Acquiring customers can cost five times as much as keeping them. And if, in addition, you focus your strategy on loyalty, and not just retention, you will have a better chance of increasing revenue.
Customer loyalty and retention are two concepts that are used interchangeably, but their meanings differ. Both are crucial to a company’s growth. But while customer retention focuses on avoiding customer churn, customer loyalty seeks to establish long-lasting, sustainable relationships with customers. In addition, customer loyalty can bring more to the company than their money and time.
The difference between customer retention and customer loyalty
A new customer may or may not buy from you again, as they may opt for other offers in the market, or stay with you until they find a better alternative.
The risk of losing this new customer must be avoided. To this end, companies focus on retention and seek to maximize the life cycle of their customers. All this, of course, to increase customer retention. Companies resort to many resources to retain customers , such as: discounts, upselling and cross-selling offers, differentiated subscription modalities, reduced rates, gifts, etc. There are many activities that can be carried out to reduce churn.
Moving from a strategy of only retaining customers to one of also building customer loyalty generates not only savings but also higher profits. A loyal customer knows and values the brand, its products and experience. This also helps to nullify any possible advantage they might have from one of your competitors. In addition, they share their experiences, increasing referral traffic and enhancing brand reputation. And loyal customers invest up to 30% more in the business than new customers.
Customer loyalty has to be part of your marketing strategy
According to marketing gurus Don Peppers and Martha Rogers, more than 80% of companies that invest in loyalty are significantly outperforming their competition. Thanks to this type of strategy, many companies are turning their customers into brand advocates.
We know that this final result depends on many variables that can be difficult to control. It is precisely for this reason that a customer loyalty plan should be implemented.
Main strategies to apply to your loyalty program
This loyalty program consists of awarding points or rewards to customers for different actions performed. For example: for each purchase made, for buying certain products, for registering on the website, etc. The points are then redeemed for products, vouchers, free services, among other benefits.
2. Exclusive offers for members
By creating a loyalty program, you can offer exclusive offers to program members. This will make them feel special and exclusive. These offers may include special discounts, access to private sales or new products before they are launched.
3. Personalized communication
It is important to maintain personalized communication with customers. Through a loyalty program, you can send personalized emails with special offers. As well as product recommendations based on their previous purchases.
4. Referral Program
By encouraging customers to refer friends and family to the loyalty program, you increase your customer base. Therefore, offering a discount or an additional benefit to customers who refer new members is always a good strategy. Of course, as long as both the customer and the company are winners.
5. Gifts at special moments
Offer a personalized experience to your customers and give them gifts at special moments. A gift card on their birthday, a gift card when they complete one year as a customer, movie tickets on Valentine’s Day, etc.
Want to know more about successful loyalty programs? Contact our team and ask for a demo of what we can do for your business.