Your business thrives on the loyalty of your customers, who are integral to its success. While it’s crucial to attract new customers, retaining your existing ones is just as important — if not more so. With inflation and intense market competition, customers are more prone to switching brands than ever before. 

To ensure that your customers stay with you, you need to incentivise them and enhance customer loyalty. But how valuable is customer loyalty? And how can you boost your customer retention? 

Customer loyalty

According to a 2023 study on customer loyalty in Australia by McKinsey & Company, “companies that offer loyalty programs with tangible benefits and a gamified experience can earn frequent and profitable customer engagement”. 

Retaining customers is crucial for businesses as returning customers can account for 65% of a company’s sales. According to Harvard Business School, increasing customer retention rates by just 5% can lead to a profit increase of 25% to 95%. Moreover, 70% of businesses agree that retaining customers is less expensive than acquiring new ones. 

In other words, losing a customer’s loyalty means losing out on potential sales and investing more money in advertising to attract new customers. It also takes time and resources to establish brand loyalty with new customers.

Introduce a loyalty program and offer rewards

Everyone wants to be loved and appreciated, especially customers who have been loyal for some time. To make them feel valued, it is crucial for retailers to offer discounts, perks, and other exclusive benefits. This is where a customer loyalty program comes into play.

A customer loyalty program recognises and rewards customers who repeatedly purchase or engage with a brand or business. There are various types of loyalty programs, such as customer discounts, rewards programs, subscription services, and loyalty tiers.

Personalising rewards based on the customer’s buying habits is an effective way to keep customers engaged. For instance, if you run a beauty store and a customer frequently purchases a particular brand of makeup, you can send them a personalised offer of 20% off their next purchase or notify them of upcoming sales. 

Maximise social media use 

In 2021, over four billion people were using social media worldwide. It’s projected that this number will reach six billion people by 2027. This is a big opportunity for retailers. 

In fact 41% of Australian shoppers reported that they made a purchase after seeing the product on social media. It’s clear that social media marketing is now a must-have rather than a nice-to-have. The objective of social media for businesses and brands is to establish a connection with their customers. Your top priority should be developing and sharing content that showcases your brand. You can do so by posting behind the scenes content of how your business operates. You can also encourage customers to generate their own content featuring your products or services, which you can reshare or repost. Organising a competition or raffle for people to participate in is also something you can do. You can benefit from a number of user-generated content by doing that.

Share a guide or a “how-to” video on how to use your products, and post inspiration or styling guides to give customers ideas. Lastly, make your customers involved in the product development by asking for their ideas and feedback. This not only boosts engagement and customer satisfaction, but also provides valuable insights into their preferences and desires. Make your customers feel like partners in your business and empower them to help shape your offerings.

Urge customers to give feedback

It’s crucial to show your customers that you value their input. To do this, you’ll need to reach out every once in a while and check in to make sure everyone’s happy. Failing to make it easy for customers to offer feedback or make complaints can send a negative message about your company’s approach to customer service. Unhappy customers are likely to make their grievances known through reviews and word-of-mouth, which can harm your reputation and future sales. 

Encouraging customers to provide feedback, such as through surveys or email reviews, can help build trust and allow you to address any issues that arise. Consider incentivising customers to leave reviews, and be sure to respond promptly and offer solutions when necessary. By prioritising customer happiness and responsiveness, you can help build customer loyalty and maintain a positive reputation.

Simon Le Grand is senior director of marketing at Lightspeed.