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How to improve customer loyalty & keep them engaged

30 Apr 2021

All businesses must strike a balance between delighting existing customers and courting new ones.

The old-world view was that it cost a company five times as much to court and convert a new customer than to keep an existing one coming back. In the digital age, it might be cheaper to attract customers, but loyalty is harder won and more easily lost.

New figures from dotdigital, which surveyed 100 global ecommerce brands, found that almost four in 10 shoppers don’t see themselves as ‘loyal’ until they’ve dealt with a company five times or more.

A company can’t grow if it’s haemorrhaging existing customers faster than it’s wooing new ones. So it makes good commercial sense to prioritise customers who have already made their brand choice – especially when they’re likely to become positive influencers if their experience is exceptional.

Consider the viral impact of that glowing online review. Conversely, think how many prospective customers would be put off by a searing and painfully detailed public complaint.

Yet, too often, even the best-known brands make the mistake of offering their best rates on insurance products, bank accounts or energy bills to those currently buying from competitors.

According to the previously mentioned study, 80 per cent of UK brands (thought to be among the most advanced in e-commerce) fail to reward customer loyalty today.
So how can organisations become more effective at thrilling long-standing customers?

Don’t rely on inertia

Never take anything for granted. The easier it is for customers to switch bank accounts, electricity providers, phone companies, supermarkets and so on, the harder these companies need to work to retain brand loyalty.

Switching brands is easier than ever before thanks to third-party apps such as Uswitch for utilities or banking, or comparison sites like MoneySuperMarket.com or GoCompare for insurance. These sites make it especially convenient for customers to assess and move across to a new provider.

Often, customers can automatically carry over no-claims bonuses, direct debits, mobile phone numbers and more to the new provider.

Even the convenience of modern payment services like PayPal plays a role. Using such facilities saves people entering their address and bank details each time they buy from a new online retailer or service provider. Add free delivery and easy returns, and the barrier to ‘shopping around’ is being lowered all the time.

Traditional loyalty schemes used to reward existing customers with points or discounts for their continued business. The more they spent with a brand, the more discounts and benefits they could accrue.

But as customer expectations rise, and competitors and market disruptors keep raising the game with dazzling new incentives to switch, companies can’t rely on these older strategies alone.

Some companies have designated ‘customer appreciation’ strategies, based on the positive impact of recognition and gratitude on people’s happiness. It’s part of the reason eBay encourages two-way reviews – i.e. of buyers, as well as sellers.

Make existing customers the target for new innovation

A more effective and sustainable approach to business retention is to keep innovating for existing customers.

This includes surprising and delighting them with new features, savings and services that make them feel good about sticking with the brand.

Customer innovation also includes telling them more about the good things the company is doing – reducing its carbon footprint, improving the working conditions for its people and supporting local communities.

Early in the COVID-19 pandemic, Pret A Manger rolled out free hot drinks and a 50 per cent discount on any other product for NHS workers, supported by empathetic messaging in its promotions in stores and on social media.

Staying closely connected to customers is an important part of this strategy. During the peak of the Covid-19 pandemic, companies with a clear line of sight across all customer touchpoints were best positioned for this – as more customers went online, for instance.

Offering discounts and promotions via social media keeps existing customers checking back in to see what the company is doing, as does using their historical account data to personalise offers – perhaps via a mobile app.

Recognising a customer’s several years of loyalty, or acknowledging a recent change in behaviour that might indicate they need help, can go a long way towards making long-standing customers feel special.

‘Have this one on us’, ‘Enjoy your stay in New York with this special voucher’, or an unexpected discount, can all leave customers feeling better about a brand. Especially if the customer wasn’t even conscious that their spending or brand enthusiasm had tailed off.

It’s often the unexpected rewards that are most likely to drive customers to share their delight in reviews and on social feeds.

Mine customer data for insightful trends

The great thing about existing customers is that their behaviour offers companies rich information, even if marketing and product innovation teams can only access and use this within strict privacy parameters.

If a customer has spent a lot with a brand historically, but has a track record of complaining about poor experiences, the company can use that information creatively to drive new services. For instance, offering more detailed billing breakdowns, better tracking information, or a new customer portal or app that lets people do more for themselves.

Above all, loyal customers like to feel listened to. So a bit of research and sentiment analysis is an important first step in determining where to start with any improvements to their overall experience.

Find out how to improve customer engagement and loyalty.

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