Customer loyalty is more critical than ever in today’s competitive business landscape. It’s the key to long-term success for businesses of all sizes and industries. In this blog post, we will explore the meaning of customer loyalty, why it matters for businesses, and how to build it effectively.
Customer loyalty goes beyond repeat business. It refers to the willingness of customers to continue doing business with a particular brand or company repeatedly. It can be expressed through repeat business, brand advocacy, and emotional connection.
Businesses stand to gain quite a lot from customer loyalty, and most of these businesses are not aware of the many benefits. Here are some of the benefits of customer loyalty to businesses.
Customer loyalty programs can increase revenue by up to 15% for businesses. According to a study by Accenture, 81% of consumers are more likely to continue doing business with brands that offer loyalty programs. Companies can encourage customers to return and make additional purchases by offering rewards and incentives for repeat business.
Another benefit of customer loyalty is customer retention. It costs five times as much to attract a new customer as it does to keep an existing one. According to research by Annex Cloud, loyalty program members generate 12-18% more revenue than non-members. The appearance of competition to you as a business puts your customer’s loyalty to a test. Loyal customers are likelier to stick with a brand, even in the face of competition.
Loyal customers can help promote your brand to others, resulting in new customers. By providing a positive customer experience and building a solid emotional connection with customers, businesses can create brand advocates who will recommend their products or services to others. Customer loyalty can increase customer advocacy by up to 18%, according to a study by Medallia.
Recommended Read: Reward Female Customers With These 10 Loyalty Programs
Behavioral loyalty refers to customers who continue to do business with a brand out of habit, convenience, or loyalty programs.
Attitudinal loyalty refers to customers who have an emotional connection to a brand, identify with its values, and are willing to pay a premium for its products or services.
Building customer loyalty requires a strategic approach; see our previous post on loyalty strategies. Effective loyalty programs, such as points systems and tiered rewards, can incentivize customers to continue doing business with a brand but understanding and strategizing accordingly improves the success of loyalty programs.
Customers are more likely to be loyal to a brand that understands their preferences and needs. Personalized marketing and communication, such as targeted email campaigns and customized offers, can help create a sense of exclusivity, fostering an emotional connection with the customer and can increase customer loyalty by up to 59%
Points systems and tiered rewards are effective in incentivizing repeat purchases and increasing customer retention.
For example, Sephora’s Beauty Insider rewards program allows customers to earn points for purchases that can be redeemed for exclusive products and experiences.
Brands that create emotional connections with customers can increase loyalty and advocacy.
Nike has leveraged heavily on attitudinal loyalty as a brand. Nike’s “Just Do It” campaign exemplifies an emotional connection with customers that has led to loyalty and advocacy. Emotionally connecting with customers involves understanding customer needs, values, and preferences and aligning with them to create a personalized experience.
Consistently delivering a positive customer experience can foster a sense of trust, leading to greater customer loyalty.
Measuring customer loyalty is crucial for tracking success and identifying areas for improvement. Key metrics for measuring customer loyalty include customer lifetime value, net promoter score, and customer satisfaction.
Measures the total value a customer will bring to a business over their lifetime.
Businesses can use CLV to understand which customers are the most valuable to their bottom line.
Measures how likely customers are to refer a brand to others
Calculated by subtracting the percentage of detractors (customers who would not refer the brand) from the percentage of promoters (customers who would refer the brand)
Can help businesses understand how satisfied their customers are with their products and services
Data from these surveys can be used to improve customer experiences and increase loyalty.
Although there are challenges to be overcome in order to effectively establish customer loyalty, businesses must continue to be customer-centric, focusing on delivering a positive customer experience consistently.
Businesses need to differentiate their loyalty programs from competitors to remain effective
Offering unique rewards or experiences can help businesses stand out.
Businesses need to adapt their loyalty strategies to meet changing customer needs and preferences.
Keeping up with trends and investing in new technologies can help businesses stay ahead.
Technology has played a significant role in enhancing loyalty programs for businesses. Companies are using advanced software to create personalized experiences for their customers, track their behaviours, and reward them accordingly. For instance, businesses can use predictive analytics tools to anticipate what customers want and make offers that will appeal to them. This way, they can create loyalty programs that will resonate with their customers and drive retention.
Enyothanku is an oil and gas retail company that has successfully leveraged customer loyalty to grow its business. By implementing a loyalty program, Enyothanku it was able to increase customer retention and repeat business.
The loyalty program rewards customers with points for every purchase of all Enyo Retail products and services. This means that on purchase of Enyo’s petrol, diesel, kerosene, lubricants, SL Gas and Vehicon (car service and maintenance), customers earn points which can then be redeemed for free fuel or other rewards. This initiative was powered by ThankUCash’s technology across all Enyo Retail outlets.
Enyothanku also focused on creating an emotional connection with its customers through personalized marketing and communication. This was made possible due to Thankucash’s technology that allowed the collection of customers’ data such as name and phone number.
By understanding its customers’ needs and preferences, Enyothanku has been able to offer tailored rewards and experiences that keep customers coming back.
Oil and gas retailers can use Enyothanku’s example to develop their own loyalty programs and strategies for building customer loyalty. By offering rewards and personalized experiences, oil and gas retailers can increase customer satisfaction and retention, ultimately driving revenue growth.
Wakapoints is a loyalty program that allows members to earn points whenever they book and pay for travel services such as flights, hotels, and vacation packages through Wakanow’s website and app. The earned points can then be redeemed for discounts on future bookings or used to purchase other travel-related products and services.
Wakanow, the company behind Wakapoints, is a leading online travel agency in Nigeria that provides a wide range of travel-related services such as flights, hotel reservations, airport transfers, and vacation packages.
Wakapoints has helped WakaNow retain its customers and grow its brand advocacy by over 50%. Customers’ points are easily redeemable on their next visit to the business and this has improved returning purchases and lowered the customer churn rate. This loyalty program is powered by ThankUCash, a technology company that helps businesses manage their customers and loyalty programs.
Other Travel agencies and lifestyle businesses can use WakaNow’s success story as a model.
Jendol Superstores, which has grown rapidly into six branches within just five years of existence, owes its success to its customer retention strategies through effective reward programs. Recently, the company implemented a closed loyalty program that rewards customers with discounts and cashback for every purchase made in their stores.
However, the previous loyalty program that used cards was plagued with issues such as missing or stolen points and compromised loyalty cards, leading to customer dissatisfaction. ThankUCash, a technology-based loyalty management host for businesses, was introduced to solve these problems by providing customers with unique pins attached to their registered accounts. Straightaway, this innovative solution eliminated the problem of forfeited points due to misplaced or stolen loyalty cards.
By comparison, Jendol Superstores has seen brand loyalty and retention increase by over 40%, with satisfied customers becoming advocates for the business. This has led to a significant increase in new customers, with over 2000 new daily visits to their stores.
In conclusion, Jendol Superstore has been able to achieve significant growth by implementing effective loyalty programs with the help of ThankUCash’s technology. These reward programs have enabled them to retain existing customers, attract new ones, and increase revenue through customer satisfaction and loyalty.
Access Bank has introduced a loyalty program named Access Rewards, aimed at increasing customer loyalty. Customers who use their Access Bank cards for transactions at various retail locations or supermarkets on Access Bank POS will receive a 2.5 – 5% cash-back incentive. In addition, all cardholders in Nigeria, regardless of their bank, are eligible to participate in this rewards program.
The primary goal of this loyalty program is to benefit both the registered merchants on Access Bank’s network and the customers that frequent these specific retail locations. The ThankUCash platform hosts the program, leveraging its advanced technology and extensive expertise to ensure its success. The Access Rewards program aims to enable customers who transact business or make purchases at merchant locations to earn Access Points that they can use to purchase goods on their subsequent visit to a participating merchant location.
Generally, since the program is open to both existing and prospective customers, it has improved revenue and helped Access Bank acquire new customers. Merchants on Access Bank’s network have already witnessed an increase in traffic, and the bank has experienced an increase in POS usage.
Altogether, customer loyalty is a critical component of business success, and Access Bank’s Access Rewards program is an excellent example of how businesses can use loyalty programs to their advantage.
Customer loyalty is critical for business success. It leads to increased revenue, customer retention, and brand advocacy. Effective loyalty programs, personalized marketing, and emotional connections with customers are key elements to building loyalty.
Measuring customer loyalty through metrics like customer lifetime value and net promoter score is essential. Oil and gas retailers can also benefit from loyalty programs to drive engagement, retention, and revenue. By leveraging technology, companies can create tailored loyalty programs. AccessBank, Enyo, and Wakanow are great examples of companies that use technology to drive growth. Ultimately, building customer loyalty requires a customer-centric approach, prioritizing their needs for long-term success. Additionally, loyal customers are more forgiving when your business makes mistakes, and they’re more likely to stick with your brand even during tough times.
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