Loyal customers are important for business because they not only make purchases regularly, but also often become brand ambassadors, recommending it to their friends. This increases sales, average check and ruces the cost of attracting new customers. Kirill Mysyakov, Product Champion at Retail Rocket Group, talks about the types of loyalty, ways to evaluate and improve it.
What is customer loyalty
Customer loyalty is the commitment of customers to a particular brand, product, or service. It is a state in which a customer’s ne is associat with a particular business, leading to repeat purchases and, often, to recommending the brand to others. Loyalty is form on the basis of positive experiences with a company and the perceiv value of its products or services.
For example, a person nes to buy milk. His ne can be satisfi by many different stores. Under equal conditions of variety and quality of goods, availability of prices and location, a person will bring money to the store to which he is loyal. The business will not spend a ruble to attract a buyer in this particular case.
If a business does not work with loyalty
Tthen it has to constantly spend its budget on attracting new customers. The cost of attracting a customer (Customer Acquisition Cost, CAC) is often higher than the cost of retaining an existing one. Thus, companies without loyal customers lose in frequency of purchases, average check and revenue in the long term.
Types of customer loyalty
Customer loyalty is a composite concept, therefore it is form on the basis of several factors at once.
Product quality and assortment. If a customer can satisfy their nes with an acceptable level of quality, they are more likely to return.
Customer service. Positive customer service, fast delivery, and prompt resolution of customer issues enhance loyalty. According to PwC , 73% of shoppers say customer experience influences their purchasing decisions.
Emotional connection Brands that evoke
Positive emotions and attractive associations in their communications are more likely to attract loyal customers.
Personalization. Individual approach in communications and service significantly increases customer loyalty. Loyalty programs . Discounts, bonuses, exclusive offers and other incentive mechanisms stimulate repeat purchases and strengthen the connection with the consumer.
How to evaluate customer loyalty
To assess customer loyalty, businesses typically use the following methods:
Net Promoter Score (NPS) surveys
This is currently one of the most popular methods of assessing loyalty. The survey consists of just one question: would the client recommend the company’s product to their friends? Net Promoter Score (NPS) is measur on a scale from -100 to 100 and is the difference between the percentage of promoters (those who rat the company 9 or 10) and the percentage of critics (those who rat it 0 to 6).
This phone number focuses on key areas of business. So that you can use your phone number data according to the specific nes france phone number data of your customers. The main feature of this phone number data for business use is that you will have it at your fingertips. So that you can use it very easily.
Customer Loyalty: What It Is and How to Increase It
Commonly accept benchmarks for NPS vary by industry, but the following values are general guidelines:
Negative NPS (from -100 to 0) means that the company has more detractors than promoters, and this is a negative buy italy whatsapp number data 5 million indicator.
Average NPS (0 to 30). This value is consider satisfactory. The company has more promoters than detractors, but there is potential for improvement.
High NPS (30 to 70): A score in this range is consider very good and indicates strong customer loyalty.
Exceptional NPS (70 to 100): A high score that indicates that most customers are promoters and are loyal to the brand.
Churn Rate Measures the percentage
Of customers who have stopp using your services over a certain period. A low rate indicates a high degree of loyalty. The formula for calculating Churn Rate is as follows:
Customer Loyalty: What It Is and How to Increase It
Customer Churning mobile number in Per Period – The number of customers who stopp using your product or service within a specifi time period (such as a month or a year).
Total number of clients at the beginning of the period – the total number of active clients at the beginning of the select period.
Churn Rate in e-commerce can vary depending on the type of business, sales model, and target audience. However, there are some generally accept benchmarks that can be us to estimate this metric.
Monthly Churn Rate
Low level. Churn Rate below 3% is consider a good indicator and indicates a high level of customer loyalty.
Average: Monthly Churn Rate in e-commerce typically hovers around 3-5% for most companies. This means that 3-5% of customers stop making purchases each month.
High level. If the Churn Rate exces 5-7% per month, this may indicate problems with customer retention and requires analysis of the causes.
Annual Churn Rate:
Low level. Churn Rate of less than 30% per year indicates a high level of customer retention and effective work with the customer base.
Average level. The annual Churn Rate in e-commerce can be around 30-50%, which means that about half of the customers who made purchases at the beginning of the year do not return within the next 12 months.
High Level: An annual Churn Rate above 50–60% indicates serious retention issues and requires the implementation of customer experience improvement strategies and loyalty programs.
Customer behavior analysis. To assess customer loyalty, a business can analyze customer behavior on the website and in the mobile application. Pay attention to the frequency of purchases, Retention Rate, LTV, average check. If the metrics are higher than the benchmarks of the business niche, this indicates high customer loyalty.
The study discusses the metrics that should be us to increase long-term revenue.
Read
Loyalty program analysis. Also, to assess the commitment to the company, businesses often compare the metrics of loyalty program participants and regular customers. If the metrics are equal, this indicates the ne to improve the current system of rewarding customers for repeat purchases.
Social mia activity. The mood of reactions and comments from real people under posts on social networks also allows you to assess loyalty. Positive comments indicate high loyalty, and negative reviews can become an impetus for restructuring internal processes and changing the product.
3 Tips to Increase Customer Loyalty
There are no universal tips for increasing loyalty, everything depends on the business area, target audience, consumption scenarios, etc. We share the main recommendations that we most often follow in our work:
Tip #1: Personalize your ads
Use customer behavior data to create personaliz communications and advertising messages. Recommend products bas on past orders, view items, add to cart, and other customer actions on your website and mobile app.
For example, Detsky Mir integrat the adTech platform Smart Placement Ads from Retail Rocket Group, which allows advertisers to use marketplace data for target promotion of products on the company’s website and mobile application.
Tip #2: Don’t overcomplicate your loyalty program
The last thing a loyal customer wants to do is figure out all sorts of mechanics, calculate compound interest, and study FAQs. The decision to buy is made quickly, so the loyalty program should be as simple and clear as possible.
Buying 5 pizzas in a month to get 300 points is a good example of a loyalty program. Buying each pizza to get a coupon that can be us to get a percentage discount on your next order is a bad example.
Tip #3: Constantly work with feback
Conduct regular surveys to get feback from customers about their experiences and preferences. This will help you understand what is working and what nes improvement.
Briefly about the main thing
Customer loyalty is when a specific ne of a person is associat with a particular brand.
Customer loyalty is a complex concept, therefore it is form on the basis of several factors at once: from product quality to reward and motivation mechanisms.
To assess loyalty, NPS surveys, customer behavior analysis, loyalty programs, and social mia activity are us.
