What is a business without its most reliable customers? Customer loyalty isn’t just about perks programs and good marketing. It’s about creating brand fans for life.
Your loyal customers don’t simply care about whether your products are on sale or whether you’re out of stock on their favorite items. They’re not just loyal to your products and prices, but also your company and its customer service as a whole.
They’ll keep coming back to buy because they like to do business with you. They trust you. They know what to expect when they buy from you.
Every brand needs loyal customers to survive and thrive. Here’s your ultimate guide on what it takes to create more of your biggest fans.
Table of Contents
Definition: What is Customer Loyalty?
Why is Customer Loyalty Important for Your Business?
How to Build Customer Loyalty
Examples of Loyalty Programs Done Right
How to Maintain Customer Loyalty
Definition: What is Customer Loyalty?
There’s no single official customer loyalty definition, but there are different ways to answer the question of "what is customer loyalty?".
It can be the act of customers consistently and proactively choosing one brand over another, regardless of price, convenience, or availability.
It can also be defined as being an advocate for a brand. Not only does a customer purchase from a specific store or brand, but the customer also vocally encourages others to do the same.
Some call it the act of brands building relationships with their customers to inspire repeat purchases. This might come in the form of a loyalty program, personalized marketing, or good old-fashioned customer service.
Wordstream sums it up nicely, too: it’s a measure of how likely your customers are to do repeat business with you.
As for a bona fide customer loyalty definition, it’s all of these things. There are a lot of moving parts to customer loyalty that work together to produce one common output: long-term fans who will continue to choose you over a competitor.
Note: Customer loyalty also plays an important part in the customer journey and even has its own stage. Check out our customer journey guide to learn more.
Why is Customer Loyalty Important for Your Business?
Every business needs customers to survive. But loyal customers help you thrive.
That’s partly because it costs at least 5 times more to acquire a new customer than it does to sell to an existing one. You’ll also have a higher success rate selling to customers who already know, love, and trust you – as much as 60-70% compared to just 5-25% with a new customer.
Customer loyalty can also be an effective strategy to increase average ticket size and beef up overall sales. Loyal customers tend to spend more with their favorite companies – about 67% more compared to new customers. They also purchase more frequently, further increasing their lifetime value to your company.
Tip: Use Meltwater Radarly to create products and services that keep your customers loyal.
What’s more, your most loyal customers will also fuel your word-of-mouth marketing. They will tell their family and friends about the brands they love and recommend you when asked. This gives you a chance to build even more loyal customers at a very low cost since your biggest fans are marketing on your behalf.
Let’s be honest, though: customer loyalty doesn’t build itself. Things like loyalty programs, referral marketing programs, or investing in social media monitoring for consumer feedback can help companies be proactive in improving customer retention.
Customer retention should always be a top priority because of the high costs of gaining new customers vs. retaining current ones.
Tip: Check out our blog on the six types of customers to learn the difference between loyal customers and ready-to-buy customers.
When you make consumer loyalty a priority, several good things happen:
Limit Customer Churn
First, you stand to reduce customer churn. Loyal customers will buy from you even when you don't have the lowest price. If you’re out of stock on an item, they’ll check back with you or continue to choose you for other needs.
They stick with you because of your great customer service.
Earn More Sales
Loyal customers and sales go hand-in-hand. Sales become natural byproducts of consumer loyalty. You don’t have to work as hard or spend as much money to generate revenue.
Build Resilience
Last but not least, business owners that have loyal customers are usually more resilient than those without a loyal following.
Take Amazon, for example. Its wildly successful Prime program became a lifeline for millions of Americans during the pandemic when groceries and household goods were unavailable locally. The company added an estimated 30 million new Prime memberships in the past year alone.
On a smaller scale, many local restaurants and retailers relied on their loyal customers to keep their doors open, even as they were forced to change how they do business. Restaurants that shifted to carry out and delivery or retailers that offered curbside service were able to retain customers simply by adapting to current needs and conditions.
When competition is tight and the economy is uncertain, your loyal customers may help keep your business going strong.
How to Build Customer Loyalty
Building customer loyalty doesn’t happen overnight. In fact, eight in 10 customers gradually build loyalty to a brand over time due to positive experiences with products, service, advice, and reviews.
So how do you get to the point where you’re creating loyal customers and eventually turning them into advocates for your brand?
Let’s look at some tried-and-true methods:
Create a Customer Loyalty Program
A customer loyalty program is a great incentive to reward your current customers for their repeat business. The idea is that when customers have a choice of receiving a reward with their purchase vs. not receiving anything extra, many will choose the more valuable reward. In fact, less than 8% of consumers say rewards are not an important part of their purchasing decision.
More than 90% of companies have some form of loyalty program totaling 3.3 billion loyalty memberships worldwide. These programs include card-based reward systems, paid loyalty programs, tiered loyal programs, and a number of other formats.
However, it’s worth noting that building customer loyalty with a loyalty program isn’t automatic. The average consumer belongs to nearly 15 loyalty programs but is active in fewer than seven of them. The program should provide real value to the user by offering the rewards they’ll want and use and not make it difficult to redeem their rewards.
When you get your loyalty program right, 73% of your customers will be more likely to recommend you and 79% will be more likely to continue doing business with you. Building a referral program into your customer loyalty program can help you take care of two goals at once.
Prioritize Social Marketing
Building customer loyalty means meeting your customers wherever they are and showing them how you can provide value to them. Social media is a great place to start.
Nearly 4 billion people worldwide have at least one social media account. That’s why multichannel social media marketing has become such an important piece of a customer loyalty strategy.
Your audience is on social media, and your customer loyalty efforts should be, too. Social media makes it easy for your customers to tag friends, like and share your posts, and be a brand advocate for you.
It also helps you stay top of mind with your current customers, especially if you have an omnichannel social marketing strategy that connects with the same customers on more than one channel. Top of mind awareness encourages repeat engagement, builds trust over time, and eventually turns first-time customers into lifelong fans.
Create a Customer-Centric Community
Even the most well-meaning attempts to build customer loyalty don’t carry as much weight as recommendations from family or friends. Your buyers will always trust reviews and recommendations more than your marketing.
That’s why a customer-centric community is such a genius idea.
Communities put people in touch with other people who know and love your brand. They can share ideas on your products or service, talk about their experiences, and help each other troubleshoot, for example.
And if the conversations should turn negative about your brand, you can step in to respond to comments and help to shape the narrative.
Online communities are an authentic way to shed light on the real customer experience for your new loyal customers. Plus, you might learn a thing or two in the process!
Examples of Loyalty Programs Done Right
Now that you know more about building customer loyalty and the role of loyalty programs, let’s look at some brands that are getting loyalty right.
HelloFresh
Meal kit delivery service HelloFresh offers a member rewards program for successful referrals. Subscribers can send friends and family a generous discount code. If they sign up for the service, the customer gets a $10 credit to use toward a future delivery.
The company’s user-friendly interface makes it quick and easy to share its referral code on a variety of channels. Members can track referral activity in their dashboard. Plus, they get rewards to offset the cost of their own meal kit service.
Barnes & Noble
Barnes & Noble is a great example of how paid rewards programs can provide big value to its members. For an annual fee, members receive 10% off all B&N purchases (in-store and online), along with free shipping, a birthday gift, and many other perks. The savings can add up quickly since the discount covers more than just books.
Amazon Smile
Not all customer rewards programs have to take the form of monetary savings. Amazon Smile allows members to choose a charity that will receive 0.5% of eligible purchases. All shoppers have to do is register for the program, select a charity, and shop through smile.amazon.com instead of amazon.com. It’s an excellent way to help shoppers feel good about their purchases.
Chick-Fil-A
Chick-Fil-A’s app-based loyalty program allows customers to earn points on their food and beverage purchases, which can be redeemed for free food items. The three-tiered program is free to join and is based on a user’s purchase history within a year. The higher the tier, the faster you earn points.
How to Maintain Customer Loyalty
Acquiring customer loyalty is just the beginning. Real loyalty also means retaining customers for as long as possible. Here are some ways to keep customer loyalty high:
Don’t Put Your Loyalty Program on Autopilot
Loyalty programs that don’t serve your customers’ needs won’t be effective in building brand advocates. As customer needs and expectations shift, your loyalty program may need to adapt to accommodate new preferences.
Continue gauging the success of your loyalty program. Look for customer churn, redemption rates, and other KPIs to tell you if your program is serving your customers well.
Be Proactive about Bad Customer Experiences
Even best-in-class brands can provide poor customer experiences. The key to retaining customers during these experiences is how you respond.
You can turn a bad moment into a great customer experience. Be proactive about improving the situation. Show you’re listening and take steps to improve. A little humility can go a long way in preserving customer relationships and creating happy customers.
Highlight User-Generated Content
One of the best ways to build brand ambassadors is to show you’re listening to your customers. You can do this by promoting user-generated content that displays your brand in a positive light. (But first, you'll need a suite for marketing professionals to help you capture and display that content).
People that create content for or about brands love seeing their work recognized. Thank them for the shout-out, show their content on your social media channels, and let them know how much you appreciate them.
When they see you’re responding to their content, you might gain higher customer engagement and encourage other customers to become brand ambassadors, too.
Bottom line: don’t leave customer loyalty to chance. When customers love you for who you are, you can leverage those relationships to keep them coming back.
