Cash Flow Solutions

Show Love to Your Customer: How to Increase Customer Loyalty

Barista handing coffee to customer

Valentine’s Day is almost here. Why not show some love to your customers? Customer loyalty is critical to keeping your small business profitable and sustaining growth, so if you haven’t already, now’s the time to look at your customer relationships.

But where do you start? Fortunately, we’ve broken it down into five chapters for you to easily navigate:

  1. How to love your customers
  2. Power of loyalty programs
  3. Designing a loyalty program
  4. Engagement is critical
  5. What to avoid

With this guide, you’ll be able to better increase customer retention and loyalty, and your customers will love you even more than they already do.

How to love your customers

Show your customers some love this Valentine’s Day! They show you love all year long by keeping your business thriving. So, it’s important to give back and make sure they know you care.

When you love your customers, you’re committing to giving them the best quality service in the industry no matter what. To truly display love for your clients, step away from the sale and focus on customer service to make them feel valued.

The merchant-customer relationship is often a thankless one, so delight your clients this February. Doing a little something extra for your consumers can result in a positive experience for your clients, so show your customers how much they mean to you.

1. Romance your customers by creating a customer loyalty program.

By giving your loyal customers coupons and discounts, you are physically expressing your thanks to them and how much you care that they choose your store. Loyalty programs are one of the most memorable ways to express your love for your customers because it gives an added reward, making your clients feel valued while also drawing them back to the store again.

Taking customer loyalty seriously by offering free shipping or other bonuses for frequent consumers makes the customer feel special and important. For a small business, loyal customers and word-of-mouth marketing are irreplaceable, and your current customer base is your best source of business.

So, reward them for all they do for you. We’ll go into details further below about the true power of loyalty programs and how to design one for your business.

2. Fall in love with customer referrals.

Rewarding customers who send new clients your way is a great way to get new business. Show your customers how much you care about them by offering discounts or gifts for referrals. You keep your clients happy, and you keep them coming back and talking about your small business to all of their friends.

But the best Valentine gift is to send Cupid’s arrow to more than just the referrer. Think about rewarding both the customer who did the referring and the new client, as this gives them both incentives to keep spreading the word about your business.

3. Hug your customers with highlights.

Reach out to your customers and let them know how much their business means to you. Admire different customers each week or month by posting information about how they use your business on your social media platforms and websites.

By recognizing all the work your customers do to keep you in business, you’ll make them feel loved. You can also highlight your clients in your store by posting pictures or stories about them. This is a great way to thank your customers for their business and make them feel valued.

Putting a spotlight on your customers also help build a community around your business and keeps them involved. Openly expressing your love for your customers and saying thank you is one of the best ways to reach out to your consumers and build a positive merchant-client relationship.

By reaching out to your customers, you’re opening up a communication pathway that will make it easier for them to reach out to you, highlight you on their social media pages and share their experiences with your products and services.

4. Show them you cherish them through customer service.

Play an active role in your customers’ experience with your product or service. Answer questions effectively and seek out feedback. Teach your customers how to best use your product through blog posts or video posts, and reach out to meet the needs of other consumers.

Ask your customers what they want, and then, if it’s within reason, of course, give it to them. By doing so you show your clients that you truly care about their wants and needs. Settle all disputes keeping in mind “the customer is always right,” and do so gracefully.

Make sure the customer knows you are doing anything you can to make everything right. Companies like Nordstrom are known for their excellent customer service; they regularly allow returns on items within 30 days of purchase and usually items without a receipt.

5. Be your customer’s secret admirer.

Get to know your customer because it makes them feel comfortable and appreciated. By getting to know your customers through social media or spending time with them while they’re in your store, you can build a solid merchant-consumer relationship that makes the customer feel important.

By getting to know your clients better, you can personalize their experience and open the communication pathway to learn more about their needs. Your customer is the base of your business, so understanding them and knowing who they are will help drive sales and build a loyal and happy consumer base.

Send out letters and emails reminding your customers that you appreciate them by offering discounts on certain days or weekly or monthly sales.
Focusing on customer relationships can help your small business grow exponentially. As a small business owner, you have the advantage of being close to your consumer base. You can learn about them and get to know them better than any big business ever could.

Doing so also creates an overall better experience for customers that fits them like no other business does. Showing your clients some love and appreciation is a great way to give back to them and turn them into loyal customers.

Making your customers feel valued by communicating with them honestly and efficiently, acknowledging all they have done for you, giving them discounts and rewards and always practicing outstanding customer service is a great way to give back to the people who deserve it most – the ones who support your small business every day.

The power of loyalty programs

This section was written by Liz Greene is a writer, marketing professional and full-blown pop culture geek from the beautiful City of Trees, Boise, ID. When not stalking the aisles of her local Ulta, she can be found shoveling down sushi while discussing the merits of the latest Game of Thrones fan theories. You can follow her on Twitter @LizVGreene, or check out her latest post on Three Broke Bunnies.

Despite being the key to a successful business, not enough time and energy is spent on cultivating loyal customers. According to the White House Office of Consumer Affairs, loyal customers are worth 10 times as much as their first purchase over their lifetime doing business with you. And it’s not just their purchasing power that serves your bottom line – loyal customers multiply your clientele through a constant stream of recommendations.

To keep consumers coming back, you have to focus on creating a positive customer experience. Service, pricing, recognition, personalization, appreciation and consistency are all elements of customer experience that deserve equal attention. However, today we’re looking at recognition and appreciation; or, to be more precise, customer loyalty programs.

When executed correctly, customer loyalty programs express your gratitude for your patrons’ continued business and acknowledge their part in your company’s continued success. They can also increase your profits considerably. Here’s how:

The Numbers

There’s no way to get around it – putting a customer loyalty program into action comes with certain costs. And since 77 percent of transaction-based loyalty programs actually fail in the first two years, you may be asking yourself why bother implementing one in the first place. Well, let’s count the reasons together:

  • 87 percent of consumers want a customer loyalty program. [Talech]
  • 74 percent of Baby Boomers, 58 percent of Gen X and 41 percent of Millennials claim they would be encouraged to spend with a brand that has a loyalty program [ICLP]
  • More than 45 percent of consumers say the opportunity to earn rewards is a primary driver for purchasing from a brand. [Maritz]
  • 86 percent of members agree loyalty programs are definitely worth the effort. [Bond]

For example, Ulta’s reward program is a transactional-based points system. Each dollar spent results in one point, and once you reach $450 spent in a calendar year, you receive platinum status, which allows you to earn points quicker. These points translate into money off of purchases and can be saved or spent as desired. Points programs often alter the way consumers make their purchases. For instance:

  • 66 percent of consumers modify amounts they spend to maximize points. [Bond]
  • 70 percent of consumers modify when and where they purchase from in order to maximize points. [Bond]
  • 58 percent buy from the stores and brands whose loyalty programs they belong to at least once a month. [DailyBreak Media]

Loyalty programs affect customer behavior in other ways as well:

  • 34 percent of customers say they would not be loyal to the brand if it weren’t for the brand’s loyalty program. [Bond]
  • 75 percent of consumers say loyalty programs are part of their relationship with brands. [Bond]
  • 83 percent of members agree that loyalty programs make them more likely to continue doing business with certain companies. [Bond]
  • 68 percent of women, and 53 percent of men, said that getting rewards from a brand makes them stay longer, and not switch to competitors. [Cherry London]

If you’re wondering how a well-run loyalty program benefits the business, consider the following statistics:

  • The average repeat customer spent 67 percent more in months 31-36 of their shopping relationship than in months 0-6. [Bain]
  • 73 percent of people are more likely to recommend brands with good loyalty programs. [Bond]
  • 75 percent of U.S. companies with loyalty programs generate a return on investment. [Experian]

Simple Ways to Implement a Loyalty Program

Now that we’ve looked at the why, let’s look at the how. Not every business can afford something as large as Ulta’s rewards, but there are many ways to approach the customer loyalty program that won’t bankrupt you.

1. Freebies

Offer something free that’s related to what your customer is already buying. The old standard of “buy x amount of product, get x free,” is both appreciated by the consumer and affordable for your business. You can use the long-established punch card or leverage your POS system for a digital approach. No matter how you choose to do it, tally up their visits and give something back. Once your customers have invested time and money to earn a reward, they’re more likely to continue coming back.

2. Discounts

Offer discounts to encourage customers to come back. Coupons good for a future visit, or special offers printed on their receipt are a great way to thank them for their current business – and invite them to return.

3. Gifts for Referrals

If your customers are kind enough to refer others to you, reward them for doing so. Offer a free product or major discount to any customer whose referral does business with you. If you can afford to, offer something to both your current customer and the referral as this is a great way to cultivate loyalty from both of them.

4. Email Promotions

Encourage customers to sign up for your email list by offering an on-the-spot discount. Once you have their email address:

  • Send coupons and special offers at least once a month
  • Send birthday offers
  • Give advance notice of sales and information on new products
  • Offer opportunities only available to loyal customers.
  • Keep track of what your customers have purchased so you can send personalized special opportunities.

A well-managed loyalty program is one of the best tools for success – but remember that it’s only one part of a great customer experience. At its heart, a loyalty program is about appreciation and recognition. Go above and beyond that program. Always show customers that you’re grateful for their business, and be sure to train your staff to do the same. Most importantly, never take your customers for granted. Without them, you have no business.

Designing a loyalty program

This section is written by Earl Jonathan Tech, an entrepreneur focused on print marketing and advertising. At a young age, Earl founded PrintMeister, an Australia-based company that provides online printing services nationwide. While he is busy with work that is mostly related to print and merchandising, Earl makes sure he’s able to write when he has the time.

Serving your first customer ever is always special and memorable for any entrepreneur. However, as time passes and you get the hang of the trade, competition becomes more apparent. You begin to recognize how important it is to increase customer acquisitions and retain existing customers. And this is where a common problem ensues.

Some of the promotions that businesses offer are:

  • Discounts
  • Sale packages
  • Coupons
  • Bonuses
  • Free merchandise

All of these perks are an attempt to encourage customers to come back in the hopes that they will become the business’ loyal patrons. But do these measures work?

What owners, managers and marketers often do is measure customer loyalty in terms of consumers’ purchase behavior and any patterns they can derive from it. Often, if a client has purchased your product or services multiple times over a given period, then she or he is identified as loyal. This assessment covers two types of customers: the ones who genuinely enjoy your products and keep purchasing them are considered loyal, and those who are merely buying your goods or services as a last resort are called frequent customers.

Frequent vs. Loyal

What exactly is the difference between frequent and loyal customers? Is there even any difference? In general, loyal customers are regular patrons, but not all frequent customers are loyal. Loyal customers often don’t mind paying a bigger price for a product or service of a brand or business they trust even when they have the option to purchase something similar for a lower cost. These loyal clients are also more often than not proud of the products they are using, and they can be the best marketers a brand can ever hope for when they are convincing other people to follow suit.

The iPhone is a perfect example of a product with loyal consumers waiting for the annual release of its new model. There are other great phones worthy of competition, but there are loyal customers who continue to support Apple products even if they have to pay a larger amount of money. Apple has been selling exclusivity and prestige to its growing loyal customer base, and that is one edge it has over other tech companies.

As for frequent customers, they purchase products not necessarily because they prefer your brand or they trust your business like loyal customers do. Instead, they buy goods and services either because they lack other options or because your offer is less than other brands. Frequent clients are the kind of consumers who will continue buying from or transacting with you until they find another brand that will offer them better products or give them greater discounts.

To put it simply, frequent consumers may continue buying your goods and services as long as they find no alternative in the market. On the other hand, loyal customers will choose your products even when other competitors have a similar offer simply because they have formed an emotional bond with your brand.

Now that we have differentiated loyal from frequent customers, let’s take a look at how you can build your brand’s relationship with your devoted customers.

Advantages of loyalty programs

A loyalty program can significantly help you take care of your customers. But before you kickstart one, you have to familiarize yourself with what that program can do for you and your customers.

When you implement a program right, you can encourage people to proactively choose your products. The programs can also invite would-be loyal customers to shift to and stick with your business. Also, word-of-mouth is a robust and inexpensive marketing strategy that can be born out of such programs, and this move works well with a loyal following. Any loyalty program may also provide you with the right data on consumers’ spending habits, and you can use such information to refine your marketing strategy.

Program planning

To come up with an appropriate program, you need to establish goals, identify key customers and their product/service preferences, select a program type and come up with a method for recording participation.

Establishing goals is about being clear about your motivation as a business owner or manager for creating a loyalty program. If you are still starting out in the industry, your program objective may be to gather as many prospective loyal clients as you can.

If your business already has a loyal following, then your goal could be to make their experience with your product more enjoyable or make transactions with you more profitable. And if you’ve lost some loyal customers and hope to regain their patronage, then a loyalty program might just do that for you. You can also use the program to gather data on your consumers’ purchasing decisions and preferences to help you streamline your marketing campaigns.

Using a CRM system may help you identify your most loyal, and therefore profitable, customers. And by understanding the reasons why your loyal customers prefer your products, you can better design programs with rewards they find appealing. Consequently, with that kind of data on hand, you can better manage your loyalty program as well.

When choosing a program type, you have to take into account the spending habits of your customers. Remember, although a loyalty program serves to benefit your business, in the long run, it does so by putting your customers first before everything else.

The types of programs you can implement range from points-based marketing that will reward gift certificates to special promos that give away custom-printed business cards customers can use to claim select merchandise. These programs may also be open to all clients or exclusive to well-performing ones only. Whichever kind of program you decide on, you have to base it on the preferences of your customers for it to work out well.

Figuring out how to track customer participation is extremely important because it will help you gauge the probability of your program’s success. Doing so will also help you save time and money.

Loyalty program testing

Like any other programs you develop, it’s important to test its viability. You should implement a pilot program to make sure that everything works according to plan.

To run an initial test, implement your program first on a small-scale basis by inviting a limited number of people to use it. If you want to gain a loyal following, invite various types of clients. If you want to develop your business relations with your customers further, attract the most loyal on your list. If you want to regain customers you lost, then target people who decided to go with your competitors.

Once you run the program, take note of the problems you encounter. You will have to address each one to guarantee a smooth implementation of the program. After addressing every issue, advertise your program extensively to your niche market to make sure there are plenty of participants during the launch and days to follow.

Run and manage your loyalty program

Loyalty programs do not exactly have an expiry date. Unless your program didn’t work or you need to transform it into a new one, the loyalty program requires maintenance and continued improvement. The most successful programs are often the most useful to both business and clients. As such, business teams must regularly monitor their plans to make improvements.

As mentioned earlier, running a program helps you gain a lot of insight into your customers’ purchasing practices and preferences. As you acquire new information, you can then develop fresh ways to generate consistent engagement from your customers, and in turn, encourage more rewarding transactions.

Keep in mind that managing the program means putting the data you gathered to good use, monitoring your results and making the necessary adjustments to improve the program.

Designing and implementing an effective loyalty program is one way to take care of your devoted customers. Doing so requires careful thought and consideration, and it takes time and effort to manage it well enough for it to become beneficial to both clients and business. But all the planning and work will pay off once you retain your most faithful customers, draw new ones or inspire old customers to return.

Engagement is critical

A lot of small businesses put customer support on the backburner when starting out. With mantras like “sell more” and “focus on growth” driving them, entrepreneurs tend to believe they have too many other priorities that take precedence over talking to customers.

But it’s no longer enough to merely support a customer. Businesses have to engage with customers if they hope to maintain good relationships and keep them coming back. The level and quality of support that a business offers right from its first customer can make or break the brand merely due to word-of-mouth, even more so in the age of social communications.

Still confused about why and how a small business should go about engaging with customers? Here are five reasons:

1. Happy customers are the best champions for your business.

It doesn’t matter how brilliant your idea is if you can’t get people to buy your product and happily share their experience. How do you let your customers know about the benefits that your solution provides?

Focus on listening to your customers and interact with them via email, phone or social media. Do they like your product? Will they recommend you to their friends? Do they engage with your business on social media?

The only way to get answers to such questions is for businesses to talk to customers early and frequently. And you can avoid overloading your team by setting up a helpdesk to efficiently manage communication.

2. Customers use more channels to connect with a business.

No matter how big or small a business is, it just takes that one good experience for one customer to make you go viral and catapult you to fame. And to provide that good experience, your business should be present where your customers are – social networking sites.

With 40 percent of the world’s population using social media, it’s absolutely necessary for businesses to maintain an online presence if they wish to engage with customers and have a say in how the public perceives them. We know how challenging it can be to manage conversations across websites and channels. So, integrating with Facebook and Twitter right into a helpdesk will help manage all communications from one place in peace.

3. Make your relationship with customers more personal.

Email and social networking sites are excellent channels for sheer volume and efficiency of engagements when it comes to talking to customers. But some customers prefer a more personal touch when they receive support. The presence of a human agent on the other end of the phone line and the immediacy of responses will make your customers instantaneously more comfortable.

So, if you wish to provide better support to customers and make them feel truly cared for, the phone channel, when tightly integrated into the helpdesk, is your best bet.

4. Your customers are the best source of feedback to improve your offerings.

“That was a great comment from my customer, but I can’t find the post-it where I marked it down…” – We know it’s a common scene and we all have lived it multiple times.

As customers are becoming more sophisticated and more vocal about their expectations, you simply can’t afford a drop-in communication and pave the way for an expensive churn. Make sure you have a feedback process in place so that your customer input is always taken into consideration and your team can keep track of and act on it.

5. Build consumer trust in your brand.

There’s no quick way to earn credibility. If you wish for customers to trust your business, the best bet is to consistently provide them with a stellar experience that makes them come back – right from the moment they first see your product to the help they receive when things go wrong and beyond.

What to avoid

If your business is struggling to attract brand advocates, generate referrals or suffering from a high customer defection rate, now might be a good time for you to determine whether any of these ten customer relationship breakers could be to blame.

When you think about customers as a group, it’s easy to lose sight of the fact that for each one of them, the relationship with your business is one-to-one. Losing one or two relationships along the way could be circumstantial and unavoidable; however, losing relationships on a regular basis might indicate that your business is the one to blame.

If your organization is losing a significant number of customer relationships, it will become difficult to gain enough new relationships just to break even, let alone grow. Plus, those new customer relationships are expensive.

Customer acquisition can cost up to 25 times as much as customer retention tactics – and that’s just the tip of the iceberg. Increasing your customer retention even by 5 percent can increase your business’s profits anywhere from 25 to 95 percent. Also, happy repeat customers can become a Defacto word-of-mouth marketing channel, driving new referrals to your doorstep at virtually no cost at all.

Obviously, we don’t believe that a business owner would consciously be looking for ways to lose customers before Valentine’s Day, but the reality is that there are small business owners out there who are agonizing over high customer churn rates and the negative impacts that follow.

For those business owners who are looking to boost client retention and loyalty, here are ten customer relationship-related dynamics that could damage – or even destroy – customer relationships.

1. Break a promise.

Corporate values, guarantees and marketing all constitute “promises” in the eyes of customers. If your organization disappoints in an area that matters most to a customer, the customer is likely to feel deceived, lose trust or even walk away forever.

2. Pull a bait and switch.

Have you ever met someone who pretended to be something better than they really were? If a customer feels like your business or its products or services aren’t what they thought it was (or has changed in ways they don’t like since the relationship started), they might break up with your business.

3. Undermine the foundation.

Many small business owners will readily assert that their employees set their business apart, but that’s not always reflected in the way employees are treated. Demoralize or disincentivize your staff (the people who are foundational to the customer experience), and there’s an excellent chance that customer relationships will be negatively impacted in the process, and some of these customers will walk away.

4. Fail to apologize.

Sooner or later something won’t go as planned in a customer transaction. Whether or not your organization is to blame, a sincere apology, wherein the customer feels that you truly feel bad that they felt bad in the course of doing business with you, is often the fastest way to mend the relationship and forestall any negative consequences.

5. Don’t dress up for the date.

You probably wouldn’t show up for a date wearing dirty, holey sweats with disheveled hair, looking like you simply didn’t bother. Likewise, your business should be ‘dressed up,’ clean and looking it’s best for customer dates, whether they occur within a brick-and-mortar or virtual location.

6. Be self-obsessed.

We’ve all known “that guy” who did nothing but talk about himself in an effort to make you believe that the honor of being in his presence was all yours. And no one wants to spend time with him! Stop talking so much about your business. Instead, talk about your customer’s interests, concerns and obsessions instead.

7. Play favorites.

While it’s important to recognize and reward your “best customers,” it’s also vitally important that you don’t make others feel like you’re playing favorites (at their expense) in the process. If a customer believes that they aren’t getting your best deal, your best service, your full attention, etc., because you are bestowing it on others, they may look for a better relationship elsewhere.

8. Make them look bad.

If a customer has done your business the honor of referring a friend, family member or co-worker to your business and you let them down, they might leave for a competitor who won’t make them look bad to the people whose opinions matter most to them.

9. Take advantage.

In healthy relationships, it’s natural and normal for both parties to do favors for one another and even go out of their way to help the other person. When one party feels like they’re giving more than they’re getting, it often leads to the end of the relationship.

If you constantly ask customers for favors (giving your business good reviews, referring friends or family members to your organization, supporting your community or charitable causes, etc.) you may inadvertently be taking advantage of their goodwill, and, in the process, lose it. Be sure that the “favors” you want from customers are tied to rewards and recognition.

10. Avoid defining the relationship.

If a customer feels like you’re looking for a one-time score at the expense of a long-term relationship, they’re just as likely to take what they want and leave, too. Make sure they know you’re in this for the long haul and are there to help them get what they need.

Avoiding these steps will help you retain customers while increasing customer loyalty. Take a deep look into your customer relationship strategy to see if there are any areas you could improve on. The more customers love your business, the more they’ll shop there and refer their friends and family to shop there as well.

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