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How to improve customer loyalty in 5 simple steps
Customer loyalty can be vital for small businesses - and we've got five simple steps to help with your customer retention strategies.
All businesses need customers, and every business owner understands that customers are fundamental to their company’s success and future growth. However, in order to be truly successful, a business needs to not only find and attract new customers, but do so while retaining its existing customer base.
It’s a challenge all businesses have to take on, but smaller firms tend to suffer from the effects of poor customer retention to a greater extent than their larger counterparts. This is often because small businesses lack the resources to compensate for customer losses – many are unable to aggressively market themselves to a new demographic in the way bigger firms would.
So, which customer retention strategies can you employ to improve customers’ loyalty to your small business?
Begin a customer loyalty programme
Customer loyalty programmes are a tried and tested method for small business owners to increase their customer retention. But, with a vast number of ways in which a scheme could be implemented, how do you tell which one is right for your business?
The key to a successful loyalty scheme is to offer something tangible to show the consumer that their custom is valued. Awarding loyalty points that can be exchanged for freebies is one option that has the added benefit of customers carrying branded loyalty cards in their purses or wallets, keeping your brand at the forefront of their minds.
Any business can set up a basic points-based loyalty programme and see some level of success. However, your business will really stand out from the competition if you can come up with an innovative loyalty scheme. For instance, you could consider measures such as personalising your customers’ loyalty gifts based upon personal buying habits, or reward loyalty by allowing customers priority access to sales. This shows that you appreciate their custom and may even improve the chances that customers will return during your next sale.
Grub Hub is a great example of a business that has used an innovative customer loyalty programme. Grub Hub offers customers the chance to play games and win prizes in return for their loyalty. This method makes great business sense, because the play-to-win element helps reduce the amount the business needs to spend on loyalty rewards, and it also encourages an element of fun and engagement with the brand – rather than customers simply receiving gifts.
In business, ‘over delivering’ has become a customer service cliché, but going above and beyond for your consumers is essential if you want your business to grow. Customers will already be expecting a good level of customer service as standard, so what else can you offer on top of good customer service?
Many modern businesses now capture a variety of data about their customers, but not all will use this to their advantage. For example, if you capture a customer’s age and date of birth, why not send a card on their birthday? And of course, there’s always Christmas too. Alternatively, try increasing customer satisfaction at the point of purchase by complementing their buying decision, or wrap their purchase up as a gift to leave a lasting impression.
To truly build good customer relations, understanding your customers’ needs has to be a fundamental part of running your business - in fact, many successful businesses will go one step further and attempt to anticipate these needs. Put yourself in your customer’s shoes and try to predict their thoughts, questions and reservations in order to make buying from you as hassle free as possible. For instance, if you sell computers and the majority of your customer base is the older generation, it’s safe to assume that they may have some follow up questions after purchase - even if they have not explicitly stated this. By providing assurances that after care and a responsive helpline is awaiting their call before you make the sale, you can alleviate any hesitation and help push the purchase over the line.
Tech giants Apple are masters of anticipating and addressing their customers’ needs. By using active listening techniques, their employees picked up on the unexpressed hesitations that many new customers have around switching from PC to Mac. To remedy this, Apple now offers new customers additional support and free data migration when buying their first product to ease the transition. This instills business loyalty by ensuring they meet all of their customer’s needs – including those that are associated with the initial purchase.
Consistency and reliability
Consistency is an essential factor in building business loyalty, it can take just one bad experience to ruin your relationship with a customer, which is why consistency should be a priority. Giving customers confidence in your brand and its ability to deliver forms a basic platform from which loyalty and trust can develop.
Humans are creatures of habit, and studies suggest that if a consumer is satisfied and knows what to expect from a business, then they are more likely to purchase from that company again in the future. With this affinity for habitual routine, we are naturally inclined to align ourselves with one particular brand, rather than changing each time. It's up to businesses to encourage this behaviour, and give consumers a reason to attach themselves to their brand.
Take the time to review your customer feedback and take heed of any future conversations you have with customers. There could be some useful indications to help you optimise your customer experience which will make dealing with your business as hassle free as possible. For example:
- An offhand comment about service speed could be an indication to hire more staff.
- Follow up emails from customers could be a sign that you need to improve your email response time.
Online retailer Amazon is a great example. The business is not revolutionary in the service it offers, but the reason that it’s one of the largest names in e-commerce today is because its service is predictable, consistent and of a high standard. Amazon’s customers have confidence in the level of service they can expect to receive, and as a result they are likely to keep returning to Amazon rather than turn to its online competitors.
Trust is a prerequisite to loyalty. If your customers have no trust in your business, then you will find it difficult to entice loyalty out of them. On the other hand, a business that is open, upfront and honest with their customers will find it easier to build a relationship around trust, which can develop into loyalty.
However, there are a number of mistakes that can jeopardise a customer’s trust in a business. For example, hidden charges will quickly sour a consumer’s opinion and reduce the chance of that customer developing an affinity for your brand. How often have you, as a consumer, abandoned an online shopping basket because you thought you were getting a good deal, only to discover that the seller was simply masking the real price with postage charges?
Transparency - whether you are opening up about where you source materials, how much your business makes, or how you pay your employees - will make it easier to build rapport and develop trust with a customer. This is a mantra that Innocent Drinks have long utilised to encourage trust in their brand. By aligning their values with the ideals of their customer base in a completely natural way, they have been able to stand out from their competition as a truly personal brand.
Educate your customers
Another way to build customer loyalty is to become more than just a business to your customers. If you position yourself as an expert within your market, then customers will return to purchase from you, and also to seek expert advice and information. Not only will this increase your opportunities to sell to customers, but it also becomes easier to build customer trust around your brand.
Brew Dog, for example, took the craft beer market by storm by working with a combination of high quality ingredients and respected brewers with in-depth knowledge. As a result, they have now established themselves as one of the foremost authorities on craft beer in the UK.
However, it’s important to remember that, when sharing your expertise with existing and prospective customers, your primary aim is not to make a sale. If you push purchases, rather than focussing on being genuinely helpful to customers, you risk losing the reputation that you’ve built for your business. To get started, here are a few suggestions of how you can begin to position your business as an expert:
- Share industry knowledge – letting your customers in on information from within the industry will not only help develop your relationship, but it also shows that you know what you’re talking about.
- For businesses with an online presence, keep on top of the latest developments in your field. If you have an email list, you could send updates to those who have signed up helping to reinforce the perception that you’ve got your finger on the pulse.
- Tailor your language to your customers. When dealing with a customer who is new to your business it can help to avoid using overly technical language as it can put them off, but it’s still important to clearly portray your knowledge.
Business loyalty is not something that can be achieved overnight. Instead, it’s something that has to be built up over time, and across numerous interactions between a customer and a business. There are many different ways that you can encourage customer loyalty, and the method that is best for you will depend on your business model, who your customer base is and the industry that you operate in.
It’s important to remember that there are many contributing factors to loyalty, such as trust and consistency. Gaining loyalty from consumers means displaying these characteristics, and letting customers know that they are valued and appreciated. Have faith that if you concentrate your efforts in developing these areas then business loyalty is likely to follow.