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How Customer Loyalty Turns SMEs Into Brands That Last

SME online store perfection, young Asian female business owner expertise enhances customer satisfaction, loyalty through precise and personalized packing of product boxes

Discover why customer loyalty is important in the digital economy and how to measure and leverage it.

When it comes to long-term business success, customer loyalty is key. In today’s global marketplace, customers have become digital-first shoppers with thousands of suppliers at their fingertip. They can purchase any product imaginable in a heartbeat and being top of the shortlist when customers consider a purchase has never been more impactful, especially for SMEs. The key to making it there? Customer loyalty.

What is customer loyalty and why is it important?

Customer loyalty epitomises how customers feel about your brand, how willing they are to make a repeat purchase and whether they would recommend you to others. In today’s hyper-connected world, customer loyalty is much more important – and harder to earn. Customer expectation is at an all-time high and customers are more willing to switch brands if they have a bad experience. They also share their experiences, good and bad, more frequently. In the trust-based economy what buyers tell their friends has become key, and business success balances on customer satisfaction more than ever before.

Loyal customers are also the biggest spenders. In fact, a 5% increase in customer retention has the power to increase profit by five times that amount. Just as significant, existing customers are 50% more likely to try new products and spend more on average than first-time buyers. Customer loyalty drives the bottom line and the digital economy has unlocked its impact.

Quantifying loyalty

The way customers shop online today has also opened up new lines of communication. More customers interact with brands directly rather than buying via third-party channels and personalising these interactions is an opportunity to make customer relationships more meaningful and appealing. With the right tools, your SME can leverage this connection and gain valuable insight into existing customer loyalty. As a result, you’ll also be able to develop tailored strategies to boost loyalty based on what your customers value most. 

The Net Promoter Score (NPS)

Actionable data – and lots of it, is key to understanding your customers and increasing loyalty. Many successful businesses use the Customer Retention Rate (CRR) as a tool to gauge whether customers are choosing to stay with them. However, the CRR omits the human factor – how customers feel about your brand and your products. But a more complete picture can be obtained by using the Net Promoter Score (NPS), a simple, two-minute survey that transforms customer sentiment into an actionable metric.

By asking customers how likely they are to recommend your brand to a friend on a scale of 0 to 10, the NPS subtracts the percentage of “Detractors” (scores of 6 and under) from the percentage of ‘Promoters’ (scores of 9 and above) to calculate a comparable loyalty benchmark.

Simple, right? But the NPS is deceptively powerful, and high NPS scores are proven to correlate directly with growth. In fact, Harvard Business Review called the NPS the single best predictor of growth and the one number you need to grow as a business.

While it provides a strong benchmark, the NPS alone is not complex enough to understand where loyalty originates and how to improve it. To overcome this, consider adding an open-ended question to your survey like “how can we improve your experience?”, or “what do you like most/least about our product?” By asking customers what matters most, you can develop a loyalty strategy that targets real needs, rather than blowing the budget on perks that don’t rate. 

Something to keep in mind is that the NPS varies greatly across industries. For example, if you’re in the car rental business, a score of 15 may be stellar – but in the streaming industry, the same score could be abysmal.

Understanding customer needs

Perhaps your SME already has solid NPS scores. Great! But now what? While the NPS is a starting point to benchmark future initiatives, the real prize is understanding what matters most to customers. Some are loyal to specific products and their price, quality or ease-of-use. For others, these perks play no role whatsoever; they are loyal to your brand, its reputation or image. Your customers are from all walks of life and won’t fit smoothly into one category or another. However, to develop a stellar strategy for boosting loyalty, it’s important you understand what drives your customers. A few basic categories your customers may fall into include: 

  • Satisfied customers: feel they receive high quality products
  • Price-loyal customers: feel they receive the best value for their money
  • Loyalty-programme customers: enjoy receiving freebies through loyalty memberships
  • Convenience customers: enjoy the ease of a product or service
  • Brand-loyal customers: love the company and its products 

By using the NPS to understand customer composition, you can set up a strategy and solutions that meet their specific expectations. Do your customers favour quick and easy fulfilment? Offer overnight shipping for the convenience crowd. Is price important? Consider special promotions and discounts for bargain-hunters. A sound loyalty strategy identifies key issues with tools like the NPS to make sure perks and promotions gel with what customers really want and are meaningful.

Key loyalty builders

Today, building customer loyalty goes beyond price and individual perks alone. To feel a connection, customers also want personalised experiences and new ways to engage. They want to feel heard across all the channels they use. In short, they want to feel seen as a real human, rather than a random entry in a spreadsheet. Our Salesforce State of the Connected Customer report reveals key insights on how to build loyalty by focusing on customer interaction. To boost loyalty: 

  1. Offer Loyalty Programmes

More than 50% of customers see companies as too impersonal today. Loyalty programmes build a more personalised connection by rewarding customers with exclusive events, early access and members-only benefits.

  1. Provide Multi-Channel Support

Lack of support is a notorious loyalty killer. Customers want to be helped in ways they’re most comfortable with, especially when they have an issue. Research shows that customers place the most value on quick and easy points of contact and documentation, like well-maintained FAQs and real-time messaging support. 

  1. Offer Different Ways to Engage

Customers often welcome opportunities to connect outside formal channels. In fact, 72% of customers expect vendors to personalise engagement to their own needs. Online communities, a social media presence or a well-maintained blog offer customers more choice to engage with you.

  1. Build Trust by Being Generous & Showing Gratitude

54% of customers don’t believe companies have their best interests in mind – 94% say trust is essential to become a loyal buyer. Sometimes, that means being generous, and incurring additional costs now for better engagement later. Forgiving return policies and warranty programmes build trust and create more loyal customers in the future.

  1. Evolve Your Business Over Time

More than 50% of customers actively seek out the most innovative brands – and continuous evolution is key to keeping customers engaged and buying. By piloting new approaches, like user-generated content or gamification, businesses can innovate beyond the scope of their product and keep interacting interesting.

The universal approach: customer experience

While each of these strategies address some customers more than others, they all feed into a loyalty builder that appeals to almost everyone. Customer Experience – aka, the customer journey, encompasses everything including first contact, choosing a product to after-sales. In fact, 80% of customers say that they consider customer experience just as important as the product itself. What’s more, 70% say they would pay extra for a great experience.

A great customer experience enables customers to engage with the brand and product at eye-level, at every stage with seamless handoffs along the way. Providing reliable support and letting the customer know their feedback matters – by way of the NPS for example – builds a two-way connection that invests customers in your brand in ways simply using the product cannot. The stark reality is that 67% of customers have recently switched vendors for a better experience. And the heyday of customer experience is only beginning: the younger the audience, the more likely they are to switch.

Creating experiences that last

Entrepreneur Tony Hsieh said: “Customer service shouldn’t just be a department; it should be the entire company.” Building enduring customer loyalty boils down to a simple but powerful truth: the customer comes first. 

By gauging loyalty with the NPS, using a data-driven approach to identify customer needs, and addressing them in a tailored and value-focused way, you can build lasting relationships, cut costs, drive sales and supercharge your brand. The reality is that it’s not the customer’s job to remember your business. But it is your job to ensure the customer has an outstanding experience that inspires them to become a loyal buyer and champion your brand.

Grow your small business and build lifelong customer relationships today all on one platform.

Salesforce Staff

The 360 Blog from Salesforce teaches readers how to improve work outcomes and professional relationships. Our content explores the mindset shifts, organisational hurdles, and people behind business evolution. We also cover the tactics, ethics, products, and thought leadership that make growth a meaningful and positive experience.

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