Customer Loyalty: Marketing’s Holy Grail
There is a rule of thumb which says that acquiring a new customer can cost as much as five times more than retaining an existing one. With these numbers, it makes good business sense to try achieve a loyal customer base. Loyal customers are profitable customers: repeat customers are cheaper to market to, spend more, and make more frequent purchases.
A loyal customer is somewhat of a holy grail for a brand. If you look at the marketing funnel, it begins with awareness, and we give our best shot to get customers to advance to the bottom of the funnel, which is advocacy.
Once a customer has made a number of repeat purchases, we label them as ‘loyal’.
Loyal customers have the potential to become our brand’s advocates; to go out and actively spread the word about our brand because they are just so damn satisfied.
A satisfied customer comes back. It’s as simple as that.
But how do we get the customer to this point?
There’s a simple equation which reads: Customer satisfaction = customer experience / customer expectations. You need to be sure that the actual experience of your brand is better than your customer’s expectations.
The universal fundamental you are looking for is in reach for every brand: understanding your customer. Brands that take the trouble to find out what customers expect from their interaction, and then make sure to exceed those expectations in delivering the brand experience, win. You might not achieve over-delivery every time, but in a world where customer experience is pretty average at best, just delivering in line with expectations is often good enough to seal the deal. Strive for better, and make sure the delivery beats expectations as often as possible. And for those times when you miss the mark, be the kind of brand or business which acknowledges its failures, and engages its clients to learn and grow and try make things right.
Another valuable point is to recognise that customers are not all created equal. Brands come unstuck when they pander to everyone. Make sure you segment your audience, which will allow you to get deeper insights into each group. Engage with these customers, understand what really makes them tick, and find that space where their needs overlap with what your brand has to offer.
And of course – brand communication has an important job here too. Make sure your message is authentic, leading them to have realistic expectations about what your brand is going to deliver.
I am impressed by those brands that have invested effort in servicing their loyal client bases throughout the Coronavirus shutdown. In reality, the hope of a sale is light years away and yet, these few brands have continued to deliver an experience which exceeds expectations.
Despite being unable to interact with the IKEA brand in the usual way, the Swedish furniture brand has engaged with relevance and practicality.
Instead of their usual product/ price formula, IKEA shared ideas on how my kids and I could make furniture forts components of their range. This generous concept provided hours of entertainment (and saved sanity) for many families who weren’t sure how to fill all the extra time spent at home. Their audience was reminded of IKEA’s accessibility, and entrenched it’s place as practical, ready-to-assemble furniture.
Another great example comes from Club Med; the holiday brand made famous for its all-fun, no-fuss getaways. They are helping fans recreate the Club Med experience in-home (in as much as is possible) by providing kids club activities and resort favourite recipes on their website.
By taking action now, these brands are retaining their base’s loyalty, by retaining their attention in the absence of a sale. They have delivered well beyond expectation.
Loyalty is in reach of every brand. Get to know your customer. Make promises you can keep. And then: deliver! deliver! deliver!
This content was first shared in Jack Be Nimble‘s #marketingopenmic. Sign up for next month’s session if you want the opportunity to learn new and interesting stuff from the marketing world.
