Customer Loyalty in 2023: The Only Guide You'll Ever Need

Most service-based businesses have excellent marketing strategies in place to acquire new customers. But few understand how to retain them once they've made a purchase.

As companies strive to build authentic relationships with their audience, extend the customer lifetime, and encourage repeat business, it's no surprise that 65% of firms are increasing their spending on Loyalty strategies in 2023.

Now, for the good news. Customer Loyalty doesn't have to be complicated. With the right strategies and a retention platform like Edge at your side, retaining customers can be one of the easiest ways to grow your business and beat the competition.

In this article, we're going to explore why customer loyalty is vital for business success. Then, we're going to detail five comprehensive strategies that are guaranteed to keep customers coming back to your business time and time again.

But before we get into all that, let's discuss what customer loyalty is and explain how you can calculate it.

What is customer loyalty?

Customer loyalty is all about encouraging your existing customers to continue purchasing your business's products or services.

It's common to get customer loyalty mixed up with customer acquisition, but the two terms differ. While acquisition is the process of acquiring new customers, loyalty is all about getting those who've already bought from your business to buy your products again.

We can measure customer loyalty by working out our 'customer loyalty rate'. Let's explore what this means and how we calculate it.

What is a 'customer loyalty rate'? How do I measure it?

Your customer retloyaltyention metric measures the percentage of customers that are the result of repeat business over a fixed period of time. We can measure it using the following formula:

((Number of customers at the end of a time period - number of customers acquired during period) / (number of customers at the beginning of a period)) ×100

For example, let's assume you run a jewelry business and sell your products online.

At the beginning of the year, your business records 2000 current customers. By the end of the year, you have 2500 customers. You know that you have acquired 1250 new customers during this period.

We can now calculate the customer rate of loyalty as follows:

((2500-1250) / 2000) x 100 = 62.5%

This reveals that you managed to retain 62.5% of the customers you had at the start of the year.

Why is customer loyalty important?

Retaining your existing customers is one of the most effective ways to grow your business. In this section, we're going to list four key reasons you should consider making customer loyalty your next big goal in 2023.

1) Loyal customers spend more than new customers

Returning customers spend an average of 67% more than new customers. The more your customers trust your business, the more they're ready to part with their cash, allowing you to achieve higher profits at no extra cost.

2) Loyalty means lower customer acquisition costs

Acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one. Increasing your retention decreases your customer churn rate, meaning you spend less on the cost of acquisition and save money in the long run.

3) Current customers provide the most valuable feedback

Feedback from your existing customers is a goldmine of insights. They've experienced your products firsthand and can offer valuable suggestions for improvement. Plus, you can create a positive impact and show your commitment by actively responding to customer feedback and using it to refine your service, helping you build long-lasting customer relationships.

4) Satisfied customers spread the word

The more your customer base trusts your business, the more likely it is they're going to recommend you to their friends. This turns your customers into valuable sales reps for your business, helping you keep the cost of acquisition down.

How do I improve my customer loyalty rate?

Before we get into the strategies you can employ today to start retaining more customers, let's explore what you should be aiming to achieve.

The primary objective of effective customer retention strategies is to target consumers at every stage of the customer journey and, ultimately, make your business appear as a clear choice over the competition. There are dozens of ways you can achieve this.

In general, every business that retains a lot of customers does all of these six things well.

• They ensure customer satisfaction.
• They exceed customer expectations
• They provide an effortless experience for their audience.
• They build trust with their customers.
• They provide excellent customer service.
• They demonstrate their commitment to their existing customers.

If you can accomplish these six things, you're setting yourself up for success. In the next section, we'll detail five strategies that will help you achieve these goals.

5 winning strategies to improve customer loyalty

There is no secret formula for customer retention. The key is to employ a wide range of tactics that help you accomplish the six core considerations we touched on earlier:

• Ensuring customer satisfaction
• Exceeding customer expectations.
• Providing an effortless experience for customers.
• Building trust
• Providing great customer service
• Showing your commitment to your customers

Let's explore five key strategies that will help you accomplish these goals.

1. Put customer feedback at the heart of your business

Every customer wants to feel that their voice is heard. It's vital that you respond to feedback quickly and actively engage with customers who take the time to leave you a review.

A great customer feedback platform is the cornerstone of customer retention. Utilizing automatic customer surveys streamlines the review process, allowing you to see every piece of feedback your business receives at a glance.

For example, Edge's innovative customer feedback platform enables you to collect and analyze all customer feedback from dozens of platforms all in one place.

This offers two primary benefits. First, it ensures you never miss the chance to refine your business's service. Second, it allows you to respond to positive feedback and address customer issues faster. When customers feel like you value their feedback, they're more likely to trust and return to your business in the future.

Top tip: Actively respond to customer feedback. If a valued customer makes a suggestion and you decide to implement it, let them know. This closes the feedback loop and proves to your customers that you listen to and care about their ideas.

2. Personalize the customer experience

Each individual customer is different, with varying needs and wants. It's essential to tailor your customer retention program to match the unique demographics that comprise your target audience.

To get started with this approach, consider your primary buyer personas. Research these personas to understand how they like to communicate. Then, make an effort to communicate on their preferred channels, whether it be social media, via email address, or in person.

In all cases, your goal is to be as authentic and personable as possible. No one appreciates PR responses. Regardless of your chosen platforms, it's vital that everything you say sounds like it's coming from a human.

Engaging with your audience on a personal basis is the best way to turn negative feedback and poor experiences into happy customers.

Top tip: Personalized experiences are also a vital component of quality customer feedback. Using the same canned response when customers provide a review doesn't prove to customers that you've understood their feedback. On the flip side, engaging with your customers to find out more information about their experience is a great way to show you're ready to go the extra mile.

3. Deliver exceptional customer service

Quality service is the key to keeping customers happy, exceeding expectations, and building long-lasting trust with your audience.

How do we accomplish an exemplary standard of customer service? The secret lies in your frontline employees.

Incentivizing your employees to become advocates for your business helps you provide positive customer experiences. It also makes it significantly easier to retain your top members of staff.

To achieve this goal, consider using an employee incentive platform to offer rewards to your frontline employees when they receive positive feedback.

For example, the Edge incentive platform encourages customers to mention employees by name in their reviews. If an employee creates a positive experience for your customers, they'll receive points that they can use to spend on rewards.

This offers an excellent way for employees to gain recognition for great customer engagements, and financially incentivizes them to provide an exceptional standard of service.

Top tip: Looking to further incentivize your employees to provide incredible service? Setting up a sales leaderboard with Edge encourages friendly competition, and makes it simpler to recognize and reward your top employees.

4. Set up customer loyalty programs

Customer loyalty programs give those who buy your products an extra incentive to keep coming back.

To get started, consider allowing customers to earn stamps or points for each additional purchase. You can then enable customers to redeem these points for special discount codes, exclusive products, or other enticing rewards. The more they engage with your business, the greater the benefits they receive, helping you build strong relationships and encourage repeat business.

Top tip: To maximize the benefits of your customer retention strategy, consider a referral program. Offering rewards to customers who refer a friend incentivizes customers to spread the word and increases the number of potential customers who have the chance to discover your business.

5. Make onboarding a priority

Many businesses make the mistake of forgetting about customers who've recently made a purchase. Some don't realize that the onboarding process is the ideal opportunity to make a great first impression and turn one-time buyers into loyal customers.

There are dozens of ways to make your customer feel like a valued member of your community once they buy your product. Setting up email newsletters, inviting customers to join social groups, and linking to personalized tutorials show that you value them and want them to become a part of your community.

In addition, prompting your customers to leave feedback with an automated customer feedback tool is an excellent way to display your commitment to your audience.

Top tip: It's all too easy to forget about customers once they've made a purchase, especially if they aren't reaching out to you with feedback. Keeping a customer communication calendar ensures you'll never let a buyer slip through the cracks.

Introducing Edge: Customer retention, made easy

Customer retention can be tricky, but it doesn't have to be.

Edge's all-in-one platform makes it easier to collect feedback, address customer complaints promptly, and turn your frontline employees into a brilliant network of brand promoters.

Whether it's creating automated customer feedback surveys, setting up sales competitions between frontline employees, or rewarding your top performers with unique incentives, our platform makes it easier to keep employees happy, build solid relationships with your audience, and keep customers coming back time and time again.

Want to find out how Edge can help you turn prospective customers into loyal buyers? Click here to find out more about our platform, or reach out today to talk to one of our experts.