Do you want to grow your business into a thriving one? Then you need to understand what customer loyalty is and how to increase it.
Creating loyal customers should be the focus of every business’s strategy. Loyal customers increase profitability through their repeat purchases, but, loyal customers don’t come easy.
First, you need to understand what customer loyalty is exactly, and then how to increase it. This article will first define loyalty and then explain how to increase it.
What is Customer Loyalty
Customers make decisions every day of who to buy from, which they have a lot to choose from. Many factors play into a customer’s decision. When a customer repeatedly buys from one brand over another, then they are considered loyal to that brand.
Customer loyalty is defined as “an attitudinal and behavioral tendency to favor one brand over all others, whether due to satisfaction with the product or service, its convenience or performance, or simply familiarity and comfort with the brand”, according to PR Loyalty Marketing.
There are different types and degrees of loyalty. A person can be loyal to many types of similar brands. For example, a person could shop at two different grocery stores on a regular basis. Or, a person can be a large brand advocate to friends, but still rarely make purchases themselves. Both types of customers are still considered loyal.
The point is that it’s unlikely a customer will be 100% loyal to a retailer all of the time. Instead, a retailer should focus on making a customer as loyal as possible. See why loyalty is so important.
Why Customer Loyalty is Important
Simply put, loyal customers are more profitable for your business. Here’s a few examples how:
Loyal Customers are Less Expensive
The average U.S. company spends 4 to 6 times more to acquire a new customer than it does to keep an existing one, according to Convero. It’s more expensive for your retail business to generate new customers. Your company should always be working to maximize the value of your existing customers.
Loyal Customers are More Consistent Shoppers
The more often a customer returns to your store, the more likely they are to make a purchase. After one purchase, a customer has a 27% change of returning to you store. But, if you get them to come back a second or third time, they have a 54% chance of making another purchase. Loyal customers represent a better chance for repeat purchases.
Loyal Customers Spend More
Not only do loyal customers shop with you more often, they also spend more than your average customer. According to RJMetrics, your top 10% loyal customers spend 3x more per order than the lower 90% and your top 1% of customers spend 5x more than the lower 90%. That’s more profit for you.
Loyal Customer Refer More Business
Loyal customers who make more purchases are more likely to make a referral. A Bain & Company study found that apparel shoppers after 10 purchases referred 50% more people than a one time purchaser.
These newly referred customers are important to your company. According to Social Annex, customers acquired through referrals spend 200% more than the average customer!
Customer loyalty is what drives long-term profitability for your retail business. That’s why all businesses should focus on making their customers as loyal as possible.
How to Increase Customer Loyalty
Creating loyal customers isn’t easy though. It’s not as simple as just offering more discounts, creating a reward program, or making a few product updates. So, how do you increase customer loyalty?
Increase Customer Loyalty With Better Customer Experience
It’s all about creating a better, more consistent customer experience across all of your selling channels. Customer experience is what differentiates your brand from your competitors. It’s the foundation of why customers choose to buy from your brand over and over – the definition of customer loyalty.
Merchants with the best customer experience will have better customer retention, improve customer satisfaction, and increase cross-selling and up-selling. Merchants who don’t face the risk of failure. 67% of customers cite a bad experience as a reason for churn.
When the last time you’ve really put some thought and energy into improving your customer experience?
Exceptional customer experiences entail so much today. It requires relationship building, personalization, use of the latest technology, top rated customer service, creative marketing, and consistent cross-channel selling, all among many other things.
If you’re ready to renew your customer experience, start by checking out these 6 must-know customer experience trends.
Increase Loyalty with Multichannel Integration
Another way to improve your customer experience is through multichannel integration of your retail systems. Your ability to provide a better customer experience can depend on the automation of your inventory, order, customer, item, and shipping/tracking data between your systems.
This allows you to provide quality product information to customers, keep inventory updated in real-time for accurate stock levels for customers, integrate your supply chain to offer options like buy online, pick-up in store. This is the type of experience that your customers are looking for, which then turns them into loyal customers.
These capabilities are made possible through the integration of your eCommerce, POS, marketplaces, ERP, and logistics systems. See how nChannel’s cloud-based integration platform helps you better manage your customer experience.
Take the Next Step to Increasing Customer Loyalty
Customer loyalty drives profitability for your business. Loyal customers are more likely to make more purchases and spend more. They’re also less expensive to keep than acquiring new customers.
All retailers strive to make their buyers as loyal as possible. A key driver of customer loyalty is customer experience. Retailers with a better customer experience have a better chance of retaining their customers.
If you want to improve your customer experience, in hopes of increasing customer loyalty, download our white paper below that details the deep connection between customer experience and loyalty! Just click the image to download.