What is Customer Loyalty?

Time to read: 5 minutes

When defining customer loyalty, many would agree that it’s a measure of how likely a customer is to engage with a business or brand on a repeat basis. While this sounds simple enough, there are several factors which can impact customer loyalty such as brand trust, customer service and how much a customer values the goods or services they receive from the business.

What influences customer loyalty?

A quality product or service alone is not enough to keep customers coming back. Other factors will set your brand apart and build a strong, loyal customer base including:

Good customer service and support
The way your company interacts with its customers is important to building a loyal customer base. As consumers we remember how we feel as we deal with a brand, so offering a positive service that makes the customer feel welcome, supported and recognised is critical to building a strong sense of loyalty.

A brand customers can feel a part of
As customers, we want to be a part of a tribe. A brand that will provide a positive community for its customers will retain their business because they are providing a brand and set of values people want to be a part of.  

A loyalty program
A loyalty program encourages customers to purchase products from your brand and acquire rewards for continually purchasing with your brand. On top of rewards, customers want to feel a personalised service and the opportunity to provide feedback. To make it easy for you to collect such data, a fully integrated CRM customer loyalty software solution will make the perfect tool.

Why focus on customer loyalty?

It is vital for all organisations, whether you run a small business or large enterprise, to understand that building strong relationships with customers is your number one priority. Key considerations that underpin strong customer relationships include:

Understand the customer journey
The customer journey is defined as such because customers will usually take multiple paths when interacting with an organisation's brand, products and services. Understanding these touchpoints will improve the customer experience which will promote customer retention and loyalty.

Gain a competitive advantage
Building customer loyalty reduces customer churn. It also acts as social proof which can sway people to choose your product or service as many others are satisfied. A loyal customer base also means they aren’t shopping with your competitors, which keeps you separated from the rest of the pack.

Boost revenue without heavy marketing
Research shows that returning customers spend more while also requiring less marketing budget to engage. They’ve shown they know the brand and trust its product or service offering in the first instance and are therefore more likely to make a repeat purchase. They also tend to be more engaged, providing greater marketing opportunities to continue building customer engagement.

Gain valuable word of mouth endorsements
A personal recommendation or endorsement is a highly valuable vote of confidence from an existing customer to another prospective customer that happens largely out of sight of the organisation. Don’t overlook the value of positive word of mouth and the impact it can have on your bottom line. In measurable terms, sentiment analysis through social media provides many insights.

How is customer loyalty measured?

Customer loyalty might seem like an intangible quality that can’t easily be quantified but this is not the case. There is a range of metrics that enable organisations to measure and track the many elements that go into making up customer loyalty.

Net Promoter Score (NPS)
A Net Promoter Score (NPS) is a powerful metric that can indicate someone’s willingness to share positive sentiments about the organisation with others. Positive word of mouth is a powerful marketing tool, so a larger NPS is desirable.

Customer Satisfaction
Measuring customer satisfaction will also provide a valuable metric on how well the organisation is meeting the needs of customers when providing goods and services. This can help show areas of strength as well as those places that need to be improved when it comes to customer interactions.

Customer retention and repeat purchases
Understanding what proportion of customers are new and what are repeat customers will provide an insight into whether the business holds on to customers or not. Given loyalty is a willingness to continue to engage, this provides a valuable measure of the strength of loyalty expressed in repeat engagement.

Engagement Scores
Similarly, measuring engagement can provide an insight into the interest and enthusiasm customers have for the brand or the business, and this level of interest is an expression of loyalty. Without any sense of loyalty, many customers are likely to quickly lose interest.

Customer Loyalty Index
A customer loyalty index is a more standardised way of measuring loyalty. Based on surveys, it utilises customer responses to the questions to develop a measure of loyalty that reflects intent to re-engage.

Salesforce Loyalty Management in your business

Salesforce Loyalty Management is a powerful tool to help you build a stronger relationship with customers. Our tool helps empower companies across industries, including retail, consumer goods, manufacturing, travel and hospitality, to create engaging and effective loyalty programs for your business. Loyalty Management is integrated with Salesforce Digital 360, Service Cloud and Tableau. Learn more about Loyalty Management here or contact our reps to learn how you can build a loyal customer base today.

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