatedly purchase products or services from a particular brand or company, based on their positive experiences and satisfaction with the brand's offerings.
It is an important measure of customer satisfaction and business success, as loyal customers can provide a stable source of revenue and serve as advocates for the brand.
How do we differentiate customer loyalty from customer engagement?
Customer loyalty refers to the ongoing commitment of customers to a specific brand or product, whereas customer engagement pertains to the active interaction and involvement of customers with a brand or its offerings.
While customer loyalty is focused on the customer's repeat purchases, customer engagement is about creating a strong relationship with the customer and fostering ongoing interactions that can lead to increased loyalty. A company can have engaged customers who are not necessarily loyal, but loyal customers are often highly engaged with the brand.
What is the importance of customer loyalty?
There are several reasons why you should be striving to build customer loyalty. Here are the most important:
To boost your profits
The more your loyal customers are, the more your profits. Increasing your customers' loyalty by 5% could boost your profits by 25% to 95%. More so, repeat customers tend to spend more on your products and services than new customers. In fact, the longer they stay loyal, the more they spend.
Also, because your existing customers understand how positive the experience with your business is, they shop more frequently, bringing in more cash.
To enjoy higher conversion rates
New and prospective customers visiting your site are less likely to convert to buying customers than loyal customers. Loyal customers have an average conversion rate of around 60% to 70%, compared to 5% to 20% for new customers.
To save money
It is more expensive to acquire new customers than retain your current ones—about five times more expensive. So, if you focus on loyalty, you save the money you could've spent acquiring them.
To plan ahead
Most businesses thrive due to proper planning. And, with loyal customers, you can make plans months or even years into the future because you can accurately forecast your earnings.
This shows how loyal customers are essential to every business. They improve sales, reduce marketing costs, and allow you to plan for the future effectively.
However, customer loyalty isn’t something that happens without intentional effort.
Ways to build customer loyalty
- Create a Loyalty Program
- Community Formation
- Create an Omnichannel Experience
- Collect Customer Data
- Interpret Behavioral Insight (Customer Data) to Know your Customers
- Personalized Push Notification
- Use a Referral Program
1. Create a loyalty program
Loyalty Programs are the means by which businesses offer rewards, discounts, and other incentives to attract and retain customers. Their eventual aim is to create loyal customers who consume their products/services repeatedly. Behavioral patterns of customers demonstrate clear frequency, trust, and positive brand perceptions toward retailers and brands with good loyalty programs.
Loyalty programs apply to high-volume businesses that aspire for return customers. As it's more expensive to acquire a new customer than to sell to an existing one, the prospect of creating a loyal following is fundamental to adding value.
Loyalty programs as a source of user data
In order to join a loyalty program, customers usually register their personal information and are given a unique identifier like an ID. Thus, thanks to loyalty programs, companies can have customer information (e.g., email, birthdays etc.). Plus, companies can benefit from the loyalty programs by providing valuable information on customer behavior (i.e., how customers are spending and what products or types of offers are most appealing).
Simplicity in enrollment
Also, it is important to create a simple loyalty program. In other words, loyalty programs that ask a customer to do something small initially are significantly more likely to acquire a customer than those requiring a more significant commitment up front. For example, asking for a phone number and permission to message at checkout in exchange for a new customer discount is more likely to succeed than asking for five pieces of information to enroll in the program.
Examples of loyalty programs
Loyalty programs might offer:
- Early access to sales
- Personalized promo codes
- Members-only discounts
- Special services (e.g., free shipping, a free or discounted product)
When loyalty programs are strategically built and communicated well, customers can get used to a specific product or service because of points or rewards that they have acquired over the course of the loyalty program.
For example, for $139 a year, Amazon Prime users get free, two-day shipping on millions of products with no minimum purchase among other benefits. This also includes their streaming service, Prime Video. For example, because of Amazon's acquisition of Whole Foods, Amazon offers Prime users substantial savings on their groceries.
Personalized promo codes, as an example of loyalty programs, can help businesses to encourage customers to become loyal ones by providing code to people on special days like their birthdays, Valentine’s Days and Christmas. Businesses can provide promo codes on apps and/or websites by using Stories. Story is an effective way to catch customers' attention and provide a loyalty programme for your potential loyal customers.
2. Community formation
For your customers to repeatedly purchase from you, you need to give them intrinsic motivations.
Why intrinsic motivation?
There are two ways that people are getting motivated: intrinsic and extrinsic. Extrinsic motivation refers to an external goal such as having a discount whereas intrinsic motivation refers to an internal goal such as having a meaningful connection. The latter one lasts longer than the former one. That’s why if you want to motivate your customers to repeatedly purchase from you, you need to give them intrinsic motivation. You need to connect your customers with your brand in a deeper, more emotional way.
Communities as a source of intrinsic motivation
You can connect emotionally with your customers by giving your loyalists a place to connect with the brand and with each other. Sometimes these conversations happen organically on social networks, and if so, you should take advantage of those opportunities as well. For example, more brands are creating Facebook Groups where they can engage with their most active fans. These types of community hubs serve the valuable purpose of engaging fans, and they can also be a tool to collect feedback and product suggestions from some of your most loyal customers and brand ambassadors. As another successful example, AloYoga has created a global community for yogis.
Community formation is all about relationship marketing. The relationship that you have with your customer. Humans have a need for a sense of belonging. Once you provide them a safe place where they feel they belong to, they can become loyal to you. On top of that, they become your brand ambassadors if you manage to touch them more deeply.
Thanks to user-generated Stories, your customers can create their content on Stories. As they actually participate in your brand by posting their Stories, they can feel more attached to your brand and become a loyal customer.
3. Create an omnichannel experience
It is imperative to make your brand seen everywhere with consistent messaging and experience. In order to attract and retain customers, businesses should reach out to their customers through multiple relevant channels as people are actively using multiple channels. Research has shown that omnichannel retailing transformed conventional retailing into a more holistic experience.
Also, customers expect convenience when seeking help, and if you can't offer it by being available on all platforms, it's unlikely they will become loyal.
Possible channels that businesses can use to reach out to their existing customers or target audiences:
- Their website
- Their app
- TikTok
- Metaverse
- Brick-and-mortar stores
- TV commercials
- Billboards and print ads
- SMS messages
For example, a clothing retailer can have a store and besides that to create an omnichannel experience for the customers, it can have its own app. By offering a 10% discount for the first purchase once it is downloaded, it motivates customers to download their app. To make the app stay on the phones, they send push notifications with new arrivals or discounts. As customers are exposed to push notifications from the firm’s app beside the physical store, the likelihood that they repeat the purchase decision gets higher.
Plus, to create an omnichannel experience businesses link their social media accounts with their apps. For example, clothing retailers can use CTAs on Stories to direct customers to mobile apps where they can continue shopping easily.
4. Collect customer data
Collecting customer data is the fundamental block to understand your customer needs and concerns and followingly to create effective customer loyalty strategies. Customer data can be a feedback for a product, purchase frequency, type of a purchased product/service.
You can collect zero-party data and feedback from customers with interactive stickers by using Storyly.
- Entertaining surveys
- Questionnaires
- Emoji bars
- Email reviews
- Customer feedback
For your customers to keep coming back, you have to show them you value them. To increase brand loyalty, you should give your customers to voice out their opinions. According to a study by Gallup, when companies engage with their customers successfully, they experience a 63% lower customer churn rate and perform 23% better than the competition.
By collecting feedback and zero-party data from your customer, you will know
- what they feel about your products and services
- what they value
- what you can improve to provide a better experience
- their needs and expectations
- their buying habits and motivations
- their interests
- pain points
- income range
Knowing these data allows you to develop a solution for them, making them loyal to you. To your customers, they will feel that you value their opinions and insights, making them more willing to invest in your business, eventually making them loyal customers.
With Storyly, you can use interactive stickers to gather audience insights through polls, quizzes, and emoji sliders that are quick and fun for users to answer. Stories with interactive stickers are an excellent source of high-quality user data.
However, solely collecting data is not enough to build customer loyalty. The collected data should further need to be interpreted and a targeted marketing campaign should be employed.
5. Interpret behavioral insight (customer data) to know your customers
Interpreting customer data allows you to understand the desires, concerns, and hesitations of each customer about a product/service. Then it becomes easier for you to segment your customers into specific groups (e.g., gender, location, food preferences, education, leisure activities, or anything that is meaningful for your audience segmentation) and target each segment more efficiently with different appealing marketing campaigns. Better segmentation and targeting will motivate your customers to become loyal to the brand.
For example, after collecting the information about the customers’ perfume preferences with the use of interactive stickers, you can show relevant perfume ads to each customer based on their answers. This way, marketers can understand consumers’ behavior and launch effective marketing strategies and loyalty programs. In return, customers can become loyal to your brand/product as people are more likely to repeatedly purchase goods that are relevant to their needs and wants.
Plus, with Storyly’s Audience Builder, it’s possible to create audience segments based on user responses for precise and effective targeted messaging. Audience Builder allows you to create entirely new audience segments based on your users' responses to interactive Stories. By labelling zero-party data to segment your audience, digital marketing teams can deliver personalized messages on a granular level that give each user exactly what they want. Labelling is very effective in attracting and connecting with different customers through relevant content which then increases the repeated behavior.
6. Personalized push notification
After collecting and interpreting customer data, you can be an expert at what your customers truly want. However, addressing the needs and wants of customers may not be enough to turn them into loyal customers. You may want to keep your customers up to date with the new releases or reaching out to them when it has been a while that they have not checked your website or app. To build customer loyalty, besides providing new offers, you should also communicate with them effectively. Personalized push notifications play a crucial role for reminding your customers that “You are here” and informing them about new releases.
What is a personalized push notification?
Personalized push notifications are attention grabbing personalized messages promoting an action to keep that attention.
Personalized push notifications are like “Hello Deniz, it’s been a while, check out…” - “Happy Birthday Deniz, in the checkout box you can see your gifts.” These notifications target each of your customers personally and encourage them to check your website/app.
At the same time, they compel/nudge people to constantly check their phones because the notifications trigger a FOMO reaction (a fear of missing out). Through relevant and consistent push notifications, you can induce FOMO and make your customers look at your website/app more often. This, in return, increases the time that they spend on your site. As people are more likely to purchase products that are familiar to them -in other words the products that they (subconsciously) see the most- with the induced FOMO reactions, personal push notifications are useful to build customer loyalty.
However, you should be careful to not send too many push notifications. For example, according to a survey, if one receives between 2 and 5 messages in a week, it is 46% likely for them to disable push notifications.
7. Use a referral program
Just like the loyalty program, a referral program is a system that rewards your current customers for referring you to others. It effectively attracts new customers and boosts your ROI, but how does it turn satisfied customers into loyal customers?
First, you have just given your existing customers a reason to return to your business. They could even consider themselves your "partner" and work hard to get more customers as they keep purchasing from you themselves. They also spread the good word about your business, giving you free marketing even to prospective buyers who won't buy directly through them.
Second, customers that come to you through referrals by close friends or relatives are very valuable. They are four times more likely to make a purchase and have a lifetime value that is 16% higher than other customers. They also have a 37% higher retention rate and spend more than non-referred customers.
Customers brought in through referrals can be fully loyal from the word go.
Wrapping up
As you may have noticed, there is a theme in all the above tips on turning satisfied customers into loyal customers: enriching their experiences. Once you know and understand your customers, offer them rewards programs, and constantly engage with them, they will have such a rich experience that they would never want to try anyone else.
That said, you shouldn't stop at these guidelines. You should always look for other ways to improve and enrich your customers' experience.
If you are looking for a different way to share content, you should incorporate Stories into your app or website through Storyly. It allows you to integrate Stories on your app or website, whether you want to share photos, videos, or story ads. For a personalized experience, Storyly allows you to tailor each Story to each user by connecting data to your product fees, ad accounts, personalization platforms, and more.
