Customer Loyalty as a Guarantor of Company Success

September 9th at 2:49pm by Susan Levermann

Back in the day, everything was better... at least when it came to shopping behavior and possibilities. You could only buy what was available, online shopping was a distant fantasy and on Saturday the shops closed at 1 p.m. Anyone wanting to shop on Sunday had to wait until Monday. Nowadays you can shop 24 hours a day, seven days a week for the widest variety of products and purchase them with one click – back then this was impossible! Oh yes, the good old days: from point of view of the company and employee, it was probably much more pleasant. Consumers bought in the store closest to where they lived, as there was not much choice. Companies did not have to deal with customer loyalty measures, as the competition was not usually a real danger. In 2019, things are very different: and it is exactly those factors making buying experiences more enjoyable for consumers that are a real challenge for companies. Customers on the internet can access a huge range of products and can be much more flexible in their choice. For companies and brands, this means constant competitive pressure and uncertainty. That is why it is all the more important in today's age to bind customers to your company or brand and generate customer loyalty. Customer relationships need to be maintained and nurtured in order to build a tribe of loyal customers and to ensure long-term profitability.

What Customer Loyalty Means

customer loyalty is a marketing term. It describes a state-oriented, static view that can change at any time, indicating a customer's attitude, i.e. loyalty, to a business. Depending on the industry, the intensity of that loyalty to the company or to the brand differs.

Some use customer retention as a synonym. Although this is also a state, it is a process that includes active processes on the side of the company. Therefore, customer retention and customer loyalty clearly differ and should not be used interchangeably. It should be recognized though, that customer satisfaction is a prerequisite for positive customer loyalty. However, customer loyalty is not the only factor, as a lack of alternatives can also lead to customer retention.

The term brand loyalty should however be avoided, as it describes a very specific type of customer retention, carefully aimed at specific brands and thus company branding. Customer satisfaction, on the other hand, refers to the perception and quality of the relationship between the company and the customer. Here the customer compares their expectations with their fulfillment by the company. Depending on the size of the discrepancy, a customer may or may not be very satisfied. From the customer's point of view, the difference between their expectations and reality is the measure of customer satisfaction.

customer loyalty is therefore a characteristic that distinguishes regular customers. Regular customers are also referred to as existing customers. Both terms describe buyers who purchase a particular product or from a company more than once. This is in contrast to new customers and first-time buyers who are at the beginning of the company-buyer relationship. customer loyalty is therefore an important prerequisite for making regular customers out of customers.

The terms now seem to have become clear in theory, but why should marketing and management treat customer retention as such a high good? This is precisely the question that the following paragraph deals with.

Customer Loyalty: The Business Case

In marketing and some other departments, the unflattering term “cash cow” is sometimes used to describe customers who regularly buy products and services. These consumers help make the company big profits. This term originates from the two-class society of buyers, consisting of new customers or first-time buyers and regular or repeat customers; and the behavior of the seller towards these groups.

In some industries, it is common to roll out the red carpet for new customers, bait them with promotions, provide them with a special service, and make them the ultimate goal of the acquisition. Existing customers, on the other hand, are only supplied with the necessities. After all, they may have already signed a fixed contract – so why should anyone invest resources on customers who are already tied to the company?

This may be the case, but then these customers will not feel satisfied with this treatment. After all, every customer should feel like royalty and not a single customer should not be left behind, under any circumstances. This can bring extremely negative responses, as all customers have two sharp weapons that they can use for or against a business: Their loyalty and willingness to make recommendations.

Loyalty to a brand or provider promises regular repurchases, and recommendations mean potentially interested new parties and therefore new customers. Both should be seen in marketing as a guarantor of more revenue. Still skeptical? Then taking a look at the following studies and figures helps:

The Numbers Don't Lie

  • Bain & Company, the management consultants, have calculated that a five percent increase in customer loyalty can make a company up to 75 percent more profitable
  • According to the study ROI of marketing measures for existing online customers, investing in this area can have a huge impact. If retailers manage to transfer 1 percent of new customers to re-purchasers, sales can be increased by about 11 million euros.
  • Customer reviews are the most important decision criterion for consumers when shopping online. Two thirds of respondents use customer reviews in online shops as a decision-making tool before purchasing products. This was the result of a representative survey commissioned by Bitkom.
  • "Good reviews bring good sales". This should be the leading principle in eCommerce. If products receive positive reviews, their sales increased, making reviews important revenue drivers. This is Spiegel Research Center's findings on the value of recommendations.

And this is only a small cross-section of the studies and experts who explore the concept of customer loyalty and its connection to recommendations as a guarantee of success. By now, at least, one should realize that the weapons customers have should be well observed and at best used for their potentially positive purposes. But how can you achieve this?

Customer Loyalty: 7 Expectations of Buyers

If a customer is satisfied, i.e. their wishes and expectations were at least met, or even better, exceeded, then this is a very good prerequisite for customer loyalty. This results in a stronger customer retention, ultimately turning a customer into a regular customer. It becomes clear that a company must know the wishes and expectations of its clients in order to meet them. This is achieved by clearly defining the potential customers, carefully analyzing data collected from all possible channels and incorporating its evaluation into company strategy.

In general, seven expectations can be found on the customer side:

  • Convenient customer service
  • Short response times
  • AccuracyHigh credibility
  • Continuous accessibility
  • Generous/Fairhanded handling of complaints
  • Online and offline accessible

If you want to meet and exceed these basic expectations, you can further develop customer service with concrete measures.

Three Measures to Meet these Expectations

You could try to meet all of these expectations now – or you could evaluate which really makes sense in your own company and in which areas you want to reach which level of customer satisfaction. First, a company must determine what standards it is willing to meet and what the guidelines are.

Not every customer request has to be blindly implemented. In order to establish authentic and structured customer management, it is important to organize processes with regard to the company philosophy on predetermined guidelines. Such a reorganization does not happen overnight but is a long process that must be guided by marketing and management.

These guidelines should then provide the framework within which expectations are to be met, and you can now address the basic customer requirements:

1. Comprehensive Service

Comprehensive customer service addresses some of these expectations: It ensures a quick response to requests, allows accessible communication across multiple channels, monitors the accuracy, and takes care of all customer concerns, such as complaints. The topic of accessibility is addressed here as customer service must provide the first contact point for all customer concerns and ensure the company's vision of service enters every aspect of communication.

This comprehensive package can only be managed if you regularly question and improve customer service. All employees who come into contact with customers must be empathetic and friendly and both fully understand and internalize this service idea. It also means regular training, a look at the possibilities brought by modern technology as well as the development of employee’s innovative ideas. Because if employees feel valued in their profession, they are also willing to give that extra level of commitment.

Therefore, the following applies: Staff must feel comfortable in order to pass on these positive emotions to the customers. They can only do this if they really support and understand the company, all its products, and its philosophy.

2. Authenticity

The authenticity of a business describes its credibility. This is influenced by all actions, practices, values, and activities that the company undertakes. Not only does this include the product and advertising, but also the interaction with employees, service providers, competition, and – of course – the customer. Only when all facets of a company have a uniform image will it become credible for customers. With this credibility, trust in the company and its promises grows.

Therefore, it is essential to align all internal and external processes according to a modern philosophy or codex and to really follow it. This is not just about slogans such as sustainability, empathy, or profit orientation. Particularly desirable is an elaborated document with several dedicated chapters, which are intended to capture the soul or "spirit" of the enterprise. Such a corporate philosophy is the perfect prerequisite for employees and customers to identify with the respective values and for the company to be authentic.

3. Omnipresence

There are hardly any industries where it is enough to open a shop and wait for the customers to appear. Today, customers expect at least one website and possibly a blog, activity on social networks such as Facebook and Twitter, but also other channels where the company presents itself. This omnipresence is desirable and should work smoothly on all devices. When switching from smartphone to PC, barriers often prevent smooth shopping. Shopping becomes even more enjoyable when relevant TouchPoints are thrown into the mix.

If you want to deal even more intensively with the wishes of loyal and regular customers and take necessary measures to satisfy them, you can find out more about so-called existing customer care. Of course, in addition to appropriate measures, there are also mistakes that can jeopardize customer loyalty.

Customer Loyalty – These Four Mistakes Should Be Avoided!!

There is no longer any need for marketing or management to fall into these traps. Those who pay attention to the following sources of danger are fore-warned and can prevent customer dissatisfaction.

  • Only paying attention to new customers
    Those who still prefer to put their resources into new customers should not be surprised if they train their customers to be unfaithful. It is therefore quite clear that the product must be and remain attractive to regular customers. Whether you implement this with extra discounts, credits, bonus promotions, or collection of points is up to you.

  • Intrusiveness is a no-go
    When you look around a shop, you don't want to be approached by assistants all the time. It is enough to keep an eye on the customer and to react to open signs of helplessness. Even online, intrusive chat windows or pop-ups can annoy you if they cover the important content and cannot be easily closed. Nevertheless, the offer of contact should be obvious and easy to implement.

  • Only focus on sales and not on the customer
    Anyone who sees a customer and immediately has euro signs in their eyes should get used to this as soon as possible. Customers immediately notice when it comes to money. Instead, they want to be taken seriously and supported by their personal concerns.

  • Don't push nonsensical products
    Taking the customer seriously also means not imposing nonsensical products on him or her just because they are currently on offer. If you are acting with your head screwed on, you will only ever recommend products that correspond to their purchasing behavior. Here you can confidently draw attention to special discounts because this is certainly in the interest of the customer.

If you manage to use these potential errors as a basis for even more targeted development of the customer approach, you can look forward to stable customer loyalty. At this point, the question often arises whether and how to make customer retention visible.

Increase Customer Loyalty with NPS

The Net Promoter Score is a great way to determine consumer satisfaction. zenloop software effectively helps to calculate and evaluate your NPS. This key metric is obtained by a customer survey. Instead of a long feedback sheet, all they have to do is answer the question of whether they would recommend the product or service to friends. The enormous advantage here is that large amounts of data can be easily evaluated.

Loyalty Must Be Rewarded

The benefits of customer loyalty mean cold hard cash thanks to loyal customers, but this profit is not for nothing. The loyalty of buyers must not only be rewarded but also promoted by both marketing and management, as this is closely linked to customer satisfaction. It is only when customers feel taken seriously and valued as buyers that they feel a strong connection to a company.

These emotions must be built into marketing, as the company sets itself up accordingly and controls its entire external and internal perception on the basis of an elaborate philosophy. Credible companies are valued by customers and receive positive recommendations – an argument for new customers to simply test the company. This means that everyone in the company must pull together to achieve this goal.

customer loyalty is a factor in marketing that can have a decisive impact on the profitability of a business. But this can only be achieved if a company manages to use this loyalty for itself and to constantly strengthen the customer's satisfaction. All the customer's experiences during their customer journey count. For this purpose, it is necessary to deal with this journey in detail. Because only through current and innovative knowledge and the corresponding implementation in marketing and other areas can one assert one's place in today's fast-paced world on the global market!

Susan Levermann

Content Marketing Manager