Yelena Petic
December 1, 2021
12 mins

How To Build Customer Loyalty In 2023

It is a universally recognized truth that retaining a loyal customer base is more cost-effective for businesses rather than constantly churning out new customers. An unwavering flow of loyal customers who continue to add to your sales funnel is what every business owner dreams of. So, having a clear understanding of how to earn and build that customer loyalty is a necessity if you want to be truly successful.

Customer loyalty in 2023 is very different from what it was 5 years ago, it’s probably more accurate to say that it’s less than five years ago with how much technology has changed within the last two years alone. Every marketer who wants to boost customer loyalty and customer retention should be aware of these trends as it is a rapidly evolving industry with highly advanced new technologies constantly emerging.

In 2023, some of these trends are relatively new while others have been around for a while. However, be assured that they are all extremely relevant!

Let's start with the basics:

Why is Customer Loyalty So Important?

While it seems like a simple question to answer, not all business owners understand just how costly it can be to lose their customers and try to replace them. Plus, ignoring the reasons (data) customers don't stay loyal can cause irreparable damage to a business’s brand.

The foundation for a profitable and successful business is its loyal customers. These customers not only help a business grow rapidly when times are great, but they also help a business stay afloat when things are going south at times too. A loyal customer is your greatest brand advocate, as they buy more and more often to show their loyalty to your brand.

1. The Customer Loyalty Landscape

Every business relies on acquiring and retaining loyal customers, but it is not always easy, especially with so much competition now more than ever. Consumers are well-informed buyers and look to genuine brands to find the solutions they need.

The importance of capturing millennials' hearts and wallets can't be overstated, their purchasing power unbelievably reached nearly $1.5 trillion in 2021. Now as we leave 2022 behind that amount has skyrocketed to $2.5 trillion. Yet, millennials, and the Gen Zs that are following in their footsteps, are a challenging and different type of consumer to engage.

2. Customer Retention Is The Key To Customer Loyalty

Several factors play a role in this, including customer service, accessibility to relevant information, special promotions for repeat customers, and brand recognition. Approximately 66% of consumers switch brands due to poor customer service, according to a digital marketing company. After a bad experience, 58% of people won't do business with a company again.

In contrast to the above, 73% of customers will fall in love with a brand as a result of friendly customer service. In addition to seeking the best deals possible, 55% of customers desire access to information about the product and service they love and it increases CX. In fact, 68% of millennials between the ages of 20-34 would switch brands to get more program rewards, access to relevant information, and great customer service if the other company is not offering it.

Customer loyalty can be affected by various factors, so devising strategies to retain loyal customers is essential. When your customer retention rate drops, you might need to dig deeper into their feedback; however, if your customer retention rate increases, more people will enroll in your loyalty program.

You can reward loyal customers with loyalty programs and create lifelong bonds the more they remain loyal to your brand. Your loyal customers will be more likely to remain loyal to you if you develop deeper relationships with them.

3. Brand Recognition Is Also Key in 2023

As millennials turn to social media for personal reinforcement, hence the popularity of status sharing and selfie-taking, this may be due to them wanting to feel that their favorite brands are loved by their peers. In addition, they seek this in the brands they work with. So, it is not surprising that brand recognition is slightly behind quality as the most significant driver for brand loyalty.

This is the age of informed and proactive customers. The internet has provided customers with a variety of opportunities and choices. The challenge for businesses is that they can pick and choose from a wide selection of brands. The rise of social media has also empowered them to share their experiences –- both positive and negative -- on social media.

And while this is good news for customers, it's great news for companies. It allows marketers to track online customer activity and develop strategies to keep their customers loyal to their brand.

Here are some customer loyalty metrics that all businesses should pay attention to achieve successful customer loyalty campaigns.

  • CRR (Customer Retention Rate)

Customer retention or CRR straightforwardly means the process of turning your buyers into repeat customers. This metric for calculating it is called the CRR or customer retention rate. It is crucial to measure your customer retention rate because growing your business involves not only finding new customers but also satisfying your existing customers.

  • The NPS (Net Promoter Score)

Net Promoter Score or NPS straightforwardly means how you measure how your customers are feeling about your business overall. It gives you a brief facet of whether your customers are actually going to return or look to other places. The NPS is found through a survey that asks a question such as: “How likely are you to recommend us to a friend, family member, or colleague?”.

  • CSAT Customer Satisfaction Score

Customer Satisfaction Score or CSAT indicates how satisfied your customers are with the product, service, or experience you provide. CSAT focuses on specific, short-term satisfaction, while NPS focuses on your overall brand.

  • CES Customer Effort Score

CES measures how easy or difficult it is to deal with your business, whether that's making a purchase, using your product, or solving a problem. If you make it easy for your customers to interact with you, they are more likely to do it again.

  •  RPR (Repeat Purchase Rate)

You can measure actual customer behavior through your Repeat Purchase Rate  (RPR), which measures emotion or intent. You can calculate your RPR by looking at the percentage of customers that make more than one purchase during a specific period. A score based on emotion is useful, but nothing shows loyalty like a score based on money. It's important not to confuse your RPR with your Customer Retention Rate, which intentionally removes new customers to focus on loyal customers. Multiple purchases are included in your RPR.

  • Audit Reviews & Social Media

Paying attention is the key here, there's no formula. You can boost your customer loyalty program by listening to them and asking them questions. You can learn a lot about your customers on social media since most of them are likely to be active on it already. Research your customers' preferences, brands they follow, products they buy, and who they speak with. Simply asking them a question can also provide you with ideas about how to reward them, as well as what products or services would be best.

Top Strategies To Build Loyal Relationships With Your Customers.

Your customers do not turn into loyal customers overnight, you must constantly provide a smooth and consistent omnichannel experience that will captivate customers and make them feel valued. Listed are the top strategies to build strong loyal relationships with your customers.

1. Understanding Your Customers On a Deeper Level

If you want to reach your customer loyalty goals you need to make your customers feel valued and special. In order to do that you must first understand these people on a deeper level. What speaks to your customers, what type of deals or special promos do they value, what your brand means to them, and what areas of your brand can be improved such as your website to be able to provide them with a better CX.

Understanding your customers is to know who your customers are, and you must gain and analyze as much data as possible to do this right. You can learn more about your customer’s motivations by analyzing data from your website, CRMs, email subscribers, social media interactions, and transactional records.

If you truly want to understand your customers on a deeper level, using conversation intelligence solutions is an invaluable tool. Tech solutions from Gong, Chorus.ai and Outreach automatically record as well as transcribe every interaction and analyze the conversation for insights. The data collected from these conversations is pure gold because your consumers are literally telling you how they want to engage with your business and how you can make their individual experience a delight.

2. Customized Interactions Based On Your customer’s Needs

The 2023 forecast for customer experience has never been higher. If you thought that a one-size-fits-all approach is acceptable in 2023 you are very mistaken, because your customers are expecting a perfectly tailored customer experience. Many businesses have already started implementing personalized website experiences and personalized ads.

It is important to make sure you are making adjustments along the journey so that your customers have a consistent experience on all channels. Businesses tend to fail in the personalized experience sector, and in 2023 it is a major oversight. Loyalty programs are a great way to make a tailored experience for your customers, here’s why…

In addition to providing you valuable insights into customer spending habits, your rewards platform can also personalize communications based on various customer interactions and previous transactions.

The more customers engage with your loyalty program, the more it can hone in on what the customer wants and cater to them in its own unique way. There could be a customer that would appreciate 25% off on software for one week only, another customer who would like free shipping on their next order or another customer who would love a gift with purchase on their next purchase of perfume and makeup accessories.

The takeaway here is that personalization is now a loyalty program standard and businesses that neglect this concept are at risk of losing their customers to the competition.

3. Provide Consistent High-Level Customer Service

An important part of customer loyalty building is delivering consistent high-level customer service. When a customer feels like they can count on your customer service agents to provide them with great service, they will appreciate the care which makes them feel valued and they come back again and make future purchases. 61% of businesses reported that repeat business accounted for most of their revenue and repeat buyers spent 67% more than new customers.

It is important to focus on customer service to increase customer value and overall revenue since the majority of business revenue is generated by repeat customers, and retention is more valuable than obtaining new customers. This can give you a different perspective on how you take on and adjust your customer service and customer retention strategies. They really should be a focal point of your marketing strategy.

Many people see customer service as a means to deal with problems and complaints from customers, and in the worst-case scenario, it may be viewed as a series of problems to address or minimize. It is important to look at customer service in a positive light. For example, you may want to view it as a chance to impress your customers by answering their questions efficiently and ensuring that they are satisfied with your service.

4. Ask Your Customers for Reviews

Consumers read online reviews about companies or individuals before doing business with them, and positive reviews usually make people more likely to buy from that business. As markets move toward a digital world, it's no surprise that consumers read online reviews about companies or individuals before doing business with them.

By implementing this strategy, you will not only attract new customers, but you will also gain their trust as a professional and trustworthy business. This will also give the customer who gave the review a feeling of appreciation and value and they will be more likely to buy from you in the future. In addition, it will improve your search engine ranking, since Google's algorithm likely factors in online reviews when ranking local businesses.

5. Create & Build a Community For Your Customers

Humans are naturally social, which is why creating and building a community for your business is a great tactic to build customer loyalty. Building a community gives your current and new customers a fun experience where they can make new friends or build professional relationships, as well as share their individual experiences and feelings about your business and its products or services.

Communities are a wonderful tool to help build customer loyalty because every business is going to say they are the best of the best in their industry. But when customers see social proof from regular people just like themselves they are more likely to trust your business and what you offer and that builds customer loyalty. In fact, consumers trust word-of-mouth recommendations when picking and choosing which business to buy from.

Building a community space where your loyal followers can get together to talk about your business is a beneficial tactic. Depending on your business, there are many different forums you can utilize to build a community. For example, some businesses will showcase interactive videos, podcasts, and monthly meetups. Even creating fun things like polls and surveys are a great way for your customers to interact with each other and you can use this collected data to your advantage in many ways.

6. Create a Solid Customer Loyalty or Rewards Program

The relationships that you create with your customers don’t simply end after they make a purchase, the reality is that it is just the beginning. If you want to really encourage customer loyalty and future purchases, use loyalty programs. Many huge multi-million and multi-billion dollar organizations use some form of loyalty or rewards program.

First and foremost, the majority of customers join reward or loyalty programs because they want or moreover demand value. It could be they have already purchased from your business many times, and the customer figured they might as well reap the rewards of their many repeat transactions.

Maybe it boils down to who you as a business are competing with for that customer’s business, and the customer is looking at which loyalty program offers the better discount or reward. Regardless of their motivation, your loyalty or reward program needs to be worth the customer’s time and investment.

Loyalty programs widely vary from business to business. The key thing to remember when creating your loyalty program is that you must give customers rewards or deals that they genuinely care about and find value in. As mentioned before in this article, you must truly understand your customers on a deeper level to give them the best offer in their minds.

The purpose of rewarding programs is a mutually beneficial arrangement that everyone -meaning both you and your customers- benefits from. An exciting rewards program enables your brand and customer to interact in a more meaningful way. Another important element to consider is you can offer the best loyalty or reward program in the world but make things overly difficult or tedious and you won't be having anyone signing up for anything.

From signing up to earning points, redeeming rewards, engaging on social media, taking part in site promotions, and everything in between, it is all about making it as easy as possible for you to build a relationship with your customers. Customers genuinely respond better to clarity and a loyalty or reward program with straightforward rules and a simple reward structure will always achieve the best results.

Customers also enjoy experiential rewards and loyalty programs, so the more you can include this in your reward or loyalty program it will have a great overall impact. A good example of this is Nike, which transcends simple discounts and freebies with events such as product launches and community action projects. Creating new incentives and rewards with social currency is something worth thinking about regularly.

In Conclusion

A solid customer loyalty campaign achieves all of the above, including value, excitement, convenience, simplicity, and social currency. Future developments will likely focus on improving personalization to create deep connections with our customers, as well as focusing more on customer lifetime value based on the customer experience rather than product value.

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