93% of your customers will make a repeat purchase if your company has great customer service. This is why you need to build customer loyalty.
It’s much easier to get the same customer to buy from you again rather than investing time, money and resources into marketing the product towards new customers and convincing them to buy it.
Not to put too much pressure on you, but American companies lose about $62 billion annually due to poor customer service.
Here are a number of ways you can create and improve customer loyalty:
#1. Offer exceptional customer service
Let me help you understand why good customer loyalty is the most important aspect of gaining customer loyalty nowadays.
With access to social media and a number of other tools, small businesses are multiplying rapidly.
This means that customers have a lot of options to choose from when purchasing a product so attracting customers has become much more challenging.
You’ll have to offer the perfect product, exceptional customer service, the best prices and great amenities to ensure that your customers stay.
- Train your workforce
Your employees are a big part of your success; if you keep them happy, they’ll make sure your customers are happy.
Train them to greet every time a customer walks in – even a smile makes a world of difference.
If you offer a high-contact service e.g. a beauty salon, bank, hotel etc. your reliance on employees is even greater. You’ll need to teach them how to build relationships with customers.
A receptionist at the front desk of a hotel can make small talk with customers about where they are from, whether their travel was comfortable, tourist spots to visit – all while checking them in.
Make sure you hire employees with good social, verbal and memory skills so that the training process is much smoother.
- Social media
Social media is the essence of most businesses these days, especially in times of COVID-19 when physical workplaces have shut down completely.
Whether your brand is big or small, you need to make each and every customer feel special. It may feel overwhelming because your business profile may have thousands and even millions of followers which can be difficult to manage, but thanks to technology, you’re in good hands.
These automation tools for digital marketing have your work cut out for you.
Have thousands of comments under your recent Instagram post?
You can reply to each comment with pre-written messages rather than having to manually type it out every time.
Here’s an example off Jetways dealing with customer complaints and negative reviews on social media:
Prompt responses and concern about customer experiences can actually change the negative perception of others who view this tweet.
Similarly, if you want to send out bulk text messages, just set up your account on ExpressText and enjoy automated features such as pre-scheduled text messages that free you from being tied up at work.
The point is, all of this automation allows you to provide more seamless customer service and saves you ample time!
#2. Give out free amenities
This is one of the customer favourites (it definitely makes me go back again!).
Disneyland is the perfect example of a business that offers unique amenities. Customers pay a lot to enter the theme park for a few hours and despite that, they are required to wait in long queues due to the large influx of visitors.
To ensure that they don’t get tired of waiting or have a dull time in the queue, Disneyland characters engage customers with entertaining acts, shaking hands, taking selfies and conducting other interactive activities so that parents don’t have to deal with children’s tantrums!
If you have a business process which requires a long wait, you can keep customers entertained with the regular amenities which won’t cost you much. This includes free WiFi, TV, food etc.
In fact, going a step further and offering your customers tea and other tasty snack items will definitely ensure that they visit you again!
This is a popular tactic used by salons, clinics, designer houses and other businesses, especially those with high-paying customers.
Remember, your customers are paying you for more than just the product. They’re paying you for the experience which will eventually build your brand reputation and separate you from competitors.
Another great tip is to classify your offerings into categories and offer more amenities when a higher price is paid.
#3. Observe, listen and implement customer feedback
This is a rule of life, not just for business endeavors, but it can make all the difference in your profits.
There’s a famous case study about a children’s bookstore that was struggling to make profits. Books were classified into broad age groups i.e. 4-8 years and so on.
Behavioural observation showed that parents who came in to buy books for their children got confused about which book would be appropriate for their child.
Would a book in the 4-8 year category be too difficult for a 4 year old to comprehend? Or too easy for an 8 year old? This led to them leaving the store without making a purchase.
The bookstore decided to change categories into individual grades and saw a massive increase in sales.
Parents who came in went straight to the category of books depending on which grade their child was studying in and purchased a book from there.
That’s a lesson for every business, whether big or small, about the importance of observing customer behaviour.
You can make your job easier by incentivizing customer feedback, whether positive or negative. View it as constructive criticism and use it to improve your offerings.
Domino’s asks customers to offer feedback via SMS. They’ll either ask you to rate your experience from 1-5 (5 being the highest) or fill out on online form for detailed feedback.
It’s a great way to listen to your customers because it doesn’t require too much effort on their part so they’ll respond to you. If the feedback is negative, Dominos will contact the customer for details:
If you face a similar situation where a customer is dissatisfied with your product or offering, use it as an opportunity to go out of the way and turn them into a loyal customer.
Offer discounts and vouchers on their next purchase or send a free product to replace the damaged/unsatisfactory one. This will ensure that they repurchase from you in the long run.
#4. Retaining existing loyal customers
All of the above were great ways to turn first-time purchasers into loyal customers.
However, it is your already existing, loyal customers (about 20% of your entire customer base) that bring in 80% of profits.
This means you need to value them the most. They are what keep your business running and you need to thank them for that.
- Exclusive discounts
To let your loyal customers know that they are more important than than regular customers, make them feel exclusive:
The first step is to get them to join your SMS and email campaigns. You can incentivise them by offering discounts for signing up.
Then, send updates of new products, sale announcements etc. to your regular customers before you announce it to the general public on your marketing platforms.
This is one of the smartest marketing tactics – it not only makes them feel valued but they will also grab the opportunity to buy the best available products since they have a limited time window until the sale announcement is live.
This tactic is great for your business if you’re in retail, but it’s great for other industries as well if used right. Timing is the key to successful strategy implementation.
Apart from email and texting campaigns, you can also introduce the concept of digital loyalty cards via mobile apps:
This removes the hassle of having to carry around a physical card (and forgetting it at home every time you need to use it).
It also allows regular customers to gain points in order to avail free or discounted products later; thus, motivating them to repurchase from you.
- Special treatment
A lot of businesses tend to bend the rules for their regular customers in order to keep them satisfied. Rush hour at the salon? Stylists will make time for their loyal customers.
Last-minute dentist appointment? The assistant will find time to fit you into the busy schedule if you’re one of the regulars.
At least, that’s what a good business would do. Like I said, your regular customers bring in most of your profits, so sometimes it may be okay to give them special treatment over others; it adds to customer loyalty, benefitting your business in the long run.
#5. Invest in your business
It’s true; to make money, you have to spend money. A lot of the time, especially now that we are surrounded with technology, you will have to invest in devices or tools to create better experiences.
For example, a clinic will need a well-functioning computer with database software that keeps a track of patient history, appointments and general information so that doctors can easily familiarize themselves with a case right before a patient comes in.
(If you’re looking for a software database, check out these customer database software to help you offer a better customer experience).
This saves precious time for doctors as they will not have to repeat questioning regular patients about previous health issues they may have faced.
This also puts a great impression on customers as they will feel valued because they believe the employees and doctors care about them enough to remember or extract their information on each visit.
However, you have to actually care if you want to succeed. Customers can notice the difference in businesses using automation to make their lives easier and actually showing concern for customers.
The solution is to find the perfect balance between the two. Add enough automation in your business process to make your life easier but also hire personnel that remember and care about regular customers and meet all their needs.
Calculating customer loyalty
There’s a specific formula that you can use to find out how many customers you are retaining:
This is great because even if you’re a small business owner with a limited workforce, you can use simple formulas like these to calculate customer retention without needing the help of a professional financial analyst.
The first thing you need to do is select a time period. You can collect information monthly, quarterly or annually – whichever suits you.
If this is the first time you’re doing this, a shorter time period is more appropriate so that you can get the hang of it before applying it extensively.
The second step involves keeping a record of every customer that made a purchase from you in that time period.
Categorise these customers into those that were already purchasing from you before this time period (regular customers) and those who made a first time purchase during this time period.
Got the numbers? Apply them to this formula and voila! That’s your customer retention rate.
A good retention rate depends on the industry benchmark, but generally, the higher the better.
Your customer retention depends upon the nature of your business as well – as some involve one-time purchases (such as cars or electronics for long term use) so it’s best to look up the industry average and aim to get as close to that or higher.
Conclusion to customer loyalty
So that’s all there is to know about customer loyalty. No matter what type of business you run, it is absolutely crucial to retain your customers.
Not only does this improve your profits in the long run, but it also ensures positive reviews.
Customers are highly influential due to tools like social media at their disposal where they can express their concerns freely.
Aim to offer a customer experience so amazing that you don’t give any customer a choice but to leave positive reviews.
Remember, it’s natural to make mistakes, but your business’s reputation is determined by how you deal with them.