Over the years, the concept of brand loyalty hasn’t changed, but a brand’s approach to customer loyalty and retention has. Customers are shifting their loyalty to brands that deliver exceptional customer experiences, through more relevant personalization.

Whether the interaction occurs online, in-app, in-store, over the phone, or on social media, brands that recognize customers across all touchpoints are driving more loyalty.

Businesses no longer control the customer journey, so they must react and adapt in real-time to customer behaviors and cues. According to a recent survey by Accenture, 93% of consumers believe it’s important that every interaction they have with a brand is excellent.

Smart brands exceed customer expectations in every interaction and understand that unlike marketers, customers don’t think in terms of “channels.” Customers engage in ways most convenient for them at a given time and place.

Retailers are also changing approaches given the new economic landscape. Their biggest challenge now is staying relevant.

According to Gartner, 80% of your company’s future revenue will come from just 20% of your existing customers. With this in mind, let’s take a look at some ways retailers can leverage loyalty engagement programs in the next normal.

• How can Retailers Leverage Loyalty Programs for Growth?
• How can a Business Create Customer Loyalty?
• Why is Customer Loyalty Important?
• How can Brands Build Consumer Loyalty Through Technology?
• How Do You Offer Incentives for Consumer Loyalty?
• What are the Types of Incentives?

How can Retailers Leverage Loyalty Programs for Growth?

1. Maintain communication

The current climate means brands have to promote products and services when encouraging spend behavior can be seen as insensitive. Smart companies will create open lines of communication, engagement, and feedback which are key competitive differentiators for success. Brand marketing has a tremendous role to play in guiding consumers towards behaviors that are most appropriate in uncertain times.

Read Also: Using Integrated Marketing to Improve Customers Experience of Your Brand

2. Accelerate the adoption of new technology

Brands can meet customers where they are faster and react in real-time by leveraging technology that supports new business models, payment, and delivery options. Rolling out new offerings like online shopping for household items and groceries, curbside pickup, contactless payments, and extended return options will help naturally lead the transformation and build trust amongst your consumers.

3. Deliver frictionless and relevant digital customer experiences

Now, more than ever, brands are striving to make their experiences frictionless. Retailers can no longer depend solely on driving in-store traffic. Recognizing every customer across all brand interactions will ensure brands engage with customers in a relevant, consistent, and personalized way. By driving digital engagement, brands can make their digital experiences more than just transactional touchpoints.

In this new landscape, retailers can disrupt or be disrupted.

Loyalty programs are a key differentiator for brands and can be used to better connect with customers and foster an engaged community. They can, for example,

• Accelerate the training of new customer behaviors with the exchange of loyalty currency (i.e. complete your first online order for bonus points).
• Go beyond transactions to offer meaningful brand interactions (i.e. complete your extended preference profile for points).
• Attract new customers via referrals from your best customers (i.e. refer-a-friend to join the loyalty program for points/reward offering).

Loyalty marketing unlocks more opportunities to collect rich first-party data in order to personalize experiences in real-time.

How can a Business Create Customer Loyalty?

No matter the size of the business, customer loyalty is incredibly important. Repeat customers spend up to 67 percent more than new customers. Plus, it’s up to ten times more expensive to try to attract new customers than it is to keep the ones already doing business with you. If you’re looking for real ways to create and keep up customer loyalty, consider implementing a few of these strategies.

1. Set up ways to communicate with your customers

Frequent communication with your customers keeps you fresh in their minds and lets you pass along important information. Take the time to set up a database with contact information such as email addresses, mailing addresses, or phone numbers. Then you can send friendly reminders, birthday greetings, or a monthly newsletter.

Social media is another great way to communicate with your customers on an almost daily basis. Keep in mind that this works better if you limit how many of your communications are actually advertisements. Don’t forget to throw in messages that are either fun reminders or useful information.

2. Provide extra perks for your most loyal customers

One of the best—and perhaps one of the cheapest—ways to reward customer loyalty is to give extra perks to your most dependable customers. Whether it’s the ability to skip the line, special meet-and-greets, or immediate seating, customers love getting a little something extra.

By setting up a reward system for the most loyal, you not only encourage them to stick around, you also give an incentive for other customers to strive to reach that status.

3. Consider different payment plans

There are some businesses out there that are very seasonal and run into cash flow issues during certain times of the year.

For instance, a wedding shop usually receives most of their sales during the summer months when weddings are in full swing, but during the winter they struggle. One shop decided to offer a payment plan through which customers could start shopping in the winter, and pay a little throughout the months leading up to the wedding, rather than paying all at once.

This plan worked because it helped customers by giving them manageable monthly payments, and it helped the company by bringing in cash during an otherwise slow time of year. In fact, customers were so happy that they often referred the shop to others, and the business saw a nearly 400 percent increase in total sales.

4. Provide great customer service

While this seems like a given, it’s one tip that bears repeating because it’s so important. One survey showed that in 2013, 51 percent of customers ended their relationship with a business because they were unhappy with the service they were receiving.

Customers remember when they’re treated well, and they remember when they’re treated poorly. In either case, they usually tell their friends and family, and that can either mean more business for you or lost business opportunities.

5. Don’t rely too much on technology

Even in our technologically advanced society filled with text messages and emails, we still want the ability to interact with other human beings. Everyone can relate to the frustration of feeling stuck in an endless loop of automated prompts until we bang on the phone keys in hopes of reaching a real human.

This is why it’s important to keep in mind that while automated phone systems may save money, highly trained customer service representatives build loyalty.

6. Offer a head start

If you want to start a customer loyalty program like coffee shops use, whereby customers buy a certain number of drinks to earn a free one, consider giving them a head start. This can be as simple as giving them the first two punches on the coffee card for free. If you give your customers a head start on the program, they’re more likely to stick around and finish it.

7. Don’t forget to smile

This is another item that seems obvious, but it’s important enough to keep being reminded of.

A study in the United Kingdom recorded the expressions used to greet customers as they entered a store, and then cross-checked with how much they spent in the store.

The study showed that shoppers who were greeted with a welcome and a smile spent up to 67 percent more than shoppers who were not greeted this way.

While it seems like a small detail, a friendly greeting obviously has important consequences.

8. Give customers a reason to be loyal

Many people believe that Apple has some of the most loyal fans out there. Customers go to great lengths to prove just how much they love the company, with bumper stickers, tattoos, and vehement arguments in favor of all the products.

Recently, neuroscientists scanned the brains of Apple fans and learned that the same part of the brain that lights up when religious people think about their deity is activated when these customers think about their beloved products. This shows that if you offer a service or product that your customers think is the best in the world, they’ll be completely devoted with a passion that can’t be topped.

In today’s business climate, it’s impossible to stress just how important customer loyalty is. These tips will help you create loyal customers who will be happy to frequent your business for many years to come.

Why is Customer Loyalty Important?

Think back to the last time you needed to buy a computer. If you’re an Apple user, there’s a good chance you’ll consider them again. You’ve had a good experience with them in the past. You consider them easy to use, their customer service is great and the computers last a long time. Even if they are slightly more expensive than the competition – you’ll probably head directly to the Apple store for your replacement computer.

That’s because you are loyal to Apple. And you aren’t alone. Brand Keys recognized Apple as “the best representative of customer loyalty and enjoyment in laptop computers, tablets, smartphones, and online music” in their 2017 Customer Loyalty Engagement Index. In fact, 87% of Apple’s customers are brand loyal – meaning they will continue to purchase from Apple in the future.

Apple invests heavily in developing customer loyalty. They want to make sure their customers continue shopping with them across their entire product line. Why does Apple feel so strongly about customer loyalty? 

Read on to find out why the importance of customer loyalty is crucial for businesses growth

The importance of customer loyalty impacts almost every metric important to running a business. Without happy customers that continue to buy from you, the business won’t survive. New customers (as we’ll talk about below) tend to cost more to acquire, and don’t spend as much money as loyal, repeat customers.

Keeping customers coming back for more is critical to business success. And it’s why short term profit grabs don’t work. Loyal customers are just better for business: they help you grow and they keep profits high.

Stronger customer loyalty helps companies grow

While it’s obvious that customers who come back to spend more money is good for business, there’s other, more subtle, benefits to loyal customers.

It’s like the old leaky bucket metaphor. Imagine a business as a bucket. Customers flow in and fill the bucket up. A successful business has a full bucket of customers (and profits).

However, imagine the bucket has a hole in it. Customers who flowed into the bucket start to leak out the hole. Losing customers is called churn, and it has a large effect on business growth. Even if you can somehow start filling the bucket faster, you’re still losing valuable customers.

Patching up the hole (or improving customer retention) means keeping more customers in the business bucket. A 5% increase in customer retention increases business profits by 25%-95%.

If it cost the same amount to replenish the customers lost through the leak, then churn wouldn’t be such a big deal. Unfortunately, it’s much more expensive to get new customers into the bucket than continue to sell to existing customers. It’s estimated that new customers cost five times more to convert than existing customers 

This means businesses with disloyal customers need to spend more of their resources on acquiring new customers. Loyal customers make it easier for businesses to grow.

Finally, loyal customers also make recommendations to family and friends. When considering if referrals are really all that important to your bottom line, consider the following stats from Referral Sasquatch:

• Lifetime Value for new referral customer is 16% higher than non-referrals. This is likely because they already have a positive opinion on the business, and friends are more likely to recommend “perfect fit customers” or those that they know will benefit from your product or service.
• 84% of B2B decision-makers start the buying process with a referral. Loyal customers can help expand your lead pipeline.
• Companies with formalized referral programs experience 86% more revenue growth over the past two years when compared to the rest.
• 83 percent of consumers said that they would recommend a company that they trusted. Meaning trust will not only help you gain repeated business, but it will create new customers alike. 

As you probably know, customer acquisition can be costly, so growing your customer base organically is always a plus.

Investing in company loyalty isn’t just about preventing customers from leaving. It’s also about maximizing the opportunity for growth. Combine all these loyalty effects together, and it’s estimated that customer disloyalty can stunt growth by 25%- 50%. Yikes.

Customer Loyalty Means Higher Profits

To operate a business revenue must be greater than expenses. If it takes $100 to convert a potential customer to a buyer, they need to spend at least that much with your business for you to break even. Customer Acquisition Cost (CAC) will often include items like marketing spend, sales labour and software cost.

All those costs add up: Bain & Company believe that most businesses need to retain customers for at least 12 to 18 months to break even on cost of acquisition. The importance of customer loyalty isn’t just a nice idea, it’s necessary to keep the business afloat.

In fact, directing resources towards improving customer loyalty is one of the best investments a business can make. A 2% increase in customer retention has the same effect on profit as decreasing operating costs by 10% (Leading on the Edge of Chaos, Emmet Murphy & Mark Murphy.) Instead of spending less money on customers, spend money on keeping customers around – the payoffs are worth it!

As a final point, repeat customers are often the most profitable. McKinsey found that repeat e-commerce customers spend more than double what new customers spend ($52.50 average cart size for repeat customers, compared to $24.50 for new customers). SaaS businesses can see a similar benefit by upselling existing customers and providing more value as the account grows.

A focus on customer loyalty results in higher profits and overall company success.

How can Brands Build Consumer Loyalty Through Technology?

These days, technology is everywhere. Technology affects just about everything the modern human being does, and it even leaves its prints in the business world. One example of this is the way that technology works towards building better customer loyalty towards your business.

In order to build customer loyalty through technology, it is crucial for businesses to be interactive with their customers, as well as efficient in delivering assistance. Here are some ways that modern-day technology allows for companies to achieve these levels of responsiveness and efficiency and, as a result, build customer loyalty.

1. Live Chat Features

Live chat features are a great way for businesses to be more interactive with their customers. Live chat features are chat windows on websites that customers can use to speak to representatives from the company that the website belongs to or is associated with.

Even though live chat features may not seem very effective at first glance, consumers are given immediate access to the assistance they need, and this help is delivered in seconds. This is extremely important to consumers, and this does wonders for building their customer loyalty.

When a business appears friendly, helpful, and efficient, customers feel more trust towards them, therefore increasing the loyalty towards a given company. Live chat features wield important results for customers, and therefore they are an extremely helpful addition to any business website. 

2. Social Media Customer Service

In the past decade, social media outlets have taken their places in the technological world and in the lives of customers. Social media is always around us, and it is always affecting how any business runs. It is an important part of how the public views, interacts with and feels about a company. To not use social media for customer service or for getting to know customers would be a great disadvantage to any company.

For this reason, many businesses use social media customer service to their advantage to build customer trust and loyalty. Examples of social media customer service include businesses replying to tweets and mentions with offers of assistance or liking and providing a support button on Facebook in order to be friendly and provide help to customers. 

Social media customer service is all about companies being more interactive with customers, while also increasing the efficiency of the business in the eyes of the consumers. As a result of this responsiveness, customers are able to experience businesses on a more personal level while receiving the assistance they need, therefore building better customer loyalty towards a company that is utilizing social media.

3. Customer Support Software

Customer support software is one of the many help desk solutions that businesses utilize. Support software exists in order to help customers and businesses alike and is a great storage device for customer data. Through customer support software customers are able to get the help they need from companies, therefore building their customer loyalty to a company even more.

This also makes customers feel as if though their comments and questions are valued, and they will appreciate that they are not being ignored. Customers’ time and opinions are valuable to the progress and improvement of a company, and customer support software allows businesses to utilize these resources rather than waste them.

Companies are able to address complaints and concerns using this advanced software, and customers are able to get the results they want and need from the businesses that they depend on every single day. Customer support software can have a very important hand in building customer loyalty towards companies if it is used properly by these businesses.

Technology is always making strides towards better customer service, and therefore, higher levels of customer loyalty for companies. When it comes to building customer loyalty, technology is an important ally to have, as it expands your overall reach and maximizes on your ability to offer assistance.

It also makes companies feel more personal and close-to-home for customers, all while showing people how quick and efficient your business is. Consider integrating these bits of technology into your customer service, if you haven’t already, and be prepared to be stunned by the levels of customer loyalty that follow.

Remember that the best thing about customer loyalty is that there is never any kind of limit to it — customer loyalty can increase and expand, and, if you play your cards right, it will still continue to grow.

How Do You Offer Incentives for Consumer Loyalty?

As a marketer or a salesperson, you can use many incentives to lure your customer back to your product. However, your offer should not only be related to your product but should also be suitable for the buying cycle.

Here are six incentives that you can offer with your product to unhappy customers.

1. Offer Extra Reward Points/Cash

Let’s say you have a reward system for your product. So whenever the customer uses the product, he receives points/cash in his virtual wallet. Use this reward system as an incentive when your customer feels unhappy about the product.

You are a credit card company and your customer sends a bad service experience feedback to you when your rep was not able to solve his payment issue. Now how can you win your customer back? Tell him you are crediting extra reward points in his card that may be used for any service payment. Voilà, you have a happy customer again.

2. Offer Bonus Upgrade On Trial Basis

It is simple, just offer an upgrade that can solve the issue the customer is facing but offer that upgrade as a trial version. So when the customer starts liking the upgrade, he will pay for the paid version. However, make the trial period long enough and ensure it provides real value even if not continued.

Let’s take the example of a CRM – your customer is unhappy with your email marketing plugin. Now, this plugin issue can be solved if the customer gets an email upgrade but he doesn’t want to pay. So you offer him the 2-month trial version, and within a few days into the trial period, he realizes how effective the upgrade is and opts for the full version.

3. Offer Discount On Next Purchase

When it comes to incentives, discounts always work like magic. Just say you will provide a discount on the next purchase and see how fast your customers get happy.

You are in the online shopping business and your customer bought a shirt that had fitting issues. Give him the same shirt with exact fitting and offer a discount on his next purchase. He will most likely be a consistent repeat customer.

4. Offer Free Product

Give away free product(s). Need I say more. Let’s take the same shopping business example – now your customer not only had fitting issues but the shirt was a defective piece too. So how will you turn this bad experience around in your favor? Offer to replace the shirt with a fresh new undamaged piece plus offer another shirt for free.

5. Offer Additional Samples

Everyone likes surprises and customers like them even better. In case your customers are unhappy with your product for quite sometimes then send additional samples as a surprise whenever possible.

Let’s use the CRM example again – your customer is facing issues with your email marketing plugin where his emails keep bouncing back and his free email package is consumed. Send him a free email package for a different plugin or a free trial of a different email plugin.

6. Offer to Pay for the Related Product

You have a product that requires regular upgrades but they come at a price. Offer to pay for those upgrades for a limited period to your customers. Again, you have a CRM that requires customers to buy regular upgrades for it to function well for various plugins. Offer to give these upgrades for free for up to 3-4 months and see how happy your customers will be.

So now that we know what type of incentive will make the customers happy, it’s time to use them in the best case scenario possible. And you can see how smoothly you can make your customers happy about the product by offering the best value-adding incentive.

What are the Types of Incentives?

Incentives are effective motivators when the objectives to be met are clearly stated upfront and when the incentives offered are desirable. Gone are the days when one type of incentives, such as money or a pat on the back, worked for everyone. A company that provides various types of incentives, tailored to individual workers, motivates employees to consistently do their best.

Profit Or Gain-Sharing Incentive Plan

Giving employees the chance to share in productivity gains or profits, usually through cash or stock bonuses, can motivate them to hit individual benchmarks or help reach team-wide or organizational objectives. One way to offer profit sharing is through deferred compensation.

For example, suppose the company already contributes 4 percent of each employee’s compensation to a 401(k) retirement plan. The company might establish an incentive plan in which, for every year in which a company’s after-tax profits exceed 4 percent, it will contribute to the 401(k) at a percentage that matches its profits. That means that if profits are 6 percent, the company would put 6 percent in the 401(k).

Because these plans are part of a 401(k), the company must meet federal regulatory requirements; however, the advantage is that employees do not pay taxes on the money immediately. A cash profit sharing plan would work similarly, but the employee would receive the contribution in cash or stock. This would be immediately taxable but is subject to less regulation.

The Good Old Cash Bonus

One-time bonuses, in addition to regular pay increases or commissions, may be paid to individuals for meeting certain milestones or performing valuable services. One example of this type of incentive plan is offering a cash bonus for referring qualified friends who are hired and complete the probationary period.

Other companies might offer bonuses for achieving a specific sales goal or for proposing an idea that saves money. Bonuses also might be offered for extraordinary performance after completion, appraisal and analysis of a specific project. Hilcorp Energy Company promised staff in 2010 that if the company doubled its production rate and reserves by 2015, every employee would get a check for $100,000.

We Pay If You Stay

Retention bonuses reward employees for staying with the company for a particular amount of time or through a specific event, such as during a merger or acquisition or a crucial production period. In the case of a merger, the bonus might be paid in full or in installments three months to 18 months after the merger has closed.

Almost 60 percent of companies surveyed by World at Work/Deloitte Consulting offer retention bonuses as an incentive for the employee to stay after receiving an offer from a competitor.

Long-term, Stock-Based Incentives

Publicly traded companies may offer long-term incentives based on the price of common stock. These incentives help align an employee’s long-term financial interest with that of the company. The most popular of these types of incentives for employees is restricted stock, which is given subject to sale restrictions or forfeiture until the employee has been with the company a specific period of time.

Read Also: Using Customer Analytics To Impact Your Business Profit

Also popular are stock options, which allow the employee to buy shares at an agreed-upon price for a certain period of time. Performance shares – grants of actual shares of stock, payment of which is contingent on performance over a multi-year period – are sometimes offered to executives or officers.

Career Development and Training

Offering specialized training in an area of interest is another valued incentive. The key to making this work is to allow the high-performing individual to choose the type of training they most value. For example, Sammis & Ochoa, LLC, pays for top performers to attend two industry or personal development events within their state.

Recognition and Other Non-Cash Incentive Plans

Many employees thrive on being recognized in front of their peers. One example is an “Employee of the Month” program. The company recognizes the employee through signs in the lobby, emails, a special parking place and at staff meetings and in employee newsletters.

Larger companies may choose employees of the month from each division and include breakfast as a group with the CEO. Recognition also can include individual or team perks, such as being able to bring a pet to work or to dress casually for a day, or prizes such as free airplane tickets to a favorite U.S. destination.

As a team incentive, a company might offer a free happy hour or a pizza party at a local restaurant of the team’s choice. Employees (or teams) might be offered additional vacation or personal time as an incentive to achieve a specific goal.

For example, for every quarter that the company has no workplace accidents, workers could receive eight hours off with pay at a time of their choice, with supervisor approval.