How can you adapt to the ever-changing needs of your customers? What techniques are ideal for your industry? How are businesses in your industry working to improve customer loyalty?
We’ll cover several winning strategies for building customer loyalty in different industries and provide further reading to get you started with building your army of loyal customers.
Customer Loyalty in the Insurance Industry
Insurance carriers face an uphill battle to cultivate loyalty among their customers as the market becomes more saturated and consumers find it difficult to differentiate between products. Customer retention rates in the insurance industry fall below average compared to other sectors.
This is partly because many insurance carriers overly prioritise customer acquisition rather than focusing on customer retention, despite the former being more expensive. Insurers in the UK, in particular, must deal with price comparison sites and aggregators that are commodifying general insurance and dominating distribution.
Another issue is that customers often get better deals by shopping for a new provider instead of opting for renewal. The current situation has made insurance customers volatile, with many ready to switch insurers for a better experience.
Insurance companies that balance an excellent service history with a modern customer experience will be the ones to thrive. Adopting creative approaches like reward programmes will allow you to stand out and successfully drive loyalty for your insurance business.
Insurance: Summary & Stats
Acquiring a new customer is about nine times more expensive for insurance companies, demonstrating the need for creative retention strategies.
Only 15% of customers reported having a positive opinion of their current insurer’s products and services.
According to the Financial Conduct Authority, home and auto policyholders in the UK lose money when they renew with their insurance providers.
According to a study, fair pricing for insurance plans was more important than the actual premium amounts. Setting outrageously low prices sabotages customer loyalty just as much as setting high prices.
The percentage of auto insurance policyholders who planned to renew their policy with their current insurer dropped from 59% in 2004 to 48% in 2019
Customer Loyalty in Financial Services
Companies that want to improve customer loyalty must adopt strategies that give customers real value to earn their trust. Value has never been under more scrutiny than it is today. The global economic crisis and high inflation rates continue to foster mistrust among customers in the financial services they depend on.
In a recent survey of consumers, the majority claimed that trust was a very important part of their buying decisions. Yet, only a small percentage of consumers actually trusted the brands they used. This mistrust among customers also applies to banks and insurance companies.
Meanwhile, this trust is the cornerstone of loyalty. Without these solid foundations, customer loyalty in financial services will continue to struggle. Competition is on the rise in monopolised markets, with new alternatives offering customers more attractive incentives. This makes consumers even more cautious than ever with their spending.
Businesses offering financial services must adapt to the changing attitudes of customers or suffer higher churn rates and lower profit margins. That’s why there’s a case for adopting customer-centric strategies and prioritising loyalty nurturing efforts to secure customer loyalty for businesses offering financial services.
Financial Services: Summary & Stats
According to a report, customers are frustrated by price increases in premiums.
GFT reports that only 48% of consumers trust their banks to help them through a recession.
Over 60% of customers will abandon their banking provider after experiencing a digital disruption.
During the pandemic, many customers felt banks barely met their expectations or failed miserably. A poll showed that 29% agreed their expectations were just about met. The largest proportion of those asked (39%) felt dissatisfied overall.
Customer Loyalty in the Retail Industry
Customer loyalty in retail has changed a lot in recent years. People are familiar with the rewards and benefits they receive in exchange for their business with brands. Discounts, free gift cards and e-vouchers, earn and burn points and that gold level tier that’s just out of reach are the norm.
However, with brand loyalty falling in recent years, these traditional loyalty initiatives just aren’t enough. There’s more of a need for something beyond point rewards and tiered programmes. Like products, loyalty building strategies need constant revision and upgrading. After all, customer expectations fluctuate over time.
Expectations about product quality are only a problem for retailers who sell poorly made products. However, people are more thrifty and want more value for their money, due in part to limited budgets. The ideal setup for customers is to get quality products that justify spending, especially when many have limited expendable incomes.
There’s also a gap in the emotional connection between retail brands and consumers. That’s because the customer loyalty approach in the retail industry is primarily focused on transactional incentives. Customers, on the other hand, are after personalised rewards and are becoming more demanding about the value they receive for their patronage.
So how can retail businesses nurture customer loyalty?
Engaging customers across multiple channels and creating a robust rewards programme are excellent approaches to nurture customer loyalty and improve retention. Refining and personalising customer relationships, from interactions to service delivery, remains the best way to retain their business.
Retail: Summary & Stats
Traditional loyalty programmes are going out of style as customer expectations keep rising. 75% of consumers would switch to a business with a better loyalty scheme
With the cost of living crisis, inflation is forcing people to abandon brands they’re normally loyal to. With 37% of people now prioritising the price of products over their brand loyalty.
According to one study, 80% of consumers want personalised experiences from retail vendors.
80% of customers also agree that the experience a company provides is just as important as the product.
Social media is another a powerful, effective motivator for retailers, as evidenced by 14% of consumers buying directly from retailers on social media. Back to top
Customer Loyalty in Telecommunication Industry
Much like any industry experiencing a major digital transformation, the telecoms industry is becoming more competitive, and businesses are having trouble standing out. Customers are demanding more than just low prices and are more than happy to switch providers when they aren’t satisfied.
Customer expectations continue to grow as they demand better experiences, better security and connectivity, and transparent pricing.
More light is being shed on the loyalty penalties customers are forced to pay for staying with the same provider. This has made customers more aware of their shopping options and more likely to enter the market for better offers when their initial contracts expire.
With new Ofcom (Office of Communications) regulations coming into play to protect consumer interests, the margin for error is growing even thinner. Telecom businesses can no longer ignore these demands if they are to retain customers.
The current situation shows that transparency and honesty are essential for building trust. Adopting a multichannel approach or launching a reward programme are among several proven techniques for building customer loyalty in the telecommunications industry. The aim is to provide memorable experiences and show customers that their brand loyalty is appreciated.
Telecommunications: Summary & Stats
With almost 50% of telecom customers actively seeking a new provider in 2019, telecom businesses have had to reevaluate their strategies to keep loyal customers.
Over 19% of consumers are more likely to trust a brand if it relieves the burden of the cost of living crisis by offering relevant discounts. Another 14% will be willing to trust brands that care about their customers.
75% of consumers prefer companies that offer rewards. A CMO Council report reports that 12% of customers switched providers because their current provider failed to reward their loyalty.
Broadband customers pay loyalty penalties averaging £113 per year after their initial contract period, 43% above the sign-on price. This penalty is much higher compared to other sectors, and over 96% of consumers consider this penalty unfair.
45% of businesses highlight customer experience as a top priority in the coming years.
Customer Loyalty for Subscription-Based Businesses
It goes without saying that all businesses want to increase sales. However, subscription-based businesses must show both existing customers and prospects that their services and products are worth the recurring fees. These businesses must go the extra mile if they are to increase subscription sales.
Flexible short-term subscription plans and the cancel-at-any-time option have made it even more tricky to secure customer loyalty as a subscription-based business. Meanwhile, customer retention is a critical success criterion for subscription-based businesses. Maintaining high retention rates increases your ROI and subscription sales.
To increase revenue from subscriptions, you should foster meaningful relationships with your customers. A successful retention strategy is built on making sure your customers are happy and rewarding their loyalty. Transform prospects into loyal customers by adopting proven retention strategies such as reward and referral programmes. Getting ahead of the customer's needs will help you stand out in the modern market, which is full of competitors.
Subscription-based Businesses: Stats & Summary
Gartner’s projections indicate that only 20% of subscription-based businesses will succeed in growing customer loyalty in 2023.
Accenture reports that 91% of customers are more inclined to buy from companies that understand them and provide personalised suggestions and relevant deals.
75% of consumers prefer companies that offer rewards to those that don’t.
During the seven-year period between 2012 and 2019, the subscription economy expanded by over 300% making competition more intense and differentiation far more challenging.
Loyalty is the Future
When customers are loyal, they aren’t swayed by product availability or price. Loyal customers will pay extra to retain the same quality service they have come to expect. Exceeding their expectations is the best way to endear your brand to your customers' hearts. However, this is no small task. A careful approach that puts the customer’s needs at the forefront is the only way to achieve true loyalty.