Customer Loyalty is the Holy Grail of sales and marketing. Loyal customers are worth their literal weight in gold because they’ve reached a level of trust, familiarity, and affinity for your brand that transcends mere pricing and brand positioning.
Brands that are able to crack the customer loyalty code do so by listening to their customers, responding to their needs and using first party data to continually find ways to add value to their customers’ lives.
In this article, we’ll cover everything you need to know about this powerful retention strategy, complete with the benefits it holds for your business and examples from global brands doing it right.
What is customer loyalty and why is it important?
Customer loyalty is about a person’s willingness to interact with and buy from a specific company on an ongoing basis. If you can create memorable, positive experiences for your customers, you’ll increase the chances of them not only coming back for more, but spending more per purchase.
The research exists to back this up.
Studies show that loyal customers spend a significant 67% more on products and services than new customers. So, even though your most loyal customers might only make up 20% of your audience, they provide up to 80% of the revenue.
When it’s 5x easier to retain a customer than acquire a new one, numbers like these are hard to ignore. Focus on creating valuable experiences and interactions for the customers you already have, and you’ll be rewarded with repeat business and increased customer lifetime value.
In an over-saturated e-commerce marketplace, loyalty matters now more than ever.
“Build a loyalty platform with clear consumer benefits, and layer in customer-generated content to help build a community. With a great voice of the customer (VOC) strategy–including questions and answers, ratings and reviews, and visual content–your customers will feel right at home consuming and adding their own voice to your community.”
Did you know that just a small change in customer loyalty can have a major impact on your bottom line?
5 Benefits of Customer Loyalty for a Business
Customer loyalty can take time to get right, but loyal customers pay dividends once dialed in. From increased engagement to reaching previously-unidentified sales opportunities, here are five of the top benefits you can achieve by focusing on customer loyalty.
1. Build Meaningful Relationships
In a world where your audience sees between 4,000-10,000 ads each day, you need to think differently if you want to stand out.
This begins with switching focus from sales to loyalty and putting the customer at the center of your marketing strategy. By creating relevant content and engagements that go beyond simple discounts and incentives, you won’t just differentiate yourself from the hordes of competitors vying for your customers’ attention — you’ll build meaningful relationships that grab attention and build brand trust.
This can stem deeper than simple sales psychology of getting customers to take the same action repeatedly. Other unique ways to build a connection with your customers include:
Aligning with their values: as the sustainable fashion movement has shown us, modern customers factor their personal values into their shopping habits. From charity partnerships to environmental pledges, if your brand has values that align with those of your customers, display them front and center in your marketing to show your customers that you care about what’s important to them.
Partnering with relevant brands: your customers have lives outside of your industry, and that presents opportunity. From cinema tickets to dining offers and even collaborations with similar brands that your audience is likely to shop with, partnerships can be a great way to deepen your customer connections outside of your business ecosystem.
2. Drive Repeat Business
With meaningful connections come brand trust, which is both a powerful sales driver and a robust defense against competitors.
The traditional sales funnel is built upon 3 core components:
In an always-online world, your customer’s journey through these stages will occur across multiple channels — giving competitors the opportunity to swoop in and steal them away with targeted advertising and well-timed engagements. However, when customers have tangible, loyal connections to a brand that they trust, they circumvent the consideration phase and jump straight to conversion, often spending more.
This isn’t marketing theory that doesn’t translate to practice. The numbers are there to back it up.
Customer loyalty research shows:
So, whether it’s down to a positive customer service experience, an emotional brand connection or simply a stand-out product range that they can’t live without, customer loyalty is key to keeping customers coming back.
3. Increase Revenue & ROI
Most businesses agree that it costs 5x as much to attract a new customer as it does to retain a current one. In a climate where acquisition, manufacturing and shipping costs are rising, this statistic is more relevant than ever.
This is where the power of customer loyalty really starts to shine.
Repeat customers who trust and are loyal to your brand are more likely to explore other ranges that they might not have previously considered, as well as ordering their favorite products in increasingly large quantities.
This has a substantial impact on Customer Lifetime Value. Research shows that customers with a loyal connection to a brand are worth 306% more across their lifetime than non-loyal customers who might return but are likely to purchase infrequently and in smaller quantities.
4. Reach New Customers With Brand Advocates
Work on customer loyalty, and your audience won’t just keep coming back themselves — they’ll bring their friends and family with them too.
From relevant online engagements to stellar products and positive customer service interactions, create positive experiences for your customers and they’ll spread the news via word-of-mouth marketing.
When people trust recommendations from friends and family more than online reviews, these brand advocates hold powerful potential to help you tap into new customer bases and attract buyers outside of your typical marketing reach, with traffic that will convert at twice the rate of non-referral audiences.
- Pro tip: Turn customers into brand advocates and drive more referrals with targeted incentivization. Build referral offers into your loyalty program with rewards that unlock at different stages, and add referral offer blocks into emails sent to repeat customer segments.
5. Gain Valuable Customer Data
If a new customer bounces from your website without making a purchase, the likelihood of them taking the time to tell you why they didn’t convert is slim — even with on-site feedback request tools.
It’s a different story with loyalty programs. Packed with engaged customers primed to help you grow the value you deliver, your loyalty program is a gold-mine for customer feedback you can trust.
There are a number of key ways you can extract value from loyal customer feedback:
- On-site improvements: Reveal key bottlenecks on your site and in-app that prevent customers from converting and impact their online shopping experience
- Loyalty program optimization: Uncover the features of your loyalty program that customers love the most, as well as underperforming areas that could benefit from optimization.
- Customer acquisition: Use the information you’ve collected from your loyal customers to uncover the offers, incentives and products that will entice new customers to convert.
When data is power, your loyalty program is one area worth your attention.
Examples Of Customer Loyalty
Let’s look at a few brands that are using customer loyalty programs to not only benefit their business, but also their customers.
Use Case: Starbucks Revamped Loyalty Program
At Starbucks, it really pays to be a member.
From a free drink on your birthday and free in-store refills on tea and coffee, to free bakery item unlocks as you accrue rewards points, the coffee giant has plenty to keep their customers coming back.
And it’s worked. Starbucks has driven over $2bn in revenue from its rewards program, with membership growing over 25% in the last 2 years to over 16 million members.
The success of Starbucks Rewards comes down to more than physical incentives — a lot of it lies with customer convenience.
Rewards members can order ahead, skip lines, exchange stars for retail merchandise, earn extra points on special days, and redeem points for smaller items such as an espresso shot or an extra pump of sugar.
Use Case: The Reebok Experience
Starbucks might have focused their loyalty strategy and convenience, but Reebok has taken an alternative approach — and it’s paid off.
The global sportswear and footwear brand has honed in on the values their customers care about, offering its loyalty program members rewards including:
- VIP experiences
- Free shipping
- Early product access
- Training and wellness programs
- Partner rewards from other brands their customers care about
Reebok built their value-based loyalty program around the belief that experiences create deeper emotional connections than transactions, while also setting themselves apart from points-and-prizes competitor programs.
In addition to providing a deeper, richer customer experience, Reebok also avoided many common rewards features such as enhanced discounts which could have cost the brand revenue, helping it to produce a higher ROI.
Grow Customer Loyalty with a Leading Customer Engagement Platform
If you want to maximize the revenue potential of your business and increase customer satisfaction, it’s time to set your sights on customer loyalty. However, integrating customer loyalty across multiple marketing channels can be a challenge for businesses.
This is where Emarsys comes in. By engaging your audience in real-time across the customer lifecycle, the Emarsys Customer Engagement Platform helps brands create seamless, personalized experiences that drive satisfaction and foster long-lasting loyalty.
Discover what Emarsys can do for your brand. Watch the 3-minute demo now.
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