Earning a customer’s loyalty is critical to business success. It is often far easier (and more cost-effective) to retain existing customers than it is to find new ones, but how exactly do you keep them coming back for more?
By James Bayhack , director: sub-Saharan Africa at CM.com
Some believe that you can earn loyalty by delighting customers or that a positive emotional response works best. Others would argue that we shouldn’t use the term loyalty at all because it’s misleading, and no one can ever really be ‘loyal’ to a brand anyway.
I believe that there are three principles that guide great customer service. The first is to meet customer expectations so that your customers don’t have a reason to leave your brand.
The second is to build loyalty by making their shopping experience as seamless and hassle-free as possible. And finally, exceptional customer service is about optimising the customer experience by actively gathering and collating insights about your customers’ expectations and needs.
Rooted in strong commercial logic, these principles help team leads manage stakeholder expectations about what customer service should (and shouldn’t) be focusing on. They can help identify which services can add the most value and where these can have a maximum financial impact.
The 2021 Truth & BrandMapp Loyalty Whitepaper revealed that as much as 74% of economically active South African were using loyalty programmes in 2021.
But can customers truly be ‘loyal’ to a brand? Let’s take a look.
Dogs are loyal, customers aren’t
In this Oracle report, consumer behaviour expert Philip Graves explains that, in psychological terms, being loyal is just not something that applies to humans and brands. Loyalty is an emotional restraint that keeps humans within the ‘safety of the herd’.
When we don’t act in accordance with social ‘rules’ or norms, we feel shame and guilt. Without shame and guilt, loyalty cannot exist. And no one should believe that consumers feel so bad about leaving a brand that they will experience shame and guilt.
So, while customers can indeed keep on using your products, this is not actually ‘loyalty’. Graves believes that repeated use comes down to how good your product is.
All this is worth keeping in mind. The word loyalty will not disappear from the business lexicon any time soon, but it is always good to be clear on what we are actually talking about.
Poor customer service is the biggest cause of disloyalty
While online shoppers buy from you because of your product or brand, they often jump ship due to poor customer service.
Customer service is typically the most significant contributor to brand disloyalty. Therefore, it’s fundamental to prevent customers from leaving in the first place.
The first priority of your team should be to address speed, friendliness, and effectiveness in meeting customer expectations. Modern customers also demand personalisation. They want brands to evolve with their specific needs in everything from products and services to experiences, moving beyond traditional offerings to something attuned to their unique lifestyle, interests, and activities.
Without reliable and personalised customer service in place, your marketing department could be fighting a losing battle from the start.
Satisfaction and spending are not indicators of loyalty
Many retail brands see customer satisfaction as a great indicator of customer loyalty. But as Frederik F. Reichheld, the inventor of NPS (Net Promoter Score), established many years ago, satisfaction isn’t always connected to actual customer behaviour and revenue growth.
However, this doesn’t mean that satisfaction isn’t important to measure. Satisfaction determines a customer’s attitude towards their latest interaction with your brand — nothing more.
More so, your highest-spending customers are probably spending their money on your competitors too. Many retailers believe that a high average spend translates to brand loyalty. But as this McKinsey study found, close to half of spending by a company’s best customers actually goes to other retailers in the same category.
What can we take from this? Correlation is not causation. Your high-spending customers are not necessarily loyal, so be wary of making connections that aren’t there.
Reducing customer effort is the clearest way to make loyalty gains
The bottom line is that, above everything else, customers want their shopping made easier, and customer effort and loyalty benefits are strongly correlated.
Reducing customer effort is the most beneficial thing a brand can do to meet customer needs and generate loyalty. This means that retailers need to think carefully before hiding their phone numbers, sending emails from ‘no reply’ addresses, or redirecting all customers towards self-service or FAQs that aren’t actually useful.
These distinctly user-unfriendly options could be killing loyalty at the source. Smart self-service options can be deployed with great success, but they need to be customer focused, and there should always be a human agent standing by in case it’s necessary.
Today, retail brands are facing serious competition due to rising customer expectations and demands. Many companies are still trying to optimise a mix of physical and online stores and refine their business model and operations to scale with the business. During this process, brands must keep asking themselves how their customer service departments contribute to loyalty.
With the right tools and platforms (such as conversational commerce, ticketing services, self-service, or mobile support), businesses can ensure that their customer service meets modern expectations and leaves a lasting impression. And considering the cost of acquiring new customers versus the cost of guaranteeing existing customers stick around, it’s well worth going the extra mile to earn customer loyalty.