Build Customer Loyalty
Learning Objectives
After completing this unit, you’ll be able to:
- Describe customer loyalty.
- Explain how businesses can engage customers and build customer loyalty.
What Is Customer Loyalty?
Simply put, customer loyalty is the likelihood that customers will keep coming back to do business with the same company. Studies have shown that companies spend more on acquiring new customers than retaining existing ones. Losing a customer means losing revenue. So it’s important that companies take a closer look at their customer retention strategies and tailor a program to keep members engaged.
When you keep customers engaged, they’re more likely to be loyal to your brand. In this module, we explore what customers expect from a brand, how companies can keep customers engaged, how loyalty programs work, and how Salesforce Loyalty Management helps.
Failure to Connect
Ramon Arjunan is a freelance journalist in downtown Chicago. Ramon loves hiking and is often out on hikes with his friends on weekends. He’s a member of a loyalty program from a Chicago-based brand that sells hiking gear. He goes to the nearby store to get a new pair of shoes for his upcoming hike. The sales rep tells him that he can get 100 bonus points and a free T-shirt, delivered the next day, if he buys the new flagship pair. Ramon purchases the shoes and finds them quite comfortable.
After a couple of days, Ramon checks his account to find that the bonus points have not been credited and there’s no tracking information available for the free T-shirt. The store he got the shoes from has shut down for some reason, so he calls another store. When he calls the store, they tell him that the T-shirt has been out of stock for several weeks. And that they don’t have his points data on the system.
Ramon feels frustrated and is disappointed by the disconnected experience he’s had with the brand. Even if Ramon were to get those bonus points, it’s unlikely that he would stay loyal to the brand.
Traditional loyalty programs reward customers with points for purchases: a simple credit of points for transactions redeemable against future purchases. This earn-and-burn, point-based loyalty program is not enough to build customer loyalty or an emotional connection with its members. While members might still be enrolled in such a program, their participation is likely dormant.
Changing Customer Expectations
The digital revolution has transformed customers’ expectations. Customers like Ramon have many options available to them, and they’re unwilling to compromise. So what makes them choose one over the other? Although quality, price, and customer service matter, it’s the experience of doing business with a brand that makes them come back to the brand. The experience they seek is not limited to value for money or loyalty points—they want more. Customers trust brands that make customers their priority and are more likely to forge a relationship with brands that connect with them emotionally. Ramon’s experience will not encourage him to go back to the same brand because the experience made him feel that the brand doesn’t care about him.
How Can Businesses Keep Up?
The Chicago-based manufacturer lost out on Ramon’s loyalty because of an ineffective interaction with him. So what can it do to engage its customers and build customer loyalty?
A customer’s experience from product consideration to purchase is a journey that includes several touch points across marketing, sales, service, and frontline staff. A touch point is any time a current or potential customer comes in contact with the brand–before, during, or after the purchase. Ramon’s experience with the brand began when he learned about the brand, visited stores, made purchases, and interacted with the sales and service staff. To keep him fully engaged on this journey, the business must offer a smooth and consistent customer experience across all touch points.
A great way to build customer loyalty is to have a loyalty program that’s meaningful and relevant to its members and offers personalized and engaging rewards. Experiential rewards, such as access to VIP events and limited edition merchandise, go beyond monetary gains and improve brand advocacy. Customers are more likely to respond to messages that are relevant to them, so businesses must focus on personalized communication too.
Structuring rewards for a loyalty program is not a one-time consideration. Customer preferences keep changing so businesses must monitor them and adapt accordingly. The business can use AI and loyalty program analytics to monitor trends in customer spending behavior. And it can send out surveys and polls to gather information from its customers directly. With the right data in hand, it’s easier to create the right loyalty program.
In the next unit, we look at the components of a loyalty program and how they communicate with each other.