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Customer loyalty: Your guide to loyal customers
22 November 2023 (Updated 22 March 2024) | Customer loyalty
Customer loyalty is a trendy word. It's not uncommon to talk about how we can get more loyal, returning customers. But what does customer loyalty really mean? Why do you want loyal customers? And what is the difference between concepts such as customer loyalty, customer experience and customer journey?
What does customer loyalty mean?
Customer loyalty is a broad concept that includes many parameters. There isn't really a clear definition, but Wikipedia says the following about customer loyalty:
”The loyalty business model is a business model used in strategic management in which company resources are employed so as to increase the loyalty of customers and other stakeholders in the expectation that corporate objectives will be met or surpassed. A typical example of this type of model is: quality of product or service leads to customer satisfaction, which leads to customer loyalty, which leads to profitability.”
So, customer loyalty is about:
• An ongoing, emotional relationship between your company and your customer.
• Positive customer experiences that give you satisfied customers.
• Credibility – the customer can trust your business.
• That the customer can come to terms with your company's values.
• A customer's willingness to engage with your business and make repeat purchases.
All in all, it's about the total value – from both the service/product and perceived emotions – that the customer gets.
Unfortunately, there is no quick fix to getting loyal customers, but by being aware of what it is and what drives customer loyalty, you can build a customer journey that will eventually lead to more loyal customers.
Customer loyalty, customer journey, customer experience & customer satisfaction – what's the difference?
Customer journey
A customer journey is the sum of all interactions a customer has with a brand or company over time.
Customer experience
Includes the impression the customer gets of a company through all the interactions it has, such as activity on the website, use of the product/service, meeting with staff and advertising on social media. The customer experience mainly includes the product and the staff.
Customer satisfaction
Reflects how well a customer's expectations are met by a product or service.
Customer loyalty
A combination of a successful customer journey, satisfied customers and positive experiences and impressions can together create stronger customer loyalty.
A customer journey never ends. If you do it the right way.
Why should you be loyal to your customers? And why should your customers be loyal to you?
Are you loyal to your visitors and guests? Namely, it's not the customers who should be loyal to you – it's you who should be loyal to them and deserve their customer loyalty.
What do you, as a company, get from loyal customers?
• Great ambassadors who spread your brand further and attract more customers.
• It's easier and more cost-effective to reach existing customers. Recruiting new ones costs all the more.
• Direct insight into a group of loyal customers – "the inner circle" – who can help you further develop your offer.
What should the customer get out of being a loyal customer?
• Excellent customer service – quick responses and personal assistance.
• Consistent quality – the customer gets what you promise.
• Loyalty program – repeat purchases are rewarded.
• Customer feedback – you listen and adjust your offer & communication.
• Emotional relationship – that goes beyond transactions.
Customer loyalty: 6 fundamentals
There are some elements that you need to have in place in order to work towards more loyal customers. Below, we list six fundamentals that we believe you as a marketer should be aware of in order to drive customer loyalty.
1. Data
Collect data from e.g. email marketing, sales and purchase history. Data is your best friend to better understand your loyal customers!
2. Analysis
Data is worth its weight in gold – if you actually learn from it. Therefore, be sure to analyze your data to make better decisions and optimize communication with customers.
3. Segments
How can you segment your customers to drive customer loyalty? Do you keep track of your gold subscribers, season ticket holders and those who make more than X purchases per year?
4. Communication
How can you as a marketer contribute to increased customer loyalty with the help of various marketing initiatives? On the one hand you need to take ownership of the customer journey through adapted and relevant communication, and on the other hand you need to find your "reasons to talk". How can you give your customers added value through communication?
5. Personalization
By personalizing your communication, you take it to the next level. Personalization is a process of tailoring offerings and communications to your unique customers, and it's more than saying someone's first name and sending product recommendations.
6. Feedback from your customers
To understand your most loyal customers, you need to listen to what they say, think and do. Be sure to collect feedback through reviews, surveys, and social media engagement.
Do you work with customer loyalty in any way?
Examples of content that increases customer loyalty
Not sure what to talk about? There's plenty of reasons to talk that adds value for your loyal customers.
• Share the story of your business
• Interviews with staff, musicians, speakers etc.
• Videos & video greetings
• Customer reviews
• Product range
• Tutorials & tips
• Personal recommendations
• Purchase discounts & free offers
• Exclusive customer events
• Personal (digital) thank you cards
• Upselling
• Early releases & launches for loyal customers
• Community forums
• Sneak peeks
• Spotify playlists
• Contests
• Unique portal for members
• Storytelling
• Exclusive merchandise
Metrics: 4 ways to measure customer loyalty
CLV: Customer Lifetime Value
A measure that estimates the total value a customer is expected to bring to a company throughout their relationship. CLV is calculated like this:
Average purchase value x Average purchase frequency x Average customer lifespan = CLV
Average purchase value: The average amount the customer spends per purchase.
Average purchase frequency: How often the customer makes purchases.
Average customer lifespan: How long the customer remains engaged with your company.
NPS: Net Score Promoter
An index based on a single question: "On a scale of 1 to 10, how likely is it that you would recommend the company/service/product to a colleague or friend?" The responses fall into three categories: critics, passives and ambassadors.
CSAT: Customer Satisfaction Score
A measure used to assess customer satisfaction with a specific interaction, product or service. Usually a survey question where customers are asked to rate their satisfaction on a scale, often from 1 to 5 or 1 to 10.
CRR: Customer Retention Rate
The percentage of existing customers who remain customers after a certain period. Reflects a company's ability to retain existing customers and prevent them from switching to competitors.
Psst! It's better to start simple than not to start at all. Choose one of the ways you want to measure, google the formula for how to measure it and start the journey towards increased customer loyalty!
5 questions: Strengthen your customer loyalty
1. Customer loyalty is the total value – from both the service/product as well as emotions and communication – that the customer feels he pr she receives. There is great value in working long-term with customer loyalty.
Consider: You need to be clear to the customer and yourself who you are actually there for. Who are your most important customers? Why does the business exist? And what will you bring to the customer's life?
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2. Customer loyalty is based on collecting and analyzing data.
Consider: What data sources and data points do you need to collect to better understand your most loyal customers? How can you use your data to get more loyal customers? And which metrics are relevant to your business?
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3. It's not your customer who should be loyal to you. It's you who must be loyal to your customer and deserve the customer's loyalty.
Consider: You need to think from the outside in. Why should the customer be loyal to you? And how can you start being loyal to the customer?
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4. As a marketer, you can contribute to increased customer loyalty through various types of marketing activities, in both images and text.
Consider: How can you take ownership of the customer journey? How can you create customized, relevant communications?
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5. Customer surveys and questionnaires are important for getting feedback from your customers.
Consider: Do you send customer surveys? Does the business make use of the feedback that is received?