Pay Attention To Little Things Customer Loyalty And Customer Retention — What Separates The Two?
Customer is the King and who can argue this universal fact?
Every business, irrespective of its type and size, strives for this one ultimate goal- to get new customers and to be able to retain them.
Businesses use all their resources to expand their customer base to grow their Brand. This is a never-ending exercise.
That said, every business owner knows that it is easier to attract new customers but all the more difficult to retain the old ones and thus, turn them into loyal assets.
Why?
Because customers today switch brand loyalties quicker than ever before.
You cannot expect your customers to show loyalty towards your business unless you make efforts to retain them. So, the fulcrum of conversation here is, “what separates customer retention from customer loyalty?”
To find an accurate answer, let’s dive deeper into this subject.
How Are Customer Loyalty And Customer Retention Different?
We can understand the basic difference between the two with the help of the below-mentioned example.
John buys a pair of jeans from the Levi’s store for the first time. After he makes the purchase from the retail outlet, he receives text messages and emails from Levi’s at regular intervals.
These messages were sent to John to apprise him of special discounts and special offers by Levi’s so that he can consider making a purchase again.
Did you get the catch here? The purpose of Levi’s customer retention strategy is to stay connected with John by sending him regular updates of special deals.
The ideal customer retention strategy focuses on engaging existing customers through exclusive deals and offers so that they can come back to make a purchase from your brand time and again.
So, John visits the retail store again and buys another pair of jeans from Levi’s. And, eventually, he chooses to repeatedly buy jeans of the same brand.
Therefore, John is now a retained customer in Levi’s books. However, he may switch to another brand once the time comes.
Now, let’s see how a retained customer i.e. John can turn into a loyal customer.
Now that John is buying repeatedly from the same clothing brand (Levi’s), he also recommends the same to his friends and family members. Customer loyalty goes beyond spending money on the same brand repeatedly.
John not only buys clothes of the same brand but also advocates on its behalf. A loyal customer has some positive things to tell about the brand to his/her contacts, who, in turn, are influenced to go with the same brand.
I hope you’ve understood the main difference between customer retention and customer loyalty, and don’t use these terms interchangeably.
To further clarify the difference between the two, let us have a look at the table below.
Customer Retention
- Set of practices that focus on keeping customer engaged to gain repeat business
- Is aimed at preventing customer churn and increase recurring revenue
- Retained customers can change loyalties anytime
- Measured as a percentage value for all customers during a predetermined time period
- Every retained customer may not necessarily be a loyal customer
Customer Loyalty
- Focuses on creating long term relations with customers
- A loyal customer will choose your brand over your competitors
- A loyal customer also circulates positive reviews of your brand and encourages others to buy from you
- Measured for each customer in particular
- Every loyal customer is a retained customer
Four Proven Strategies To Improve Customer Retention
Every business understands the fact that it’s cheaper to get existing customers to make a repeat purchase than it is to acquire a new customer. However, that’s easier said than done.
If you want to grow from a below-average customer retention rate to a healthy figure then we have some proven strategies that are likely to benefit your business.
#Provide A Good Onboarding Experience
First impressions matter big time, especially in the age of crowded marketplaces. Most of your new customers will always think about the first experience they had while purchasing from you. The initial excitement of having a new product or service will subside after a few days, but if you provide a positive onboarding experience, your customers are likely to stick around for years to come.
#Understand Customer Sentiment
One of the main keys to retaining customers is to understand how they feel and what they like/dislike. To understand your customers better, you can use the most popular brand-loyalty metric, which is known as NPS methodology or Net Promoter Score. It centers on a single question: “How likely are you to recommend [your brand name] to a friend?” on a 0–10 rating scale. The customer rates the brand and uses their own words in an open-ended feedback question to tell the reason behind their scoring.
#Practice Continuous Customer Engagement
Your customer experience doesn’t end with the swipe of a credit card and generating an invoice. In fact, it only starts there. You can’t stop marketing and promoting your brand to your customer assuming they will come back for repeated purchases. Stay on top of your customers’ minds by sending out weekly email newsletters, social media posts, and producing high-value content (videos, podcasts, or downloadable PDF resources).
#Reward Customers
Don’t take your customers for granted. They are ready to jump ship if you don’t make them feel valued and appreciated for sticking around. Rewarding customers should not be just limited to offering special discounts on prices. You might as well consider sending bonus gifts for Loyal Customers who’ve been around for long. Sending personalized “thank you” notes and discount vouchers via email can also go a long way in developing a healthy customer-seller relationship.
Four Proven Strategies To Improve Customer Loyalty
“If you’re trying to build brand loyalty today, an emotional connection is no longer a nice-to-have, it’s a must-have”, says René Vader, Global Sector Leader, Consumer & Retail, KPMG International.
As mentioned earlier, your loyal customers are your retained customers. Retained customers can be made loyal customers only if your brand can provide them a more-than-satisfactory experience right from the first sale to delightful after sales service, good communication to meeting expectations, and making them feel appreciated.
So, how can you improve customer loyalty? Read on to find more about it.
#Prioritize Customer Service
89% of consumers are likely to repeat purchases after having a positive customer service experience. Reliable and efficient customer service is one of the best ways to create loyal customers for your business. Your brand could be offering quality products and services that impress its target audience, but it probably won’t be able to create much of an impression if it fails to provide delightful customer service. Providing quick solutions to their problems is the most effective way to please them.
#Reward Your Loyal Customers
This strategy is common to both customer retention and customer loyalty. Your loyal customers are repeatedly purchasing from you and recommending your brand to others, but how are you paying them back? Rewarding loyal customers is more than giving away discounts. Introduce and offer a loyalty program that offers your loyal customers some great discounts, gifts, and exclusive offers. Remember that customers love surprises and gifts in all forms.
#Take Customer Feedback And Act On It
Do you care to ask your loyal customers if there is something they’d like to suggest to further improve your products or services? It could be that some of your loyal customers are not happy with your product, services, or customer service, and they are looking to switch loyalties. Every business should prioritize customer feedback and act on it (if needed). You can take feedback by making phone calls, sending emails, a pop-up survey on your website, and reviewing chat bots and live chat transcripts. Nothing pleases customers more when their suggestions/complaints are acted upon in time.
#Pay Attention To Little Things
Businesses that have a long list of loyal customers tend to keep a close eye on the latter’s behavior all the time. How? Did you notice that one of your loyal customers hasn’t purchased from you (either online or in-store visit)? Did you care to check out why? If not then it doesn’t speak well of your brand’s efforts towards caring for loyal customers. A business must remind customers that they are missed, and make efforts to call them back with some kind of reward or gift.
If you do not care about your customers, they would not care to visit you either.
The Takeaway
Now that you know what separates both customer retention and customer loyalty, you will be in a better position to identify your customers who fall under both these categories. You can know how many of your retained customers are converting to loyal customers, and potential reasons for customers retracting from your business.
As a result, your marketing team would be able to formulate different strategies for both types of customers to achieve desired results. Good luck.
Your customer retention strategy and your customer loyalty strategy should look quite different. After all, they seek to achieve different results.
Good luck!
If you enjoyed reading this article:
Clap: so others can find it
Comment: if you have a question/suggestion you’d like to ask
Follow: ProofHub to read all the articles
Also Read:
- How Time Management Can Help Reduce Your Stress at Workplace
- Going Back to Office Post-Pandemic: How to Make It Less Stressful
3. How To Create A Hybrid Work Schedule To Meet Modern Work Requirements
Know How To Differentiate Between Customer Loyalty And Customer Retention was originally published in ProofHub Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
