It’s hard to overstate the importance of customer loyalty. For online businesses, customer loyalty can mean the difference between success and failure — between making it big and going under. Online retailers know that building strong relationships with customers is the key to taking their business to the next level.
However, it can be tough to figure out exactly what “customer loyalty” means. It can be even tougher to figure out how to strengthen that loyalty. That’s why we’ve put together a guide to the most common forms of customer loyalty and how to strengthen them. Keep reading for a rundown of everything you need to know.
Why Does Customer Loyalty Matter?
In today’s global marketplace, businesses are constantly competing against each other for customers. That means that having a loyal customer — someone who already knows and trusts your products — is invaluable. A loyal customer will consistently return to your brand or your store over a long period of time.
Loyal Customers Bring You Fresh Business
People like to spread the word about great products. Happy customers tend to tell their friends about the great store they shopped at, for example.
Think about it. The last time you bought a great new sweater, you probably told someone about it, right? You may have even bragged about the great deal you got, how well-made it was, or how easy it was to care for.
Chances are that the friends you told about your sweater went online and took a peek at the store you bought it from. Some of them may even have bought a sweater from the same shop. That’s how word-of-mouth advertising works — and loyal customers lead to a lot of that kind of free marketing for your business.
In the online world, we see this with affiliate marketing. Many businesses have successfully used software to create a special affiliate system — which allows them to market their products and services to a newer, broader audience with the help of affiliates who serve as ambassadors for the brand.
Loyal Customers Shop More Often
Once people find a business they love, they tend to come back to that business often. They might even start shopping more often than they used to. That’s because they’re excited about the great new products they find at their favorite business.
Think about customers at your local farmers market, for example. Maybe they started going to the market because they heard it had the freshest tomatoes around. Once they realized how good the tomatoes were, they stopped by the market regularly to try the berries, the bell peppers, and the summer squash. Before you know it, they’re visiting almost every day.
Loyal Customers Can Help Improve Your Products
Your loyal customers already trust you and your products. This means that in return, you can turn to them for input on how to make your products or services even better.
One way to look at this is to treat your loyal customers almost like a focus group. They can let you know where they’d like to see changes in your products and what they think needs improvement. The more you turn to your loyal customers for feedback, the stronger a relationship you build with them.
What Types of Customer Loyalty Exist?
Customers will be motivated by different things, depending on their needs, finances, and desires. To inspire customer loyalty, you need to consider your customers’ unique set of circumstances and the kinds of things that might motivate them as a result.
Keep reading for some of the major forms of loyalty, as well as tips on how to encourage that loyalty in your customers.
1. Transactional Loyalty
Transactional loyalty is the most basic form of customer loyalty. Think about a frozen yogurt stand that gives you one of those punch cards when you buy a cup. After nine yogurts, you get a free cup.
The great thing about this kind of customer loyalty program is that it’s straightforward and easy to work with. After all, everyone wants free rewards, so it stands to reason that your customers will keep coming back until they’ve earned their free item.
However, the downside to this system is that you’re not building up an especially strong connection to your customers. Simply offering a free item after a certain number of visits isn’t enough to make your customers feel engaged and involved. It doesn’t build the kind of lasting relationship you’re looking for, either. So while transactional loyalty is a good starting point, it isn’t enough on its own.
2. Social Loyalty
Social media engagement is one of the best ways to get people involved in your business.
Here’s how it works: You offer your customers a small reward in return for posting about your business on social media. You can customize this, so it fits your specific needs, of course. For example, if you’d like to make sure that a broad base of people learn about one of your new seasonal offerings, you can incentivize your customers to spread the word about that offering. Or if you’d like people to spread a particular post, you can offer a reward for that.
What would this small reward look like? Again, that’s going to depend on your particular needs. Some businesses offer a point system, where customers earn points for each social media post or retweet. They can later redeem those points for free products or for discounts on big-ticket items.
You might even want to encourage your customers to chat about their rewards on social media — sometimes that’s a fun way to generate extra buzz about your business.
3. Emotional Loyalty
Everyone likes to feel like they’re known and understood. Think about how great it feels to walk into your favorite restaurant or bar and have the waitstaff greet you by name. “Do you want the usual?” is a wonderful thing to hear — it makes you feel at home.
When customers feel like you know them, they automatically feel an allegiance to your business. You can give your customers that sense of belonging by sending them special offers for their birthday or their anniversaries. You might want to send them a message a few days ahead of their birthday to remind them a special offer is coming, just to build anticipation and engagement.
The beauty of this approach is that it truly builds connections and relationships. However, it also takes time to develop. You’ll probably want to collect some simple demographic data from your customers early on, so you can implement an emotional loyalty plan once enough time has gone by.
4. Behavioral Loyalty
Experts say behavioral loyalty is one of the best ways to build a strong relationship with your customers.
Behavioral loyalty means working to get your customers to do the kinds of things that build success for your business. If you’re working with a point system, you can offer your customers extra points — maybe even double or triple points — in return for certain kinds of purchases.
For example, you might want to offer extra points for customers who make purchases off-season or during any time that’s usually slow for you. You can also offer extra points to customers who make a number of purchases at once.
Customers can then redeem their points for your products — and this, in turn, will fuel their involvement with your brand and your store.
5. Advocacy Loyalty
Advocacy loyalty means offering your customers a reward every time they recommend your business to new customers.
In a simple form, advocacy loyalty is like word-of-mouth advertising. It’s a great way to get new customers excited about your business and your products. In general, people are much more willing to give businesses a try if they’ve heard about them from a trusted friend — that’s why word of mouth advertising is so valuable.
If you use a point system to give rewards to your customers, it might be a good idea to offer double points — or even triple points — every time a customer successfully refers a friend to your business. Of course, if their friends turn into loyal customers, then eventually they might recommend other friends, and so on, and so on. The idea behind customer loyalty plans is that it will yield ever-greater rewards for your business.
We live in an intensely competitive world in which businesses constantly compete for customers. Developing a base of loyal customers is the absolute best solution to this endless competition. By cultivating loyal customers, you can save yourself the endless stress and expense of constantly seeking out new customers. Instead, you’ll be able to focus on what your business truly needs.
In fact, cultivating loyal customers means that eventually, your customers will do a lot of the marketing for you. They’ll share news about your brand on social media, they’ll shop more than usual at your store, and they’ll recommend your products to their friends.
Would you like to learn more about marketing and building a following of loyal customers? Get in touch to learn more about our affiliate marketing software and what LeadDyno can do for you and your business.