Customers are good for business – understatement! They are, after all, helping to pay the bills and keep your dreams alive. But even with that knowledge many businesses aren’t securing or valuing their customers’ loyalty.
If you know your customers are awesome for your business and you want to keep them, it pays to investigate ways to build their loyalty; keeping them engaged with your story, shopping with your business and championing your products. Nurturing your customers’ ongoing support for your business will bring you solid returns on investment.
The value of loyal customers
The value of retained, loyal customers lies in their ability to support your business in a number of ways:
- as a returning/continuing revenue stream, purchasing your products ($$);
- as a valuable endorsement of business and products to other customers (they’re doing your marketing for you); and
- as a reduced cost to the business in marketing dollars (read further, there’s a 5 x rule you should be aware of).
Tips for building customer loyalty
Here are 4 top tips for building customer loyalty:
- Research and plan – know your customers wants and behaviours and develop a relevant, timely, customer retention strategy so you and your staff can invest in customer relationship and loyalty activities effectively, authentically and efficiently. In addition, planning helps you measure success;
- Connect on Socials – use the social media channels your customers use and respond to their questions, comments and complaints in a way that is consistent with your brand values and brand personality;
- Support Community – authentically invest in your customers’ community – sponsor sports team, donate to charities, champion signature causes that resonate with your community and align with your business values – celebrate your community;
- Invest in Remarketing – use the power of electronic direct mail (e-newsletters, sms messages) to communicate offers of particular value, and available exclusively to, existing customers. Loyalty programs can be a great boost for product-based businesses.
The cost of acquiring and retaining customers
There has been much research into the cost to a business of acquiring a new customer and the comparative cost of retaining an existing customer, with the rule of thumb being acquisition is 5 times more costly than retention. As with most things though, this stat deserves a closer look. In digging deeper into costs and return on investment, there are a few things to consider, such as:
- what is each customer’s lifetime value? (CLV) In other words, what is the total value of that customer to your business over the lifetime of their relationship with your business. Any assessment of CLV will allow you to make an informed decision on where to spend your money. Perhaps targeting new, desirable customers with higher CLV and then building their loyalty will prove to be a greater return on investment than trying to retain a particular customer with a low CLV;
- how big is your business and how diverse do you need your marketing activities to be? If you’re a small outfit, the 5 times rule may not even apply if your marketing activities are relatively low-cost across the board. Don’t over-invest in costly apps and customer relationship management software if you can build on basics; do make sure you’re delivering value that customers want and appreciate, not just something you want to giveaway; and
- data rules – we mean, it really IS the king/queen of all you survey. Capture customer data so you can get to know them better – their demographics, their buying behaviour, special occasions (birthday!) so you can celebrate them, tap into their wants and needs, and build their loyalty for a reduced cost.
When it all boils down to it, a bird in hand is worth two in the bush. If you’ve got these great, engaged customers who are already sold on how fantastic your business, your staff and your products are, then letting them know that you value them – be that through bonus products, gifts, discounts or personal communication – will bring ongoing rewards.
Why the pub photo on this post? Because pubs and cafés are fantastic at building loyalty, making customers feel seen and valued – ‘here’s your latte, Jim!’, ‘a chardonnay, right Lisa?’. Valuing customers. Building loyalty. Nurturing relationships. It’s worth your while.
Some interesting reading
Forbes.com article on deepening customer loyalty during a crisis
Qualtrics.com article on customer lifetime value
