Failing to retain your customer base? There are a lot of mistakes businesses can make when it comes to customer loyalty. If you aren’t careful, you could alienate your customers, forcing them to switch to your competitors.
Customer loyalty is one of the most important things businesses need to focus on. Returning customers tend to spend more than new ones; in fact, statistics show that you could boost your profits by up to 25% if you increase your customer retention rate by just 5%. This means your existing customers have the opportunity to provide excellent lifetime value (CLV).
So, how can you improve customer retention? Well, first it helps to understand what could be driving your customers away. Let’s explore some of the reasons why your customers aren't staying on board with your brand.
You treat all your customers the same
Equality is obviously very important in business. However, when it comes to your customers, treating them the same could have damaging consequences.
Personalisation has become crucial in marketing. Addressing customers by their first name, segmenting your email marketing list, and offering personalised recommendations have all become commonplace and are often expected by the customer. Focusing on personalisation will help to build customer engagement.
You don’t reward your customers
Customer loyalty will likely fall when you fail to reward your customers. Most businesses know the importance of providing incentives to new customers, but it’s equally as important to provide incentives to existing customers too.
One of the best ways to reward customers for their continued business is through a loyalty scheme. There are a lot of different types of loyalty schemes out there, each offering its own pros and cons. Not all loyalty programs will work within your business, so how do you know which one to go with?
You can get inspiration from existing popular loyalty schemes. The Starbucks loyalty program is one of the most successful in the world. Customers receive star points whenever they purchase something from the store, which can then be redeemed for a great range of rewards. The reason the Starbucks loyalty program works so well is because it rewards customers for something they were going to do anyway. Grabbing a coffee is a daily habit for many of the brand’s customers. The fact that they get rewards for doing it increases satisfaction.
The key is to find out what kind of incentives your customer base wants. What better way to do this than to ask them? Send out a survey to your customers and ask them what type of rewards they would prefer in a loyalty scheme. This will give you a good idea of the type of loyalty scheme you should put into place.
Your loyalty programme isn’t marketed correctly
Incorporating a loyalty scheme into your business is only the first step to garnering customer loyalty. If you don’t market it correctly, you’ll still see that customer loyalty will likely fall. Having an ineffective scheme can be just as damaging to customer loyalty as not having one at all.
Don’t forget to highlight the rewards and benefits of the scheme. If you're running a points-based scheme, send reminders to customers to use their loyalty points via email or text message. Social media is a great place to advertise your scheme while boosting customer engagement, so let customers know what sets your programme apart from your competitors.
You need to build up meaningful relationships with your customers. This is something that can only be done over time. If you want your customers to take advantage of the scheme, you need to continually let them know it exists.
You aren’t giving your customers what they want
It’s important to listen to your customers. If you don’t, they will have no hesitation switching over to your competitors.
Pay attention to any complaints you receive, either directly or via social media platforms. Make sure you respond to any problems in a professional and helpful manner, and apologise for any issues, but don’t forget to offer a solution too. Tell your customers how you're going to resolve the problem and, if applicable, when they can expect a resolution.
You could also learn from your competitors. Look at reviews that mention your competitors’ loyalty schemes. What do customers like and what problems are they experiencing? You can then use the findings to put together a better, more effective scheme. Not only will this keep your own customers happy, but you could also steal customers from your competitors.
Always aim to give your customers what they want. If you do, they will stick with you.
You don’t engage with your customers
Engagement is crucial when it comes to customer loyalty. When you increase engagement, it builds up trust and nurtures the business-customer relationship. In today’s digital landscape, there's no excuse not to engage with your customer base.
So, how exactly can you boost customer engagement? Some of the best methods include:
- Provide useful, engaging content
- Use relevant platforms in line with your target audience
- Answer your customers
- Follow up on any issues your customers experience
- Respond to positive and negative customer reviews
These are just some of the ways you can build up customer engagement. Social media is particularly useful as it allows you to speak directly to your customer base. When you reply to your customers on these platforms where people can publicly see, you're showing your customer service skills off to the world.
Collecting and actively managing customer reviews is another great way to get insights from the happy and not-so-happy customers before you may lose some for good!
The more time you spend on engagement, the more benefits your business will experience.
Failing to provide value for money
Finally, customer loyalty will likely fall dramatically if you don’t provide good value for money. Now, this doesn’t necessarily mean that you need to offer cheap goods. It just means that what you do offer needs to be worth the money. Everyone appreciates a freebie, so competitions will get your audience engaged and excited, or you could offer vouchers for money off their next purchase, inspiring them to buy something new.
Raising prices without providing extra value is a great way to alienate your customers. If you do want to increase your prices, make sure your customers are still getting the best value for money.
As you can see, there are a lot of mistakes you can make when you're trying to retain customers. While it might sound like a lot of effort, focusing on customer retention can significantly boost your bottom line. Returning customers spend more, while also providing you with a reliable and steady stream of income. Follow the advice above and you’ll soon start to see an increase in customer loyalty.