Increasing customer retention rates by just 5% can increase profits by 25% to 95% (source). So why then are 44% of companies putting a greater focus on customer acquisition versus 18% who put a greater emphasis on retention? Well, new customers can improve sales and top-line numbers, which looks impressive. But fostering customer loyalty and bringing back customers again and again is what drives long-term profitability. Here’s what you need to know about improving brand loyalty:
Lower price is not a good long-term strategy.
Beating your competition by offering lower prices can help you infiltrate a new market, but eventually someone else will do the same thing to you. It’s just a matter of time. And because any customer can (and will) research pricing information online before making a purchase, they will know where to get the best price.
So how do you maintain a competitive edge if not by offering the lowest price? Your business needs to offer the most value. And depending on the goods and services you offer, your customers will gauge value differently. For example, a store that sells tires will likely offer free periodic rotations as a courtesy to customers who buy four new tires. A website hosting company can maintain a live chat to quickly address customer concerns. Use the topics below to brainstorm ways your customer service can go above and beyond to provide the most value.
People are loyal to ideas, not brands.
People connect with each other because they have shared interests and values. They connect with brands for the same reasons. Companies of all sizes are taking stances and incorporating values systems as part of their branding to promote brand loyalty with targeted audiences—and it works.
You may have heard about the Like a Girl campaign from Always. Without putting any focus on their products, Always launched a campaign intended to drive an emotional connection to the brand and increase their popularity by creating a cultural change. This led them to make a video that took the derogatory phrase “like a girl” and turn it into a message for positivity.
That video had over 90 million views and the hashtag #LikeAGirl was used 177,000 times on Twitter in the first three months. Always Twitter followers also tripled in the first three months. Additionally, claimed purchase intent grew more than 50% among their target. Learn more.
Now, this doesn’t mean that you should pick any emotional topic and make it part of your marketing. Always had been using confidence at the core of their business for years, albeit only in terms of functionality (their products won’t let you down). But it wasn’t a big leap for them to focus a campaign on emotional confidence in adolescent girls.
Try to brainstorm ways that your business can make a positive impact. Maybe you can give back to your community or, like Always, you can be a catalyst for change. If you can show your customers that your business cares about the same issues that they do, you will create a bond with them that will outlast a single sale or promotion.
Unhappy employees lead to unsatisfied customers.
Just like you want your business to embody values that attracts long-term customers, your employees should be ambassadors for those values. It’s important that you create a good company culture and foster employees who are passionate about your business and their work. When your customers encounter your employees, whether through sales or customer service, they will remember how they were treated.
When asked what defines poor customer service, data shows that 73% of people cite rude and incompetent staff as their primary issue. Furthermore, consumers are more likely to feel good about the level of service they receive if employees spend more time with them. Surprisingly, customers are willing to wait to receive a response or sit on hold as long as they don’t feel rushed through their complaints or concerns.
You only get one shot at a second chance.
When it comes to customer satisfaction, the good news is you might get a second chance if something goes wrong. However, one more chance is all you’ll get.
Customers know that mistakes happen. And according to data, 95% of complaining customers are willing to overlook a serious service mishap if the problem is resolved in the next interaction they have with a company (source). But if the customer is unsatisfied the second time, their opinion about a company will be set in stone. Therefore, it’s very much worth your while to ensure that customer complaints are taken seriously and that your staff is trained to remedy errors as thoroughly as possible.
And in addition to training in customer care, your customer service team needs to have the authority to make decisions that benefit the customer. It is frustrating for everyone involved if a customer calls a someone who must constantly check in with a supervisor to fix an issue. This puts stress on the system and makes it more likely that your customer service representative will choose inaction instead of taking the lead to fix an issue.
Inexpensive WOW factors.
Lots of companies promise customer service that goes above and beyond, but few truly deliver exceptional customer experiences. And the thing is, it doesn’t take much to impress consumers.
This study published in the Journal of Applied Social Psychology tested whether the simple gesture of giving patrons a piece of chocolate would improve tipping. Over the course of two experiments, the study showed that patrons who received candy with their check tipped higher than those who didn’t. Furthermore, patrons who received additional candy as a personal courtesy from their waiter increased their tip amount even more, up to 23%.
This shows that it’s not the cost, but the thought of the gesture that mattered most to consumers. Restaurant goers who felt that their waiter did something just to be nice (bringing them an additional piece of candy) were willing to spend more for their experience. And although this is beyond the scope of the experiment, it wouldn’t be surprising if that patron was more likely to visit the restaurant again.
Remember what keeps the lights on.
At the end of the day, you need to trust that you are doing something right with your business. There is a reason you’ve made it this far, and you need to focus on what that reason is. Start by making a list of your most important customers or the audience that you rely on the most. Then make another list that details why those customers chose your business in the first place.
Did your customers forge a relationship with a specific salesperson? Do you offer a care package that your loyal customers love? Are your products of such exceptional quality that the same can’t be found anywhere else? Know what your strengths are and formulate your mission statement and your marketing strategy around them. Customer loyalty will follow.
Customer loyalty is more profitable and less expensive than customer acquisition.
Although you’ll find a wide range of numbers, almost all experienced marketers will tell you that it costs less to retain customers than to attract new ones. Furthermore, they spend more and are more willing to try new products (source). And here’s the thing: 89% of companies believe that customer experience is a key factor in driving customer loyalty and retention.
It’s time to focus on the things that matter: your business, your employees, and your loyal customers. With those in place, great marketing and great results are sure to follow.