Customer loyalty is a positive emotional relationship that exists between a customer and a brand. It is an indicator of a customer’s likelihood to do repeat business with a brand or a retailer. Customer loyalty is a result of multiple factors, including a positive shopping experience, reliable customer service, and customer satisfaction.
When customers have loyalty, they are more likely to return as customers, recommend your business to family and friends, choose your brand over other companies that offer similar products and services, and interact with your multiple brand channels. Compared to other customers, they are more likely to understand your brand and the value of your products and identify with your vision.
Why It Matters
Customer loyalty brings more profit to brands and retailers without having to spend more on customer acquisition. More resources go into luring new customers than repeat customers. There are also more steps to take before shoppers arrive at a decision, which means crafting a comprehensive marketing strategy for brands.
Customers who are already familiar with your business and follow your brand are more likely to purchase again, and more. This decreases the required effort for other conversion tactics. Loyal customers are also willing to advocate for your brand by recommending your products and the eCommerce experience to friends and people online.
Measuring Customer Loyalty
The following are some of the ways you can gauge customer loyalty:
- Net Promoter Score (NPS). This survey is distributed to existing customers, asking them to rate the likelihood of recommending your product or service to their friends or colleagues. Informed by customer satisfaction, among others, your NPS can serve as a basis for creating a good marketing strategy.
- Customer Loyalty Index (CLI). Another customer survey, CLI measures how strongly a customer feels loyal towards your brand. There are more questions than NPS and there is more focus on customer intent in future shopping.
- Customer Lifetime Value (CLV). CLV is the value of a user in their entire time as a customer of your brand. An increasing CLV can indicate a stronger sense of loyalty to your business.
Encouraging Customer Loyalty
The following are some practices that can encourage customer loyalty:
- Ensure great customer service. Customers appreciate friendly and reliable representatives regardless of their concerns. It can make shoppers feel that you value and respect your relationship with them.
- Prioritize personalization. Shoppers prefer and seek personalized experiences. A shopping experience and set of recommendations that speak to customers make them feel seen and understood.
- Have a loyalty program in place. This is an easy way to lure customers back. They can buy more from your brand and earn points that they can use in the future for freebies, discounts, and more.