A Guide to Customer Loyalty: How to Effectively Retain Your Customers

Many businesses have made mistakes that cost them their customer loyalty and retention and damaged the company’s image and financial standing.

Today, consumers have so many options when looking for service providers. That’s why our clients’ loyalty and retention are more volatile than ever.

Since businesses can never be so sure if their customers will continue to purchase their products or services, the financial security of these companies is also uncertain. Anything can go up in smoke overnight.

You should pay attention to two questions: “What is customer loyalty and retention?” and “How do you build customer loyalty and retention?”

This article will try to answer these by answering the biggest question of them all: what is the most direct cause of customer loyalty and retention to retain them effectively?

In this article

Importance of Customer Loyalty and Retention

If you’re a brand manager, marketing director, or account manager, your company role is vital. You’re the one who knows how to build and maintain the brand’s relationship with its customers. Such a relationship is built on trust, and keeping that kind of trust with the clients is a crucial skill that you ought to have.

When customers trust a brand, they are more likely to be loyal to it and thus continue purchasing its goods and services. It means that the business can enjoy an increase in the retention of clients and also maintain its sales and profitability.

Customer loyalty and retention are essential in ensuring the success of a business, and lasting loyalty ensures a lasting business over time. It would be best if you strived to work on loyalty and retention together instead of seeing it as customer loyalty vs customer retention.

How to Develop a Brand that Attracts Your Target Customers

Things are changing fast, so the customers’ needs are also changing. Unfortunately, customers expect more from brands nowadays than they did in the past.

If we think about some strategies for maintaining customer loyalty and retention, one of those is the ability of the brand to adapt and be flexible.

Just imagine that the needs of the GenX customers are no longer the same compared to those of Generations Y and Z. Needs and priorities are changing. New ones appear, so new criteria for purchasing decisions should be something businesses consider.

In a matter of five years, millennials are going to make up about 75% of the planet’s workforce, and they’re going to have that purchasing power. So, what does it mean for your business? It’s vital to have an understanding of what the needs of this new generation are going to be.

By knowing the priorities and needs of the millennials, your business can prepare how to accommodate such needs. When you start to ask, “what is the most direct cause of customer loyalty and retention?” The answer is:

Having an understanding of what’s important to your clientele and being able to provide it

The strategies for increasing customer loyalty and retention are simple, but you need to take concrete steps to make them happen. If customers like what they get from your business, then it’s more likely that they will be loyal customers. It will increase the business’s profitability and strengthen its financial security.

What You Need to Know About the Millennial Clientele

For this section, we will look into the millennial clientele’s characteristics. It’s a way for you to prepare the business for when they become avid customers in a few years. Doing so will allow your brand to thrive through these changing times.

They Have a More Conscious Purchasing Power

The first thing you need to know about millennials is that the products and services they buy talk a lot about who they are as customers and that they don’t become loyal customers overnight.

Millennials are more inclined to patronize brands with commitments, behaviors, and values aligned with their priorities. What does this mean exactly?

The millennial type of client does not simply buy a product or service. They begin and end their relationships with brands for personal reasons. Often, this is due to the company’s impact on society and the environment, whether positive or negative.

That’s why it’s crucial to deeply understand millennial customers so that the brand can adopt a specific behavior that will please them. These potential customers will be able to relate more to these businesses. Such a relationship will encourage millennial consumers to be loyal customers.

They are Concerned with the Environment

As you may already know, the top concern among Gen Z and Millennials is climate change and how to protect the environment. Other concerns include inequality and terrorism, but environmental concerns come first among these two generations.

For your business as a brand manager or marketing director, if you wish to have a millennial clientele and to make your customers happy, it will benefit the company if you start implementing actions that will help reduce the business’s environmental impact. Another is to communicate clearly what the concrete results of those actions are.

The goal here is for the business to lessen the adverse effects that it has on the environment. Also, the brand should be able to share the results of its steps.

When you communicate these results to the target audience, the brand will become more appealing to the generations most concerned with the environment.

But more than that, another thing that the company can do is to support environmental organizations to increase the positive impact of the business further. Also, the company can devote a budget to develop a program to address your country’s many environmental issues. The options here are numerous! Find one that suits your brand best.

They Have Expectations from Brands

Other than the environmental awareness of these generations, they also have certain expectations from the brands they patronize. A study states that millennials see a gap between what companies do and what they ought to be doing.

For example, millennials and Gen Z customers believe companies should lessen their drive to seek profit. Instead, they ought to focus on providing high-quality products and services, improving the skills of their employees, and protecting the environment.

Of course, it would be challenging to meet all of the expectations of these customers. However, it’s a good starting point if you want them to become loyal customers. You can look into what the company can improve and take the necessary steps to address them.

If you start making innovative changes to the company’s priorities, it will impact attracting millennial and Generation Z customers. It doesn’t have to be drastic, but small changes can mean a lot if you want to win the favor of this emerging client base.

Understanding What Could Strengthen or Weaken Relationships with Consumers

It’s also important to look into the different criteria when considering the existing relationships that the business has with millennial and Gen Z consumers.

As we have already established earlier, these generations are volatile. We can say that they are the type that can either deepen or end their relationships with companies.

Some factors that affect these consumers’ relationship with businesses include advertising campaigns, diversity, political positioning, data management, and ethical behavior. If you want to guarantee customer retention, these are some of the points that you should pay attention to.

There are also two interesting points here: the behavior of the company leader and the management of personal data. Let’s delve deeper into these two.

Why the Company CEO’s Behaviour Matters in Customer Retention

Among consumers:

37% of millenials think that business leaders have a positive impact on the world and around 29% of these consumers have ended relationships with certain brands because of the company leader’s behaviour.

If we look into this, we can see an opportunity here. If the millennials and Gen Z do not have confidence in the business leaders, then they have low expectations regarding their positive behavior. It may be easy to surprise them then.

The point here is that since the consumers have shallow expectations of the company leaders, even a tiny action headed in the right direction can help the brand improve image.

You can promote your company’s business leaders and ensure that they adopt the behaviors that millennial and Gen Z consumers will find to be positive. This move might boost the brand’s image and make a difference in increasing customer loyalty.

Management of Personal Data

There was a survey that found that

73% of the millennials and Gen Z consumers are worried about the security of their personal data in companies. 79% of the participants are afraid to be victims of identity theft on the internet.

By having this information, it only makes sense that a third of the participants have already ended their relationships with particular brands that have requested too much personal data.

About a quarter of the participants also did the same since the companies could not keep the data secure or they were over-monitoring the purchasing behaviors of their existing customers.

These consumers are tired of the intrusions and how some companies force themselves on the customers because of the personal data that they have about their clientele.

An example here is when companies become very insistent in targeting their audiences. Ads are suitable, but if your brand appears on just about every platform, people will get annoyed, and customers expect privacy.

This issue is something that businesses should also pay attention to because there’s an opportunity to adjust and improve so that the relationships with the existing customers can be further strengthened.

Companies may begin by being transparent and explaining to customers how they use their data. It would also be better if businesses could share what protection and security protocols they have in place. It’s vital to build a good reputation when it comes to personal data management.

If companies can do this, it can become a real asset, further attracting millennials and Gen Z consumers. Remember that these customers prefer brands with a reputation for being responsible in managing customer’s personal data.

It is expected that you wish to have data and specific metrics on potential customers and follow their customer journey, but be mindful. Try to avoid overly personal forms of communication, such as phone calls.

Consistency

Another characteristic that your business can develop to strengthen its relationship with the consumers is consistency. It’s crucial to understand these two generations. They grew up in an era of economic crisis. Many have become pessimistic about their careers.

These two generations are tired of a world that lacks consistency, where anything can change overnight. Businesses ought to take inspiration from this. If you can establish a relationship of trust with these consumers regularly, then you can position your brand as something that these customers can rely on.

Why It’s Time to Adapt

What we have learned so far is that things are changing very fast. Knowing this, businesses must adapt to the desires and priorities of the two generations that will soon make up many consumers.

With these changes, businesses that will succeed will be those that have been able to adapt to them. Failure to do so will make companies obsolete and old-fashioned.

With Sortlist, we can help you adopt effective communication strategies that match the current situation and audience. These techniques will be ideally suited to your business and the steps you will undertake.

The business environment we have now is so competitive in marketing and communication that teaming up with the right people will significantly impact the business’s success. Sortlist can help you contact the best marketing agencies to get started with the steps needed to reach your target audience.

The individuals that make up these two generations want companies that take on meaningful actions and become vehicles of change. They expect these companies to help improve social situations and protect the environment.

When businesses can meet such expectations, they can capture these target clients and start building relationships with millennials and Gen Z consumers.

Such action tells consumers that companies listen to them and make the necessary changes to be the company they expect.

Learning from Netflix and Apple’s Communication Strategies to Build Customer Loyalty and Retention

Beyond knowing these unique characteristics of millennials and Gen Z consumers, businesses should also be able to develop a sound and growing relationship with them.

Focusing on long-term customer loyalty and retention is integral to the success of the business.

However, it would be best if you remembered that it depends on your brand identity. It’s not simply adopting a particular tone of voice when communicating with your audience. One company’s way of doing it may not work well for your business.

There’s an important distinction that needs to be understood here: there are two types of relationships: peer-to-peer relationships and the dominant-dominated relationship. Depending on your relationship with your clients, the way you communicate with them will also vary. Let’s take a deeper look into these two kinds of relationships.

Peer-to-Peer Relationship

This type implies that you have put your brand on an equal footing with your customers. It means that your business wants to build a close relationship with its clientele. Netflix is one of the best examples of this.

When you check the Twitter page of Netflix, you’ll see how this brand communicates with its audience. It puts itself on the same level as its clients and communicates humorously, which makes the brand endearing to its audience.

However, we must remember that this communication is not the only determining factor for customer loyalty and retention. Another significant factor is the affordability of a Netflix subscription. Imagine accessing so many movies and TV series for a low price. It attracts a lot of customers.

We still have to give credit for how this brand communicates with its clients on Facebook, though.

By having this unique voice, Netflix is building its brand and also strengthening its position in the market.

If we think about it this way, any competitor can provide more movies to customers at a lower price. This would challenge Netflix. That’s why communication strategies are essential because it is what build customer loyalty.

Any business can copy another’s technology and sell it at lower prices. However, we must remember that it’s impossible to copy a brand’s uniqueness. When your brand has established its identity, no competitor can take it away from the company.

That’s why the type of communication you will use for your brand will play an essential role in building customer loyalty and retention. It allows customers to be emotionally attached to your brand.

Dominant-Dominated Relationship

With this type of relationship, the brand is positioned in such a way that it is superior to its customers. This means there is a distance between the brand and its audience. The voice adopted here is less friendly than the other kind of relationship.

One of the best examples of a dominant-dominated relationship is that of Apple and its clientele. You won’t expect Apple to joke around with its audience on its Facebook page like Netflix does. This brand’s identity has an air of seriousness compared to its competitor, Samsung.

Nevertheless, Apple does use a light-hearted tone at certain times of the year. It’s known to have built particular rituals that its audience looks forward to. Apple knows how to make its audience anticipate and get excited about its new products.

Apple strategically keeps quiet so that when it does deliver a message to its audience, it creates a significant impact.

What’s great about this is that it also works when building loyalty. Your audience would want to know what products the company will release next.

However, this strategy will only work if the brand is known for high-quality products, uniqueness, and an inspiring and charismatic business leader. You can see all these characteristics with Apple; that’s why the dominant-dominated relationship works so well.

So, whichever you decide on when it comes to the type of relationship to pursue with your customers, what’s important is that you position your brand in a unique way that will allow it to stand out.

How you communicate with your audience should also perfectly align with your brand identity. Before pursuing any communication strategy, define the brand’s personality first so that you’ll understand how you want to present the brand to new customers.

Sortlist can help you do this by connecting you with the best branding agencies. These agencies will make the process much easier. Expert branding professionals will help you make your brand stand out and become memorable to your audience.

Authenticity and Honesty: How These Will Get Your Brand Through Tough Times

Businesses must be ready for crisis situations because it can significantly impact the brand image. At present, the dissemination of information is so fast that one mistake can reach millions of people in a brief moment.

And it’s not just about people knowing.

Audiences now have the power to comment about it and air their opinions about a situation.

But what does this have to do with customer loyalty and retention? Everything.

Your existing customers will become lost if they no longer wish to be associated with your brand. Potential future customers will most likely crawl towards your competitor if they are unsatisfied with your customer feedback.

There’s a Choice to Make

When companies face a crisis situation, they will be overwhelmed by the criticisms on social media. People may even call for a boycott.

If you ever find yourself in a situation where your business is going through a crisis, there are two ways to react: you can recognize what went wrong or be dismissive about it.

As a marketing director or a brand manager of a company in a crisis, the best step is always to recognize the mistake. While escaping from it all is tempting, it will make everything worse for the brand.

Hopefully, your company will already have an issue management plan, but a business that can own up to its wrongs will act honestly and apologize to the appropriate audiences.

The brand will be seen as one that is mature and responsible. It’s more likely that these businesses will earn a positive reputation for choosing to face a crisis this way.

The brand’s reputation has already been damaged, and it’s up to you to handle this situation.

Weighing your options here, the company has better chances of recovering from the mistake if it acknowledges the situation instead of remaining silent and waiting for things to pass.

Let’s look at two examples of this situation: one company admitted its mistake while the other kept silent about it.

How Delhaize Acknowledged Its Mistake and Used Humour

Delhaize is a Belgian supermarket chain that made a mistake by having a marketing strategy against current trends. What it did was that for every purchase of 20 euros, the customer gets to receive plastic parts similar to Legos.

Source: The Bulletin

These plastic parts are meant to be toys for children. They can use the parts to build a toy store. The problem was that the plastic pieces were contained in little plastic trays wrapped in plastic bags.

Customers will then get two pieces of plastic that are wrapped in plastic. Remember that this marketing strategy was used at a time when consumers were already sensitive when it came to plastic use.

The result of this tactic was that many customers of Delhaize reacted.  The national press even covered the news, and the company quickly found itself in a crisis that needed to be managed.

During this situation, Delhaize had two options. It decided to acknowledge its mistake and issued a public apology for it. This move was the best choice that the company had to preserve its reputation.

Also, Delhaize managed the crisis by using humor, saying, “We got a little carried away.” Through this, Delhaize managed to approach its customers and become open to discussion.

Such a statement stirs sympathy and would want to make the audience read the content of the apology statement. But the company did not stop there. It offered a concrete solution to its mistake by explaining.

Delhaize stated that all the plastics produced because of the marketing campaign could be recovered and ultimately recycled. The company also announced its commitment to supporting an environmental organization.

Delhaize was able to manage to save its business and preserve its reputation.

BP’s Leak and the Fiasco that Resulted from Its Silence

As you may already know, BP is a British multinational company active in the petroleum industry. But on April 20, 2010, it experienced its biggest crisis. It was when the Gulf of Mexico suffered the biggest oil spill ever recorded in the history of the oil industry.

About 5 million barrels of oil were accidentally released into the water. As you can imagine, the effects of an oil spill this massive have been incredibly disastrous for marine life in the region, the tourism industry, and the local community.

This incident was the company’s responsibility, and the public did not like what it did about the situation.

One of the statements of Tony Hayward, the CEO, was that the oil that has been spilled was “relatively small compared to the enormous size of the ocean.”

Because of statements like this, consumers became angry at the company and the CEO. Hayward was consequently dismissed from his post. The lesson here is that three fundamental things were lacking in how BP handled the situation.

First, at no point did the CEO of BP apologize for the biggest oil spill in history. He did not take on that responsibility even if everyone knew that a mistake was made, even if it was an accident, and they didn’t intend it to happen.

And then, with the gravity of that situation, it was not adequately addressed, and the CEO went against public opinion.  It just made the consumers more aggressive toward the company, and without resolving past problems, the company struggled to move forward.

If we look at Delhaize’s open letter of apology, the company went in the direction of the consumers. They acknowledged that they were indeed correct. The company then aligned itself with public opinion. Consumers want to be heard and understood. Delhaize succeeded in reassuring its audience, while the BP CEO did not.

Honesty and Apologies Are The Keys to Customer Loyalty

The takeaway from these two examples is that recognizing the company’s mistakes will allow you to increase customer retention through a strong relationship. You will even have the chance to keep their loyalty and retention in the long run.

If your company ever faces a crisis, be sure to listen to the reaction of your stakeholders. What are the things that they’re blaming you for? Know and understand the mistake and why it happened. Once you do this, you will know where the problem originated.

Follows the apology.  An explanation can lessen the aggression of the consumers toward the company. Of course, you should also state what you plan to do to resolve the problem and the actions your business will take so that it won’t happen again.

Being able to solve a business crisis requires you to have particular skills. It’s about public relations and the necessary skills for crisis communication. If you ever find yourself in a crisis, getting the right PR agencies will be an essential step.

Measure Customer Loyalty and Customer Retention

There are many different ways for a company to measure customer loyalty and customer retention. It all depends on what you consider a loyal customer who will likely return and continue purchasing.

The most important thing to note, however, is that there are multiple factors to consider when measuring customer loyalty. You will need to look at things such as the net promoter score (NPS score range), brand engagement, the customer loyalty index, customer churn, customer retention rate…the list goes on.

Our best advice is to use Google Analytics to help you make these calculations if you have your business on a website. According to Loyalty Lion on the platform, you should take a look at:

1. new vs. returning visitor rate
2. new vs. returning customer rate
3. time to purchases (time log)
4. path length

Final Thoughts on Your Loyal Customers and Their Retention in the Long-Term

Every marketing department should have a way of measuring customer loyalty so that the company can benefit from exciting data on customer loyalty and retention in the long term.

To measure customer loyalty, you can create a loyalty program with your customers and track various factors including customer satisfaction, purchases and ask for feedback regularly.

Don’t forget the answer to what is the most direct cause of customer loyalty and retention.  Honesty is the best policy, and all your customers want from you is dependability and a place for them to be comfortable making their purchases