Companies are learning that good customer loyalty is a vital part of their business. It’s no longer enough to rely on new prospects; companies are recognising the importance of repeat business and customer advocacy.
What is Customer Loyalty?
Customer loyalty is an attitude and behaviour where customers favour one business brand over others. Usually, a company earns customer loyalty through satisfying the customer’s needs and requirements, whether it’s a service or product (or both!). It can also be born out of a sense of familiarity with a brand’s image, and, more and more, a company’s corporate social responsibility.
Also read this article for more information: How To Improve Customer Experience
Why is it so important?
The Gartner Group discovered that 20% of existing customers generate 80% of a company’s profits. This is backed up by marketing data, which reveals that selling to brand new customers if only 5-20% likely, versus a whopping 60-70% for current customers.
That is customer loyalty at work.
A customer who has previously been satisfied by the quality of a product or impressed with the level of customer service, is more comfortable with the brand in question and as a result is far more likely to purchase again. And recommend that brand to others, enter customer advocacy.
What drives Customer Loyalty?
People tend to be driven by emotions. Customer loyalty comes from the emotional response to a successful business transaction. Are they happy with a product? Happy enough to come back and buy again? That ‘happiness’ is the driving factor, and must be maintained over time to stop the relationship from deteriorating.
There are many emotions and states of mind that play a part in this. On the whole, however, the following four take the lead:
1. Appreciation & Gratitude
These two emotions go hand-in-hand. A grateful customer is a loyal customer. They feel appreciated by the business because they’ve been looked after. In turn, they appreciate the business for performing up to their expectations, a great way to win customer loyalty!
While not strictly speaking an ‘emotion’, this has to do with how comfortable customers are with a brand’s image. It’s about familiarity. People are more likely to use a brand they recognise and know to be ‘safe’ than step out of their comfort zone to try something different. This isn’t just about big business; today, with the Millennial consumer focussing on corporate social responsibility, smaller businesses with strong ties to the community, for example, have the power to outperform the large businesses in this area.
Surprising a customer – in the right way – can ensure that a business stands out in a crowd. Being different is important to outdo the competition. More than that, however, surprise is one of the strongest emotions to tap into when it comes to maintaining customer loyalty as it will keep brand messages from going stale.
People like to feel as though they belong and are part of a community. Being able to generate the feeling that customers are included in decisions, ideas, festivities, is a great way to increase customer loyalty, and a good way to stand out from the crowd. People are less likely to swap businesses if they feel like they are part of a family.
Of course, these aren’t the only emotions driving customer loyalty. People are too complex for us to assume that everyone reacts the same way or wants the same thing. Some of us just want to walk into a store and buy a pair of shoes, or a sundae, without being bothered that it’s not our ‘usual store’. But, let’s be honest, we do get a nice buzz when we walk into our favourite cafe and the barista goes “Hi, Sam, the usual?…One pumpkin-spiced double-frothed skinny latte, extra hot, extra large, with cinnamon dusting, to go, coming right up!”.