How to Boost Customer Loyalty and Increase Retention
Understanding what motivates customers to be loyal is important if you hope to gain and retain them. More than 80% of consumers say that the major factor in determining their loyalty to a service provider is which competitor provides the best customer experience. That’s a good place to start.
You want your customers to keep returning and loyal to you. Read on to learn how to improve customer loyalty and retention.
What Drives Customer Loyalty and Retention?
Customer loyalty and customer retention seem to be similar concepts. It’s important to understand how they differ.
Customer retention is a metric about your customers that you can calculate. Over a given accounting period, such as a year, customer retention is a measure of what percentage of the customers you start with are still with you by the end.
If you start the year with 100 customers and at the end of the year you have 110 customers, that might look as if you have increased the number of customers, and of course, you have. It does not reveal how many of the customers at the end of the year are the same customers that you started with.
If 60 of the year-end customers are new and you have lost 50 original customers, your customer retention rate is 50%. A strong customer number hides a potential problem. Your business depends on finding new customers at an alarming rate with all the costs and effort involved.
You might want to understand why customers are not staying with you.
Customer loyalty isn’t the same as customer retention. It’s a measure of customer satisfaction. It seeks to understand whether customers will resist the advances of your competitors and even if they will be advocates for your brand.
Loyal customers are more committed that retained customers. They are more likely to buy other things from you and help you win more customers.
Value is a subtle mix of price and quality.
The price we pay for a product or service may be more than the dollars we exchange. It can include the cost of inconvenience, the cost of making the buying decision, the risk of loss, and more.
Quality is much more than an objective assessment of the function of a product or service. It can include hard-to-define perceived qualities such as reputation, image, aesthetics, etc.
To attract and keep customers coming back, analyze your value proposition. Is it meeting the needs and wants of your target customers? Does it compete well with the alternative suppliers your customer could switch to? Make whatever adjustments you need so that your value proposition is competitive.
You might be happy to have any type of customer, but the ones you should want are engaged customers. These customers care about you and your products and service. When they care about you and your products and service, they can be as valuable to you as your direct employees.
Engaged customers can win you more business by selling your products and services to others. They can help you improve your products with feedback and ideas. They can help build a community of engaged customers around which you can build a platform for growth.
Recognize when customers are loyal. To keep customers loyal, show them that you care about them. Do things to give them reasons to remain loyal and justify their commitment to you.
A customer loyalty rewards program can provide discounts, offers, and special treatment. Make these important customers feel special.
The first thing is to capture information about them and establish a database. Enroll them in a loyalty program and get email and SMS details so you can communicate with them.
Communicate with them as a distinct customer group. This can make them feel different from the general population. Send targeted newsletters, surveys, and customized offers.
Invite them to introduce a friend and reward them with a discount when they do. Reward them if they share your social media posts with points they can accumulate and spend on prizes. Invite them to review products and enter them in a prize draw.
Exceptional Customer Service
Customer service is at the heart of the customer experience. Make that service meet, or better still, exceed your customer’s expectations.
If customers expect information to be presented in a particular way, do it their way rather than yours. If customers expect a response within a specific period, organize your business around that period rather than find reasons to justify what the customer will regard as a delay.
Check the customer’s expectation of quality and ensure that your product or service meets or exceeds the quality expectation.
Seek and Listen to Feedback
There’s great value in talking to customers. Ask them what they like and what they don’t like.
Ask loyal customers about what keeps them coming back. And ask them about the problem if you can get feedback from the lost customers. Try to understand why you have not retained them, and in the process, try to understand what you can do to win them back.
It might hurt your feelings to hear why customers feel the need to reject you. Use these feelings to motivate yourself to do better and to learn. Don’t be negative and reject the opportunity to improve your customer service.
Relationships Not Transactions
Customer loyalty and retention are not about a sales transaction. It’s about building customer relationships that are for the long term. It’s these relationships that can make a business truly sustainable.
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