Have you ever heard of customer loyalty?
Do you know what this term refers to and, above all, do you know what are the advantages that the implementation of customer loyalty strategies offers for your company?
If you want to learn how to retain customers, do not stop reading this article.
Basic concepts and objectives of customer loyalty
There are many people who tend to think of customer loyalty as something that is limited to getting good customer service, so that they continue to buy in their businesses for a long time.
Although it is a correct definition, it may be a bit short since it does not contemplate either the objectives or the strategic importance that the implementation of a customer loyalty system implies for any company.
What is customer loyalty?
Customer loyalty is the set of strategies, techniques and actions that a company carries out in order to retain customers and make them choose to buy its products or services on a regular basis.
Building loyalty involves a considerable effort at the level of marketing, sales and customer service. Especially since this task should focus on transforming —from a strategic point of view— customer loyalty into a ‘natural’ promotional channel for a certain business or brand.
The 6 phases of customer loyalty
While it is true that customer loyalty focuses on the actions carried out to retain customers, it is also important to try to understand customer loyalty from the moment they find out about your business.
These are the phases of customer loyalty:
- Knowledge: the client discovers your business and what you offer.
- Search: the customer is looking for information on your online site.
- Purchase: the customer purchases a product or service from your store.
- Use: the customer uses the product or service they bought in your store.
- Repetition: the customer repeats a new purchase in your store.
- Recommendation: the customer recommends your store to their family and friends.
If we take into account this 6-stage process, we can say that every time the customer moves from one phase to another, their loyalty level increases.
In other words: a customer who repeats a purchase on your website (phase 5) has a much stronger commitment to your store and your brand than one who has just made their first transaction (phase 3).
Loyalty, satisfaction and exclusivity
Customer loyalty implies that there are satisfied customers who are committed to your brand. But this doesn’t always translate into immediate fidelity.
In other words, not all satisfied customers are loyal. In fact, it is perfectly possible for a customer to be completely satisfied with the purchase they made in your store, and yet not buy anything else again. Even if you are exploiting some of these popular online business ideas.
In the same way, having a loyal customer does not mean that they have adopted a commitment to exclusivity with your brand or products. It may be that you buy certain products in your e-commerce, but also make use of your competitor’s websites.
Understanding this difference is essential to learn about how to retain customers, as some online stores make the mistake of equating loyalty with the satisfaction or commitment of certain customers to your company.
What do you look for with customer loyalty?
The goal of any customer loyalty system is quite simple: establish a long-term relationship with customers.
This implies that the goal of loyalty is to achieve customer retention. This retention is aimed at consolidating two fundamental behavioral variables among customers:
- Reiteration: make customers continue to buy the services or products of your store on a regular basis.
- Promotion: make customers so satisfied with the service you provide that they become almost your own commercial, recommending your store to their friends and family.
And why are reiteration and promotion so important? Mainly because they allow you to compete in the market effectively. And in addition to that, they help you to grow your business over time in a stable way.
Importance of customer loyalty
From a strategic point of view, all companies need to do two things: attract and retain customers.
In fact, any marketing initiative and strategy must include both types of objective. But do you know which of the two is more expensive for your business?
The advantages of the reiteration factor
If we compare the acquisition costs of a new customer with those of another who repeats their purchases with some frequency, the figures will surprise you notably: it is much cheaper to get a customer to repeat their orders than to find a new one who makes only one purchase.