There is one essential rule in customer relationship management that you certainly know. “Retaining a consumer costs less than finding a new customer.”
And that’s true! A satisfied customer will be more sensitive to your offers, especially if they are personalized, and will no longer have to be convinced of your professionalism. It is easier to sell products and services back to you without expensive marketing or advertising campaigns.
However, it is common to think that with the Internet, customers are more volatile and it is difficult to retain them. It’s wrong. A study conducted for Zendesk shows that72% of customers become loyal when customer service is at the top. These same consumers claim to consume more afterward. In addition, 54% of Internet users say they are tempted to become regular consumers if the brand or company
offers a loyalty program.
Creating a lasting relationship with your customers has a lot of benefits for your business. In a context marked by fierce competition, globalization, and consumer volatility, loyalty is an essential strategy to consolidate your market share and develop your business. Loyalty strategies go upstream through better customer knowledge.
Loyalty programs are part of a customer relationship and loyalty approach. They have become a key tool in a context of increased competition and consumer volatility. To be effective, your loyalty program must be backed by a proactive customer knowledge strategy.
So how do you implement a Edenred Singapore‘s loyalty strategy that will allow your customers to come back to you after their first purchase? Here, are the reasons that how building customer loyalty programs can benefit your business.
It’s cheaper than buying new ones
This is one of the strongest arguments, often overlooked or ignored by marketers. Most marketing and sales teams are focused on the acquisition while sitting on a gold mine. This gold mine is all the customers who are “already there.”
“It is true, to retain a customer, whether through reward programs or various financial benefits and varied at a cost”. It’s undeniable. But this cost (which must be considered as an investment) is lower than the cost of acquiring new
Today more than ever, acquiring customers, conquering new market shares is a real obstacle course, because of the competition. The return on investment of prospecting shares is not always the rendezvous, far from it. In fact, the strategy of acquiring new customers almost always results in a price war with competitors, economically ruinous.
Loyal customers buy more than others
As part of a study on brand loyalty, the consulting firm CSC Peat Marwick interviewed several major retailers. We are in the late 1990s, but the lessons of this study are still relevant. 93% of the companies surveyed said that loyalty was a competitive advantage for them.
More importantly, while repeat customers accounted for an average of 20% of their total customer base, these same repeat customers accounted for 80% of total sales. Other studies, more recent, go in the same direction. Bain & Cie, for example, has shown that increasing the retention of the best customers by 5% led to an increase in economic results of 25% to 55%.
These figures are revealing: they clearly show that a loyal customer buys more than others. And above all: that they buy more often. A loyal customer is a repeat buyer, unlike a non-loyal customer. Increasing your customer loyalty rate is therefore quite decisive from an economic point of view. Loyalty positively impacts the turnover and profitability of companies. Expenses incurred in loyalty actions are therefore quickly profitable.
A loyal customer is less volatile
All companies can make the observation: consumers are more and more volatile. There are several reasons for this phenomenon, which we have already briefly mentioned above. To limit this volatility, the impact of which can be catastrophic for a company, it is fundamental to adopt a customer-centric approach. Supply must adapt to demand!
Loyalty, by creating an emotional connection between the customer and the company, also reduces the volatility of customers. One could also invoke the argument of the
exit costs of a loyal customer, which goes in the same direction.
In the absence of sufficient customer loyalty, Orange, SFR and Bouygues Telecom lost hundreds of thousands of customers as a result of Free’s arrival on the market. These phone companies have since understood the importance of loyalty and have made great efforts in this direction, as everyone can see.
A loyal customer can become an ambassador for your company
A loyal and satisfied customer will tend to recommend the company to those around him, to become an ambassador for your brand. Word-of-mouth and prescription, at a time of social networks, have very important economic effects, which it would be dangerous not to take into account.
That’s why relying on customer loyalty allows you to acquire new customers. Ultimately, building customer loyalty “already there” and acquiring new prospects are not two opposing approaches. Opting for a loyalty strategy is to kill two birds with one stone.
A loyal customer can help improve your offer
A customer who loves business appreciates customer service and enjoys the products they sell tends to develop an emotional connection with that same company. A loyal customer will be more than happy to participate in improving your services and your catalog, by answering an online questionnaire or by bringing your own ideas (on the crowdsourcing model). Involving your loyal customers in improving your offer will, in turn, reinforce your connection to these same customers.
The loyal customers have a positive impact on the staff of the company
It is always more pleasant for an employee to deal with satisfied customers than dissatisfied customers. Increasing customer satisfaction through loyalty also improves the social climate in your company.
More generally, it is rewarding for an employee to belong to a company valued by his clients. But as everyone knows, a “happy” employee at work is a more productive employee. Loyalty also has this effect, often unnoticed.
Loyal customers help reduce support costs
Retention of your customers will help reduce your support costs. A customer who is loyal is a customer who knows by definition the operation of your services. He is more autonomous and needs less help than a new client. As you may have already noticed, the majority of customers who contact customer service are new or recent customers who are not yet used to your services.
There are probably other reasons that favor the loyalty of its customers. But those that have been discussed here are already largely sufficient to make you aware of the central role of the loyalty strategy.
Finally, we must emphasize this point: all effective customer loyalty strategies are based first and foremost on good customer knowledge. It is an indispensable prerequisite. If you do not know exactly who your customers are, what they like, their expectations, what satisfies them into your business, the points they consider to reverse negative, you will not be able to satisfy your customers and has a portion to turn them into loyal customers.