loyalty-issues-strategies
Summary
What is customer loyalty?
The benefits of customer loyalty
How to measure customer loyalty?
The 9 challenges of customer loyalty
9 customer loyalty strategies
Create a roadmap to retain customers
What is customer loyalty?
Customer loyalty refers to all the techniques and actions implemented by a list of azerbaijan whatsapp phone numbers company to create and maintain a strong, lasting and positive relationship with its customers. The goal is to encourage satisfied customers to repeat their purchases and choose your brand over that of a competitor, even if the latter offers similar benefits.
It is important to distinguish a loyal customer from a simple buyer. A buyer makes a one-time purchase, without necessarily intending to repeat this action. Conversely, a loyal customer is characterized by:
Regular and frequent purchases
Purchases across multiple product or service lines from the brand
A high probability of recommending the brand to those around you
A certain impermeability to competitive offers
Concretely, a customer who buys from you for the first time goes through a 5-stage cycle:
He learns about your product
He makes a first purchase
He evaluates his post-purchase experience
He decides whether or not to buy back from you
He renews his purchase and enters a cycle of regular repurchases.
Transforming a buyer into a loyal customer doesn’t happen overnight. It’s a process that requires time and the implementation of a real relationship strategy. Two key factors come into play: the degree of preference for your brand and the level of perceived differentiation of your products or services. The higher the perceived preference and differentiation, the more loyal your customers will be.
Now that we have clarified the definition of customer loyalty, let's see why it is a major business issue and how it can boost your performance.
The benefits of customer loyalty
Implementing an effective loyalty strategy offers many benefits for companies, regardless of their sector of activity (e-commerce, retail, media, pharmaceuticals, etc.). In a context of increased competition and rapidly changing consumer expectations, retaining customers has become a strategic imperative. Here are the 5 main benefits of a successful loyalty approach.
1. Increase turnover
A loyal customer buys more often and generally spends more than a new customer. According to a study by Fundera, 20% of a company's existing customers generate 80% of its profits. Transforming your buyers into loyal customers means securing revenue in the long term.
In addition, the chances of selling to an existing customer are between 60 and 70%, compared to only 5 to 20% for a new prospect. Focusing on loyalty means optimizing your ROI!
2. Reduce costs
Retaining a customer costs 5 times less than recruiting a new one. Loyal customers already know your products and need less assistance, which reduces your support costs. They are also less sensitive to promotional offers.
Other financial benefits of loyalty include reduced unsubscribe rates, increased average basket size through upselling and cross-selling , and positive word-of-mouth that reduces your acquisition costs.
3. Make your customers ambassadors
Loyal customers are the best ambassadors for your brand. Satisfied with their experience, they will naturally recommend it to those around them, becoming a real promotional force.
This positive word of mouth is extremely valuable: not only does it bring you new customers at a lower cost, but it also strengthens your brand image. Consumers trust recommendations from their friends more than traditional advertising.
4. Resist competition
A loyal customer is a customer that your competitors won't have! By maintaining a close relationship with your customers and offering them a personalized experience, you strengthen their attachment to your brand.
Even if a competitor makes them a great deal, loyal customers will be less likely to leave. Every euro spent with you is one euro less for your competitors.
5. Improve your products and services
Your most loyal customers are a goldmine for improving your offering. They know your products well and will be happy to share their feedback with you.
Don't hesitate to ask them questions via questionnaires or to analyze their purchasing behavior: you will obtain valuable information to optimize your offer and stick as closely as possible to their expectations. It's a virtuous circle that strengthens their attachment!
Now that we have seen why loyalty is an essential lever for growth, let's look at how to concretely measure the loyalty and retention of your customers.
How to measure customer loyalty?
To effectively manage your loyalty strategy, it is essential to monitor relevant indicators. These will allow you to measure the progress made, identify areas for improvement and adjust your actions accordingly. Here are 4 essential KPIs for measuring the retention and loyalty of your customers.
1. Net Promoter Score (NPS)
NPS is one of the most widely used metrics to measure customer satisfaction and loyalty. It is based on a simple question: "On a scale of 0 to 10, how likely are you to recommend our company/product/service to a friend or colleague?"
Depending on their score, respondents are classified into 3 categories:
Promoters (score of 9 or 10): very satisfied and loyal customers, who will actively recommend your brand
Passives (score of 7 or 8): satisfied but not particularly enthusiastic customers, likely to switch to the competition
Detractors (score 0-6): Dissatisfied customers who can harm your reputation
To calculate your NPS, subtract the percentage of detractors from the percentage of promoters. The result is a score between -100 and +100. The higher it is, the more loyal your customers are and are more likely to recommend you.
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2. Repurchase rate
The repeat purchase rate measures the likelihood that a customer who has already purchased from you will make a repeat purchase. It’s a great indicator of loyalty : the more frequently your customers purchase, the more engaged they are with your brand.
To calculate this rate, divide the number of customers who made X purchases in a given period by the total number of customers in that same period. For example, if 500 of your 2,000 customers purchased 3 or more times in a year, your repeat purchase rate is 25%.
Tracking this indicator over time allows you to spot potential retention issues and adjust your retention strategy accordingly.
3. Retention rate
The retention rate expresses the percentage of customers you have managed to keep over a given period. It is calculated by dividing the number of customers at the end of the period (minus new customers acquired) by the number of customers at the beginning of that period.
For example, if you had 1000 customers at the beginning of the year, and you have 1100 at the end of the year, including 300 new ones, your retention
