How To Build Customer Loyalty

January 10, 2019

Building Customer Loyalty will guarantee more sales than acquiring new customers

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What’s This?

Loyal customers are the most important to your business for many reasons. Retaining existing customers is significantly less expensive than acquiring new ones, in fact, some studies claim it costs 6 to 7 times more to acquire a new customer than to keep an old one. On top of that, loyal customers are more likely to recommend your product, to become brand advocates, and – in turn – to reduce the costs associated with marketing. Today, we will discuss how to build customer loyalty with social media. If you have questions on any of these tips, let us know in the comments below.

How To Build Customer Loyalty

A Few Statistics on the Value of Customer Loyalty

A report published by American express revealed that 3 out of 5 customers were willing to give up a former favorite brand in order to have better service experience. Based on the results of Customer Experience Impact report, 9 in 10 Americans are willing to spend more with companies they believe provide excellent customer service. And 80 percent believed smaller companies place a greater emphasis on service than larger companies. Those are some pretty common sense numbers you shouldn’t ignore.

Small Businesses Success is Largely Dependent on Customer Loyalty & Satisfaction.

Unfortunately, news of bad customer service spreads to more than twice as many people as praise for good service. And according to the White House Office of Consumer Affairs, for every customer who bothers to complain, nearly 26 others remain silent. Each unsatisfied customer that remains quiet is a lost business advocate.

What Shapes Customer Loyalty?

Customer-Loyalty-is-From-Emotion-Experience-and-Expectation

Much has been written on the Internet about how to generate customer loyalty, but most articles fail to understand what the foundation of customer loyalty actually is. Customer loyalty is directly linked to emotion and is the result of a positive emotional experience derived from a product or service. Family and friends may disappoint you, but you remain loyal to them for the most part because of the emotional bond you share, and the same applies with customer loyalty, but first, you must establish an emotional bond with your customers.

Believe it or not, the emotional bond a customer has with a brand is rooted in shared values and beliefs. Based on a study published by the Harvard Business Review, which included 7,000 consumers across the United States, the United Kingdom, and Australia, loyalty to brands is almost impossible to achieve without shared values. Of those consumers who said that they had a strong brand relationship, 64% cited shared values as the primary reason.




According to Aaron Lottonn, the CEB, who researched the topic of brand loyalty for more than a year, consumers everywhere stated that they were loyal “not to companies, but to beliefs.”  Lottonn added: “We saw that emotional attachments to brands certainly do exist, but that connection typically starts with a ‘shared value’ that consumers believe they hold in common with the brand.”

As Help Scout, a help desk designed for small businesses points out, the most beloved brands have developed their cult following through a strong stance on issues both within and outside of their industry. Below are a few examples of how to build customer loyalty:

  • TOMS champions their One for One movement, which gives a pair of shoes to a needy person in the world for each purchase.
  • Zappos has built their core values around wowing customers, placing service as their #1 priority.
  • Timberland emphasizes their G.R.E.E.N. Standard, which places profitability and community service on the same team.
  • Locally Laid Egg Company plans to give back 5% of their profits to public schools, libraries, art institutions, and environmental organizations in their community, and they also plant a tree for every egg delivery, claiming it’s a simple and important way to make a difference on global warming and air quality.

In other words, your company must embrace some issue of importance and take a stand. So as part of their effort to build brand loyalty, They have recognized the things that are important to their audience and taken a stand. This is something that any business can implement.

A small restaurant could establish brand loyalty by pledging that for every meal purchased by their patrons, the restaurant will donate a bowl of homemade soup to a local soup kitchen, (or some variation). This has added value outside of being a way on how to build customer loyalty:

  • News Worthiness: This is news-worthy and may be picked up by bloggers and news outlets making it easier for your clientele to become aware of your actions.
  • Social Media Benefits: This type of partnership lends itself to collaboration. If your audience is interested in the non-profit you are collaborating with, they will probably be willing to share your program with them. It’s an incredible marketing opportunity.
  • SEO Benefits include increasing the chances to earn organic links from publications and even earning you some coveted .gov links.
  • Financial Benefits: It may also have some fantastic tax benefits, so putting charitable programs in place can have incredible benefits.

How to Build Customer Loyalty on a Budget

 

Free mint experiment in restaurants garnered some shocking results

When it comes to building customer loyalty on a budget, psychologist Norbert Schwarz showed that as little as 10 cents could change someone’s mood and influence them to form a favorable opinion of another person or brand.

In a classic study at a German university, Schwarz in the course of a day occasionally placed a coin equivalent to a dime on a copy machine for the next user to find. Later, everyone who used the machine was interviewed about their lives. “Those who found the dime were more happy and more satisfied and wanted to change their lives less than those who didn’t find a dime,” says Schwarz. “It’s not the value of what you find. It’s that something positive happened to you, and surprised you.”

Help Scout cites a study published in the Journal of Applied Social Psychology, where researchers tested the effects that mints had against a control group (where no mints were given) in order to measure their effectiveness in increasing tips. The first group studied had waiters giving mints along with the check, but making no mention of the mints themselves. This increased tips by around 3 percent against the control group.

The second group had waiters bring out two mints per person by hand (separate from the check), and then mention to the table, “Would anyone like some mints before they leave?” This saw tips increase by about 14 percent against the control group.

The last group had waiters bring out the check along with a few initial mints. A short time later, the waiter came back with another set of mints, letting customers know that they had brought out more mints, just in case they wanted extras. In this third test, waiters saw a 23 percent increase in tips versus the control group.

The Focus Should Be On Personalized Attention

In the third test, the waiter brought out the second set of mints after some time had passed from the first offering and mentioned they had done this as an additional courtesy. Researchers concluded that this personalization aspect of waiting tables (even if the waiter did this for every customer) was the catalyst for increased tips, which appeared as genuine concern for customers’ needs. This prompted a connection with customers much deeper than you would think possible from just a few additional mints.

How to Build Customer Loyalty in Three Short Steps

1) Success is dependent on customer satisfaction.

2) Customer loyalty is established via an emotional bond rooted in shared values.

3) Personal attention to customer needs is valued more by the customer than fast, speedy service.

 

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