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In this article, we are going to talk in detail about one of the most important factors that determine the long-term success of a business, customer loyalty. We will explain what customer loyalty is, why it is important and how to improve customer loyalty with digital marketing.

What is Customer Loyalty?

Customer loyalty can be defined as the likeliness of a customer to do repeat business with a brand or a company. In other words, it is an ongoing positive relationship between a customer and a business. Customer loyalty is the drive behind repeat purchases and what prompts your customers to use and advocate your brand over hundreds of other competitors who are offering similar benefits.

Customer loyalty dimensions

Why is Customer Loyalty Important?

Customer loyalty impacts almost every aspect of running a business. Without happy and satisfied customers to buy from your business continuously, you won’t be able to survive. Loyal customers are the ones that spend the most time and money on your business. Not only that, but they also recommend your brand/business to others and encourage them to buy from you.

A well-designed and carefully planned loyalty program can not only help you retain existing customers but also attract new customers, reduce the churn rate and generate more profits. Yet only 18% of all businesses focus their efforts on customer loyalty and retention. Following are some of the main reasons why you should consider customer loyalty management as one of the main business functions:

Generate Higher Revenue

Returning customers spend more than 70% money on purchasing products and services from your business when compared to first-time customers

Higher Conversion Rates

Existing customers have way higher conversion rates than new ones. The average conversion rate of a loyal customer is 60% to 70%, while that of a new one is 5% to 20%

Boosts Profits

To enjoy better profits, brands need to foster customer loyalty. Business profits go up by 25% to 95% when customer retention rates are increased by only 5%

Comparatively Cheaper

It is cheaper to keep an existing customer than to bring a new one on board. Studies show that getting a first-time customer is 5X more expensive than retaining a loyal one

Helps in Effective Planning

Customer loyalty enables businesses to predict growth more effectively, thus helping in financial planning. Marketing teams can identify committed customers who can be relied upon hence making it easier to make anticipatory decisions based on their budget

Loyal Customers Shop Regularly

Given their good experience with a brand, repeat customers have higher chances of returning. Moreover, their likelihood of making future purchases increases as they make more transactions

Act as Brand Ambassadors

Loyal customers act as advocates for your brand by spreading brand awareness through word of mouth and recommending your brand to others

Provide Quality Feedback

Loyal customers provide honest and quality feedback with the genuine intention of supporting your brand

How Can You Use Digital Marketing to Improve Customer Loyalty?

Nowadays, social media is a great platform for building awareness, trust, and loyalty with your customers. By building a brand value on social media will attract more people and provide high-quality referrals.

Every time your business needs to make their customers happy because happy customers will be willing to spend more money on your products or services. While by making your customer happy you can build a good relationship with them and that builds customer loyalty for your business. Moreover, here are some practical ways to do that.

01)  Introduce  a loyalty program Reward for your loyal customers

In today’s highly competitive marketplace, customers have a lot of options to choose from. Therefore, just because your business has a lot of customers today, you shouldn’t assume that they are going to stick with your brand forever. They can always shift to another brand. Therefore, it is important to give your customers a reason to keep coming back to your brand.

Having a well-crafted loyalty program is a solid way to encourage customers to keep coming back to your business. The key to a successful loyalty program is to make your loyal customers feel super special and exclusive. The simplest and the most commonly used loyalty program is the point system where customers can earn loyalty points every time they make a purchase with your brand. Then these points when accumulated earn them rewards such as discounts, gifts, special offers, etc.

Loyalty card image

For example, Woolworths is the biggest supermarket in Australia and Woolworths uses digital marketing strategies to improve their customers’ loyalty by providing excellent customer service in stores. Even more, Woolworths introduced a rewards loyalty program for their customers. In that rewards program, Woolworths focus on the customers’ purchases and based on that they give various types of rewards like cash back rewards, reward points, fuel vouchers, gifts, buy one get one offer, and more. By doing this it increases their repeat customers as well as customer loyalty.

Woolworths

02) Make customer service a business priority

Customer service and repeat businesses go hand in hand. Without exceptional customer service, you cannot expect customers to keep coming back to your business. Customer service is not only about handling customer problems and complaints. It is also about ensuring that your customers enjoy a positive experience and that you leave a lasting impression on customers.

With the increased popularity of social media among both businesses and consumers, social media has become a great customer service tool. Businesses can easily identify both the negative and positive experiences of customers with your brand and address them directly.

Business websites also play a vital role in digital customer service. Today, the first thing a person does when they are interested in buying a product or service is to visit the websites of relevant brands or businesses. Therefore, providing exceptional customer service via the website is important to convert visitors into buyers as well as to retain existing customers. Posting updated content on websites, offering live chat support and automated chat support 24/7, making sure that your website is smoothly navigated, having a mobile responsive website are some of the main things that you can do to ensure that customers are having a positive experience on your website.

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03) Boost your customer experience by introducing VIP deals

By adding VIP tiers for the most loyal customers your company can boost loyalty among existing customers and entice new and less engaged customers to interact more with the brand. For that, you can start with smaller rewards for all customers who are in the program, then encourage repeat purchases by increasing the rewards for each step up the loyalty ladder.

For example, Adidas launched its “Adidas app”, in 2019 and it has become a central strategy for fostering relationships with their most loyal customers, or premium members, over time. In fact, this app is currently reaching over 30 countries across all major markets. This app became an important new customer touchpoint in the digital marketing for Adidas. The app is directly linked to the Adidas e-commerce store and provides consumers with personal conversations, the chance to buy their most exclusive products, a frictionless checkout, seamless order tracking as well as personalized content and access to our membership program – the Creators Club. The success of the app is significantly enhanced by continued investments in Customer Relationship Management (CRM), which will enable us to develop an even deeper consumer understanding and connection.

Adidas App

04) Encourage your customers to give feedback and act on it

Customer feedback is an essential component in any successful business operation. Before you try to retain your customers or to increase returning customers you should clearly understand the reasons why some customers are leaving your business and the reasons why others are staying loyal to your business.

A couple of years ago, getting this feedback from customers was a challenging task. Businesses had to conduct physical interviews and surveys spending a significant amount of money, time and effort. But today with digital marketing, businesses have multiple channels to obtain feedback directly from customers without spending much effort and time. Google reviews, Google My Business reviews, comments, shares on social media platforms are some of the most commonly used social listening tools by businesses.

Nike brand is a great example for prioritizing and handling customer feedback on social media platforms, especially on Twitter.

Nike

Another great way of collecting customer feedback is through customer satisfaction surveys. Big companies like Airbnb send out emails to their existing customers with a survey just after they use their services to gain better insights on how the customers genuinely feel about the service.

Airbnb

05) Celebrate your loyal customers

It is important to make your loyal customers feel special. For this, businesses first need to identify their loyal customers and what they say about the brand/business. Social media platforms like Facebook, Instagram and Twitter allow businesses to easily identify what their customers are posting about them using hashtags.

Hashtags

Once you have identified the content posted by your customers, you can post or re-share that content on your own digital platforms. These types of content are known as user-generated content(UGC). Also, businesses can conduct social media contests and giveaways to motivate loyal customers.

Conclusion

Customer loyalty is essential for the long-term success of any type of business or brand. If you aren’t already prioritizing customer loyalty management as one of the main business function, this is the ideal time to start. Use all your digital marketing platforms and tools to improve customer loyalty. Don’t forget to add improving customer loyalty as one of the main objectives of your digital marketing strategy. If you need any support to design a comprehensive digital marketing strategy that covers all your business objectives, our team at DigiFix is more than happy to help you on your journey.

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