6 Principles Of Customer Loyalty

We all know that loyal customers are better than non-returning customers.

But how do you earn customer loyalty?

What are the principles of customer loyalty?

1. Positioning – communicate your brand values clearly and strongly

This sounds good in the abstract, and it makes sense for giant companies like Apple and Harley-Davidson. But what if you’re just a small mom-and-pop store?

It’s still very important. A customer walking past your store should be able to tell, in an instant, what your business is “about”.

You might be selling ice cream, coffee, or even groceries. But what kind of grocery store is it?

Is it a place that’s cheaper than everywhere else? Does it have the best service? Does it have the most pleasant shopping experience? The most helpful staff?

You don’t need to be perfect in every area – and you shouldn’t try to be. Rather, you should figure out what exactly you’re about, and communicate that as effectively and consistently as you can.

You’ll earn loyalty from the specific type of customer who’s looking for your specific type of store. So be clear about what that is.

2. Trust – be consistent and reliable

Lots of people know that they can get better coffee somewhere other than Starbucks, and better food somewhere other than McDonald’s – and yet they patronize those places over and over again. Why? Because it’s consistent and reliable. You know that a Frappucino or a Big Mac is going to taste and cost pretty much the same, wherever in the world you buy it.

As consumers, we’re all overwhelmed with information every single day. We have too many decisions to make about too many things. And so we often satisfice by going with what we know is “good enough”.

One simple and effective way to reassure would-be patrons and earn their confidence is by having a return policy. If you’re an F&B outlet, this could come in the form of a “We’ll make your drink/dish again, no questions asked” policy.

3. Surprise – delight your customers whenever you get the chance

Everybody loves free stuff. And we love it even more when it’s unexpected.

(Of course, sometimes you’re going to get truly unreasonable customers. You don’t want those people to come back. Still, be firm and polite. In the Facebook era, every small business has a chance of being thrown into the media frenzy of international news because of a customer feedback issue.)

4. Treat them well when things go wrong

Lifelong customers can switch loyalties when something bad happens, and then the response is fudged. You do want to minimize the odds of bad things happening (especially catastrophically bad stuff like food safety, faulty products and so on). But you also need to know that something will inevitably go wrong, and some of your customers will be disappointed. One of your crew is going to spill a drink on a customer. You need to be prepared for this.

Make it up to them. Be sincere in your apology. Give them free stuff, and not a derisory amount (like a 10% coupon or something). It might seem costly in the moment, but the positive word-of-mouth you’ll get from this sort of thing is very worth it.

5. Keep your employees happy

Unless your brand is all about grumpy staff, you’ll want to keep your staff happy. They are the stewards of your brand.

Zappos is one of the famous examples of a brand that’s known to delight its own employees. Virgin is another.

“It should go without saying, if the person who works at your company is 100 percent proud of the brand and you give them the tools to do a good job and they are treated well, they’re going to be happy.” – Richard Branson, to Inc

6. Build a community

Every great brand has a loyal following, and that following becomes a community.

Host little events in your business space, if you can. I’m particularly partial to live music. Lululemon turns some of its stores into yoga studios after hours.

Loyalty Program Best Practices

So you want to set up a loyalty program for your business. What are the do’s and don’ts?

1. Use Artificial Advancement to motivate customers to keep coming back

As HelpScout pointed out in their blogpost about loyalty programs, studies have shown that artificial advancement encourage people to participate more:

artificial-advancement-car-wash

In other words, starting your loyalty program with “3 stickers, 7 to go” is more effective than “1 sticker, 7 to go”.

2. Keep it simple – avoid tedious terms and conditions

One o the most frustrating experiences is to have a loyalty card of some kind, hang on to it for months, and then find out that you can’t use it anymore because of some small-print (or worse, not-in-print) expiry date.

Forte Consultancy pointed out in their blogpost that JetBlue’s TrueBlue program had frequent flier miles that expired within a calendar year  – meaning that most program members could never redeem their miles.

You never want your loyalty program to frustrate your customers.

3. Make it as easy as possible to use

This is where modern apps like CandyBar can make a big difference.

Nobody wants to have to scrounge through their bags and wallets looking for physical punchcards, and nobody wants to remember a bunch of extraneous logins and passwords.

With CandyBar, all your customers need to remember is their own phone numbers – and they can get loyalty stickers instantly!

Try a free trial of CandyBar today.

 

Why You Should Run A Digital Loyalty Program [Infographic]

Should you run a digital loyalty program?

Learn about what digital loyalty marketing is, how it works, why it’s so effective, and why we think you should get some digital loyalty punch cards setup for your small business.

CandyBar-Infographic-final

Want a digital loyalty program for your store? Check out CandyBar.co!

Embed this infographic using the following code:

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<a href=”http://www.referralcandy.com”>CandyBar – Digital punch card loyalty program</a>

Text: Why you should have a digital loyalty program

In a milkshake bar not so far away…

Alice the customer: Awesome milkshake and great service! Love it!
Bob the bar owner: Thank you!

3 days later…

(Bob sees Alice buying milkshare from another shop)

Bob thinks to himself, “If people love my milkshake and service, why don’t they come back more often?”

Well, the truth is…

Customer satisfaction ≠ Customer loyalty

“There is a big difference between a satisfied customer and a loyal customer. Never settle for ‘Satisfied’.” – Shep Hyken, Customer Service Expert [source]

Customer loyalty doesn’t come by chance.
You have to actively build it!

Here’s an example:

Alice: Awesome milkshake and great service! Love it!
Bob: Thanks! Fancy getting a free milkshake on your third visit?

Here’s one way you can incentivize customers to be loyal. This is known as ‘Loyalty Marketing’

Loyalty Marketing is actively engaging and incentivizing customers to come back often.

Bob: Hmm… Is Loyalty Marketing really worth the effort?

Yes! Here’s some data and examples to prove it:

  • Starbucks’ loyalty program drove significant revenue and loyalty for the brand

“(My Starbucks Rewards) continues to be our most important business driver as new members contribute not only short-term increases in revenue and profit, but also to long-term loyalty for years to come.” – Howard Schultz, Starbucks CEO [source]

  • Loyalty program members buy 20% more frequently [Source]
  • Engaged loyal customers spend 60% more [Source]
  • Amazon Prime members spend more than non-members on average [Source]
  • 73% of loyalty program members are more likely to recommend brands with good loyalty programs [source]

Loyalty Marketing works. It rewards your customers and drives more revenue and referrals for you.

Bob: If Loyalty Marketing is so good, why don’t all businesses already have it or do it well?

Good question! Here’s why:

  • It may not work well for some industries. (Such as: Automotive sales, Construction, Appliance repair, etc) One-time purchase industries are better off focusing improving their products and services and encouraging referrals.
  • A physical punch card loyalty program can be costly and labor intensive. From designing, printing, promoting to manually stamping them during every transaction, every step can add up to a huge amount of work.
  • Customers aren’t always fully engaged. Sometimes they forget to bring their punch cards, sometimes they lose their punch cards
    It is hard to track and measure impact. It’s a challenge to determine how many percent of the overall revenue can be attributed to loyalty program

Bob: Sounds daunting! Are you sure I can do Loyalty Marketing? I’m just a small business owner…

A digital loyalty program app would be ideal for you:

  • It’s easier and faster to set up and run
  • Customers can access their punch cards on their smartphones any time
  • Everything is tracked and measured automatically
  • More time for you to engage your customers and understand them better

A digital loyalty program app is a smart and easy way to incentivize your customers to come back often.

And this is why you should have a digital loyalty program.

Bob: Sounds good. Let’s do this!

Want a digital loyalty program for your store? Check out CandyBar.co!

Loyalty Program Statistics – 5 Important Numbers To Note

What is loyalty all about? Let’s ask an expert:

Loyalty is a precious commodity.

As skewed as Dwight’s logic is, he did get one thing correct—that is, loyalty should be valued and pursued after. Certainly, the idea that customer acquisition is far more important than customer retention appears to be on the way out.

Numerous studies, polls, and industry experts have consistently demonstrated that cultivating a faithful repeating customer base is not only cost-effective, but highly lucrative.

loyal-customers-likelier-to-buy
Existing customers are much likelier to buy.

And key to achieving such results comes in the form of loyalty programs, which may reward frequent customers with discounts, new products, free merchandise, gifts, and even company stock.

Here are five important statistics to further show you that romancing your existing customers is simply the right (and profitable) thing to do.

1) The 80/20 Rule – 20% of a company’s existing customers will generate 80% of its future revenue (Garnet)

pareto-principle-graph

In a detailed article by Forbes, a particular statistic stood out. According to research conducted by the Garnet Group, one-fifth of a company’s existing customers will generate at least 80% of its future revenue.

In other words, you don’t have to search far for greener pastures, when all you have to do is tend to the one you’re standing on now.

Invest in your relationships with your customers!

2) It’s all in the Family – 63% of millennials share similar brand loyalties as their parents (Adroit)

According to a comprehensive Adroit Digital survey, around 63% of the millennials polled were loyal users of the same brands their parents follow. This discovery has some important implications.

For one, we see how brand loyalty can be passed down from generation to generation, with each tier strengthening that bond.

It’s all in the family.

Second, the idea that young individuals display similar consuming patterns as their parents further dispels the false dichotomy between customer retention and customer acquisition. The two aren’t mutually exclusive.

Creating loyal customers out of parents means setting up their kids to be loyal customers too.

3) The Other 98% – Loyalty programs tend to over-reward the top 2% of customers (HBR)

In an enlightening article by the Harvard Business Review, the author revealed that loyalty programs in the airline industry tend to over-reward and privilege the top 2% of customers.

Could your loyalty program be alienating some of your customers?

The author’s point here then is that loyalty programs can alienate customers if they’re not careful. A good should be cater to the varying profitabilities of different customers, while never making them feel second-class.

4) Repeating customers spend 70% more in their 31st month than in their first six months with their preferred retailers (Bain)

“Patience, you must have,” said Master Jedi Yoda. Indeed, in a study published by Bain & Company, repeating customers were discovered to spent almost 70% more in their 31st month with retailers than in their initial six months.

As we’ve said before, it’s a marathon, and never a sprint.

Long-term relationships are a most valuable thing in this tumultuous world.

5) Love Your Other Half – More than 50% of customers have switched brands due to poor customer service (Accenture)

In today’s digital, faceless age, you’d be forgiven for thinking customers don’t prioritise human contact. But apparently, they do. Market research by Accenture Strategy showed that 83% of American consumers prefer interacting with ‘human’ customer services.

Alarmingly, 52% have switched brands and service providers due to poor customer service, costing companies a loss of $1.6 trillion dollars.

What this shows is that human interaction remains a vital component in inducing customer loyalty. A well-designed loyalty program means little if customers feel like they’re interacting with robots, or worse, actual human beings who couldn’t care less.

Please don’t do this.

Recap:

  1. 20% of your existing customers will form the backbone of future profits and revenue
  2. Customer retention and customer acquisition are not mutually exclusive
  3. Be mindful if you’re privileging your ‘best’ customers at the expense of the majority
  4. Long, meaningful company-customer relationships do pay off
  5. Good customer service remains fundamental