It’s good to know what compels a customer to stick with you, otherwise even the best loyalty programme will fail. Your greatest tools quickly become useless without knowing how to use them properly. In this article we analyse the 5 drivers of customer loyalty and how to implement them.
That’s why there needs to be a genuine interest in what you’re building. Alongside knowledge of the different parts – those being drivers of customer loyalty – and how they all fit together. Then, you will shift your strategies into fifth gear and win results such as better retention.
5 Drivers of customer loyalty
There are many drivers of customer loyalty. Ultimately however, we placed them into five fundamentals. These are:
Company culture: how willing is your company investing in a customer-centric experience
Technology: what technology advancements are in place to support your loyalty-building strategies and deliver a loyalty programme that offers an enhanced personalised CX
Product & service innovation: how do you stand out from competitors?
Customer services: how does your team engage in external comms and resolve complaints?
Value-Added Services (VAS): do you go the extra mile to enhance customer experience (CX)?
Each of these are the foundation blocks of your loyalty-nurturing strategies. In order for each one to hold its own as well as support the others, we need ask three questions:
Why - is it a fundamental factor?
How - does it impact or influence loyalty?
What - actionable steps can be taken to increase customer engagement, retention, referrals and conversions?
1) Company culture
In this Statista report, a 52% share of consumers agreed that trust is key to loyalty. Similarly, the degree in which they identified with the brand scored an 18% share. Trust is earned by repeatedly delighting customers who shop with you.
Whereas identifying with brands, usually depends on how central values are to the product or service. Although most major enterprises make a point of showing they care about topics like sustainability and workplace equality to resonate with customers.
How company culture impacts customer loyalty
According to the Harvard Business Review, a survey showed that 80% of consumers asked about trust, said it was the deciding factor in their purchase decisions.
A 2019 report by Endelman showed that 64% of consumers buy or boycott brands on the basis of their political stances.
In the age of low trust, brands are suffering from consumer cynicism. But if you put the customer first at every step of the buyer’s journey, you’ll quickly become known as a trustworthy brand that delivers time and again. Letting customers know that your focus is on looking after them and not just after their money, is a great feeling throughout their experience with you and shows you're a purveyor of consistent quality.
On the other hand, values are a core part of our identities, so when a brand shares the same ones as their customer base, a deeper sense of connection is fostered between the two. Brand value or equity, improves credibility, visibility and supercharges loyalty.
Trust is essential as it’s one of the bedrock drivers of customer loyalty but perhaps takes the most work to achieve. Therefore your actionable step here is to implement some suggestions in the next sections.
As for customers identifying with your brand, you should try humanisation. This means making your brand appear more human. Everything from how you communicate on social media to even the main topics of your content, affect the perception of just how “human” your brand is in the eyes of your audience.
Remember, customers are people. What’s human-centric is customer-centric and vice-versa. So:
Include a “Meet the Team” page on your website. Putting faces to names increases trust and shows visitors that you value your employees enough to show them off!
"Better yet, celebrate your employees’ successes and their great experiences working with you. 87% of customers feel affinity with companies that look after and champion their employees"
Make sure you use social media to interact and engage with your audience! It’s a cheap and easy way of nurturing trust with existing and potential customers!
Technology is one of the fundamental drivers of customer loyalty as it facilitates the way we deliver enhanced personalised experiences. Advancements in AI, CRM and loyalty solutions help businesses monitor and target customers like never before.
These huge data sets can be leveraged in ways to make rewards, offers and the overall CX hyper-relevant to the engaged individual. Driving retention, repeat purchases and an experience they’ll want to share with family and friends!
What’s more, robust technology makes access to customer data seamless, whilst simultaneously making the buyer’s journey convenient and frictionless for every customer. Effectively bridging the gap between marketers or businesses as a whole and customers.
Technology truly makes its case as a fundamental driver with its ability to deliver super personalised and interactive elements to your loyalty nurturing strategies. AI-led solutions are currently at the forefront of product and customer-centric innovations.
Gamification promises your customers an unforgettable experience interacting with your brand. As they are incentivised through fun and entertainment to take part in your loyalty programme. After all, earning points or elevating to the next tier should never feel like a chore. It should be delivered in a way that brings value to the customer’s journey.
How technology impacts customer loyalty
- Brands that include gamified elements to their loyalty building strategies drive engagement up by 47% and a 22% increase in brand loyalty.
- 53% of customers prefer using loyalty schemes and claiming rewards on apps instead of mobile sites.
We’d recommend starting with the basics first. Integrate tech that optimises your website. Also, 24/7 comms – like chatbots – are ideal, relatively cheap and simple for all businesses to use on their website.
Build customer loyalty by using a platform provider that offers a white label, plugin solution and quick and seamless integration. You want a solution that makes your loyalty strategies easy and simple to launch!
Explore automation of essential tasks to improve efficiency and productivity. For example, CRMs and AI-led solutions are more economically viable and easy to integrate with plugins but still free up plenty of time for you to focus on other key areas of your business.
Implement gamified elements into your loyalty programme or find a loyalty solution (like Propello!) that offers gamification in their services.
3) Product & service innovation
Customers expect you to stand out from the competition. If anything, this is a sign of how much choice is available for consumers. The shopping experience goes far beyond what was imagined merely twenty years ago. If you can find it on the web, most likely you can buy it.
Whilst from a customer’s standpoint this is hugely convenient, from a business perspective it poses yet another challenge. Offering a high quality product or service is no longer enough for many consumers. They expect more!
That’s precisely why we list innovation as one of the main drivers of customer loyalty. More than anything, it’s a philosophy that carries you through every business milestone set in your sights and has the potential to bleed into everything else you do. Whether that be how you use social media or what type of technology you use.
Its impact and influence
Organisations with a pro-innovation culture see 30% higher growth in value.
84% of executives believe future success is extremely dependent on innovation.
Innovation is difficult to get right. Without an experienced and proven product manager, and innovation metrics that measure R&D performances correctly, what may seem like a great idea often fails.
However, implementing these things refines your method of insight gathering. Plus, advanced technologies like AI-led market research could be leveraged towards more customer-centric product innovation. Thereby building loyalty that much more effectively.
Here’s a couple of things you should consider when innovating your product or service.
Innovation works best when we collaborate. Who better to get creative with than your customers? Research has shown collaborating with customers is instrumental in successful innovation.
By inviting them into your company this way, you let them have their say and feel connected to your product or service because they were part of it “developing” it. This gives them a sense of ownership, a massive incentive for repeat purchases and even referrals. Both of which are hallmark actions of loyal customers.
AI-driven product innovation is the future! Although you might not be in a position to invest in an AI solution just yet, it’s worth keeping your ear to the ground. Early forecasts are looking promising for AI-led solutions. For example, companies using advanced Artificial Intelligence and Machine Learning see a 30% rise in revenues!
Check out this great blog exploring the importance of AI-driven innovation.
For something a little more simple, why not try a survey to incentivise customers to share ways of improving your product or service? Survey results yield great insights and even shed light on particular pain points not yet considered in the marketplace. Giving you the jump on future opportunities.
4) Customer Services
Most customers forgive companies for mistakes, given that company has great customer services in place. Otherwise expect to lose them forever and do the opposite of referring you to people they know. They’ll tell them to avoid you.
It’s make or break. And that’s why we’ve selected customer service as one of the main drivers of customer loyalty.
How customer service impacts customer loyalty
"89% of consumers are more likely to make repeat purchases after a positive customer service experience"
"75% of customers who negatively experience a brand with great customer service are more likely to forgive, compared to just 15% with a brand that has poor customer service"
Overall great customer service is always thorough. From first purchase right up to referral. At times however, there’ll be someone who experiences something bad with your brand.
In between inevitable gaps of product or service quality should be contingencies in place. Safety nets designed to catch dissatisfied customers and reactivate them back onto your buyer’s journey.
The best way to manage customer complaints is to use our complaint process called “SORRY”. This stands for:
Say sorry - always lead your response to a complaint with an apology.
Open dialogue - invite your customer to engage with you and listen.
Repeat - the main points of your customer’s complaints and express empathy.
Respond - once you’ve acknowledged their complaint, explain how you’ll respond/act.
You - the final stage is an acronym itself: Yield, Offer, Update.
Always make the “You” stage about the customer. This ensures you resolve the complaint and shown the customer that you’ve acknowledged and learned from their feedback.
Bear in mind whether to “Yield” and/or “Offer’ depends on your business type. Usually a subscription service might yield to a customer’s demand to cancel their membership. You must always do this.
Alternatively, offer something by way of an apology to the customer. However, practice caution when offering discounts to customers.
Measure their loyalty. Are they repeat purchasers? Or first time buyers? Sometimes people try to take advantage of discounts by complaining for no reason. Therefore, you should always scale your apology to the size of your business and the loyalty of your customers.
An enterprise might be able to offer a 60% discount, whereas a small family-run restaurant might give starters or desserts away for free. Again, depending on the customer’s loyalty, offers might alternate between a full refund for new customers and discounts for repeat purchasers.
Always follow through on “Update”. Use follow-up emails approximately one month after a customer unsubscribed from your service. The content of these emails may vary. We always recommend going down the friendly chat route. Avoid trying to sell anything or getting the customer onboard.
Just get an update with them. See how they’re doing. Perhaps thank them again for their feedback and show ways you’ve improved or plan to improve your product or service.
5) Value added services (VAS)
Using strategies orientated around delighting or surprising consumers is another way of converting a consumer into a loyal customer. We’d even argue that out of all the drivers of customer loyalty, implementing VAS into your overall CX is a surefire way of building trust.
Loyalty programmes exceed the expectations of customers because they encourage businesses to create incentives and rewards cycles. These motivate subscribers to repeat actions in return for continued or increased value. What’s more, loyalty programmes are useful tools for measuring acquisition, conversion, engagement, retention and referrals!
Its impact and influence
Members of loyalty programmes generate 12-18% more revenue than non-members.
84% of surveyed consumers said they were more likely to stay with brands that offer some form of loyalty scheme.
Loyalty programmes are a particularly effective form of VAS due to their flexibility. For example, you could:
Offer rewards or discounts on a customer’s birthday. This is hugely personalised as everyone only has one special day dedicated to them.
Similar to the previous point, offer them something on a sentimental date. We’re not talking about Christmas Day or Valentine's Day.
Even better…the relationship between your brand and customers! Mark the first time they bought from you and on the anniversary they became a customer, send them a special gift.
Loyalty programmes allow you to work in seemingly sentimental ways like these. By having these things in place on an automated service, you continue to innovate and explore other drivers of customer loyalty, whilst making huge inroads with existing clients at the same time.
How to measure the success of each customer loyalty driver?
Be sure to use an accurate method of measuring the success of each loyalty driver. One of the most simple but accurate methods are surveys. These give the freedom to choose the topic (in this case the specific driver) and prompt customers to ask questions about it.
Use Net Promoter Score (NPS) to ascertain how willing customers are to refer you to their friends and family. This is a good way of getting a full picture of customer perception towards your overall customer experience. Also consider the fact that referrals are the ultimate expression of customer loyalty. Therefore, your NPS score will tell you just how loyal customers are. It might be worth doing this before and after you introduce new drivers.
Why not check out our blog for more information on how to measure loyalty metrics.
Drivers of loyalty that lead to destination “trust”.
Ultimately, these drivers and what they develop into, lead to one crucial feeling customers should feel towards your brand; trust.
Implement customer-centric strategies into your loyalty building efforts. Before you try anything, ask yourself, “how does this benefit the customer?” instead of “will this make the customer loyal to me?”. By doing this, you almost guarantee your drivers of customer loyalty will be that more effective.
Want to discuss the contents of this blog more or get some free advice on your existing loyalty strategy? Get in touch today. We’re always happy to help!