According to numerous surveys, retaining a loyal customer is five times easier than finding a new one. Also, existing customers are far more likely than new customers to try out new products.
It can be seen that loyal customers play a crucial role and have a significant impact on the growth of business divisions. So, what is a loyal customer? and how to retain customers? Follow Hanami‘s article, “ Customer loyalty and retention strategies” to find out!
What is customer loyalty?
This is the group of people who frequently buy or use the company’s products and services. They are willing to spend a lot of money on the product you are selling because they trust the quality rather than having to wonder and think as much as new customers.
Some characteristics of loyal customers include:
- Being the first to support the company when it launches a new product.
- Always provide businesses with honest, sincere feedback.
- Having difficulty accepting offers from other brands.
- Always recommend products and services to your family and friends.
- When something turns out badly, always sympathize with and protect the company.
How important are loyal customers?
Those who work in the business field undoubtedly also understand how crucial loyal customers are to the company’s existence, and this is also the object of nurturing and assisting the company’s expansion.
Why is customer loyalty important?
As mentioned above, acquiring and retaining new customers is five times more difficult and costly than retaining a loyal and long-term customer. Furthermore, existing customers account for more than half of all purchases, while new customers account for 31%. As a result, loyal customers play an important role in the development and growth of the business.
Not only that, but existing customers help businesses develop and build potential markets many times faster than the number of new customers acquired through marketing.
Advantages of loyal customers
- Loyal customers are more likely to spend more than new customers. It can be seen that the average monthly spending of existing customers is higher than that of new customers, and that customers’ trust in and use of the business’s products and services grows over time.
- Existing customers result in higher profits and higher conversion rates. Businesses should pay special attention and care to loyal customers in order to achieve this.
- Customer loyalty assists businesses in developing effective marketing strategies. Customer loyalty enables businesses to more accurately predict growth rates and thus create financial plans.
- Taking care of existing customers is less expensive than finding new ones. According to studies, acquiring a new customer is five times more expensive than retaining an existing one.
- Loyal customers shop frequently and spend more money on vacations. Customers are more likely to return if a business unit provides them with a variety of positive experiences.
Some types of loyal customers
Loyal customers who value convenience
This group of customers is willing to pay for and buy your products and services because your company provides the conveniences they require. It is possible to mention the location near the center, which is convenient to move; the fast and professional delivery team; the variety of products;… This customer segment is frequently willing to pay for convenience.
Customers who are price loyal
These customers are loyal because they believe the company offers the best prices in comparison to the competition. Furthermore, they provide promotions and discounts. Most of these customers are unconcerned about quality or comfort.
Loyal customers with programs and awards
Because this loyal customer has a price-sensitive personality, they will be loyal to the promotions, discounts, and promotions that your store offers.
How to build customer loyalty?
Enhance customer service
This is one of the most effective ways to retain loyal customers that any business should try and widely implement. Sending emails and SMS messages to customers on special occasions such as birthdays and holidays and providing promotional vouchers and discounts when using your products, etc., will make them happy and increase their trust in the business.
Apply customer loyalty programs
Offering loyalty rewards is one of the best ways to retain customers. Some simple loyalty programs such as accumulate points, buy 2 get 1 free,…
Some types of loyalty programs can include:
- Tiered Loyalty Program: This is typically reserved for high-end, long-standing brands. For instance, insurance, banking,….
- Point-based loyalty programs are currently the most popular method. It is more effective in fast food restaurants, where it encourages customers to make frequent, short-term purchases.
- Loyalty program based on games: Make your loyalty program into a game to encourage customers to return. However, with any contest or sweepstakes, make sure your customers feel it is always transparent.
- Loyalty program for partners: Which company should I work with? The answer is determined by the customer’s daily activities, needs, and purchasing process. On Valentine’s Day, for example, if you own a restaurant, you could collaborate with a cooking class or chocolate-making classes.
Enhance the customer experience with a VIP package.
The scale that determines customer behavior is social status. By offering VIP packages to your most loyal customers, your company can both retain and attract new customers.
Start with a smaller reward for all customers who participate in the program. Then, increase the rewards for each loyalty level to encourage repeat purchases.
Optimizing business referral programs
Promote referral programs by rewarding senders and recipients, encouraging customers to promote through various channels, and creating messages of encouragement and sharing.
Customer Segmentation
Customer classification based on age, gender, occupation, geographical location, etc. allows businesses to focus on and care for each customer group with greater detail and accuracy. This is also one of the most effective methods of retaining loyal customers.
Encourage customers to give feedback
This is one of the ways to make it easier for customers to receive and respond to your business and also helps businesses build relationships with customers.
Encourage them to give feedback and find out why they are dissatisfied with the product or service, and show a willingness to improve it.
Do not forget to set up a dedicated contact line for customers who are not satisfied with the product or service for care and support. Finally, always thank the customer after they give their feedback and use it to adjust the restaurant/business structure accordingly.
Loyal customer retention strategies
One of the elements that helps businesses in growing and improving their position is customer loyalty. The following strategies can be used to keep these loyal consumers in order to lower the percentage of customers leaving the business.
Tips for retaining customers
- Consider ways to engage customers on a regular basis, such as sending birthday and anniversary greetings via email, reminders, referrals, or monthly newsletters.
- Build strong customer relationships to ensure long-term retention: show each customer how important they are to the brand. Make each customer group/object a unique experience.
- Speak your customers’ language to make your brand more relatable: use words and emojis that they enjoy.
- Provide flexible payment options, such as allowing customers to pay using a variety of methods. For instance, by bank card, e-wallet, or QR code.
- Make the loyalty program visible on the website: the more visible and accessible it is, the more likely it is that customers will engage with and appreciate it.
Loyal customers are an important factor to the success of the business. Hopefully, Hanami’s information about customer loyalty and retention strategies has been helpful to you. Stay tuned for more updates.
