Customer loyalty: How happy customers turn into brand ambassadors
Winning customers is one thing; keeping them as loyal customers is another matter. Customer needs have increased in light of technological developments and the diversity of products and services offered (keyword: IWWIWWIWI). Product quality and product prices are becoming more transparent – and can be more easily substituted. Even mostly satisfied customers demonstrate a (high) willingness to switch when the right offer materializes. The magic word: customer loyalty. We are dedicating a three-part blog series to this topic, beginning with the basics in Part 1.
Customer loyalty – what does it actually mean?
Customer loyalty is a customer’s voluntary commitment to a product, brand, or company. The terms customer retention, customer preference, customer commitment, or customer delight are also used in this context. Delight and positive emotions play a central role in this.
Customer satisfaction does not equal customer loyalty
Often, it is no longer sufficient today to satisfy customers. Satisfied customers are almost as disloyal as unsatisfied customers. They, too, are looking for variety, maximum convenience, and the best deal. To build long-term customer relationships, customer loyalty measures are needed – they are a worthwhile investment. After all, a one-percent increase in the customer retention rate will likely increase the company value by five percent (Bruhn, 2016, “Kundenorientierung” [Customer Orientation]).
Three steps to attaining customer loyalty
In simplified terms, customers go through three stages before reaching the loyalty phase. True loyalty is not created until customers are intrinsically compelled and delighted. Not only do they increase their participation in the company at that point, but they also recommend the company automatically as a brand ambassador.
- An interest in a product or service represents the beginning of the customer relationship.
- Meeting customer expectations after the purchase creates customer satisfaction.
- Using smart loyalty measures, companies can encourage their customers to make repeat purchases and can delight them over and over again.
The best loyalty program is useless if it is not relevant to customers. For it to be relevant, companies must know their customers’ wants and needs, and ideally, they recognize a customer at each touchpoint. This scenario is feasible when the loyalty program is linked to the CRM solution.
In Part 2 of our blog series, Bernhard Egger will show you how to increase customer loyalty with marketing automation. Finally, in Part 3, we will present best practices in digital loyalty management.