The past two years have changed consumer behaviors in drastic ways—and those behaviors are still changing. Look at Peloton, which saw explosive growth early in the COVID-19 pandemic. Just a year and half later, their shares were down 75%, they laid off 2,800 people, and replaced their CEO.
Peloton is just one high-profile example of the breakneck pace at which consumer behaviors change; many other businesses large and small have experienced similar shifts. Roughly 75% of Americans have changed their shopping behaviors during the pandemic, and of those who have, a whopping 40% of them have changed brands.
While this creates a lot of opportunity for new customer acquisition, it also means that brands need to work even harder at retaining existing customers and building brand loyalty. Doing so will be key for brands looking to find and sustain long term profitability. How can we do that in such a quickly shifting landscape? Here are key strategies to build customer loyalty.
To improve brand loyalty, you first need to know which kinds of customers you want to retain. What kinds of repeat customers stay the longest and spend the most with your brand, and why? These customers are your most profitable customers.
It’s important not to go after just any customer — the wrong kind of customer can lose your business money and hinder your plans to build a community of loyal customers.
To identify your most profitable customers, you can calculate customer lifetime value and assess who makes repeat purchases and how long they stay a customer. Then, separate their data from customers who aren’t as profitable. If you have additional first- or third-party data, you can run your customer data against that to suss out more meaningful attributes, such as location and general interests.
You can also run your existing data through a machine learning model that cross-references your customer data against attributes and behaviors to learn who your profitable customers are.
Do they own homes? Do they respond to social media ads? Do they follow COVID protocols, spend time outdoors, attend church? Are they neurotic?
When you learn more about who your profitable customers are, you can better understand what will build a loyal customer base.
If you’re looking for specific feedback from your customers, consider sending them a survey. From a data perspective, a survey is not a highly accurate measure of profitability. Only a select population will respond, it’s difficult to draw conclusions about commonalities, and the respondent pool is small.
However, surveys can build customer relationships and provide your teams with a bit of directional insight, provided you don’t place too much weight on the findings.
In these surveys, you can ask about product features or potential new services, about behaviors, thoughts or feedback. You will get your most actionable feedback if you are able to segment responses from your most profitable customers.
Email marketing is a crucial part of any marketing strategy, but un-targeted blast emails can actually do more harm than good. If you send content that doesn’t resonate with your profitable customers, there is a high chance they’ll unsubscribe. That means you’ll have lost the only medium you have to directly communicate with your profitable customers.
Understanding who your profitable customers are can give you insight into what they respond to. Are they impulse shoppers who love a good deal? Then they’ll stay with you for your awesome discounts.
Are the more methodical purchasers happy to pay full price? Send them emails with quality content that target their interests (another insight from understanding who your profitable customers are). If your profitable customers are environmentalists, that provides you an excellent angle for your email content.
When you have a good idea of who your customers are, you can use A/B testing to learn the messages and emails they respond to. This will have the added benefit of improving your marketing efforts as well as customer loyalty!
Creating a rewards program is a conventional tactic to achieve brand loyalty, but it is not always appropriate. We have seen instances where profitable customers do not like to partake in rewards programs. Pushing such a program could not only create a greater friction and negative feelings with your product or service, but could ultimately cause them to churn.
When profitable customers don’t favor rewards programs, some businesses have success with referral campaigns that entice customers to refer their friends, since word of mouth remains highly valuable. Like a rewards program, you want to be as sure as possible ahead of time that your audience will respond to a referral program. It could be that your profitable customers don’t want their friends to know where they get things or don’t like to share their purchase behaviors with others.
One way to bolster customer retention is to ensure that the product speaks directly to what they like and want. Customers want to keep products that bring them value. You can use insight from your customer survey, or better yet, your findings about the behavior and attitudes of your profitable customer.
This information about customers and their preferences gives your product team actionable feedback for their product roadmap. It also ensures that future new products and services align with what your customers need and want.
Customer service is a considerable factor in building loyalty. A user-friendly customer experience should be a no-brainer. A quality customer experience might look like personalized site features, easy returns and exchnages, speedy response times across channels (email, phone, social media), and even personal touches.
One of our clients knew that profitable customers at risk of churning would respond to a thoughtful, personal touch. The brand harnesed their profitable customer profile to send hand-written cards to retain individuals Ocurate predicted were highly profitabe. Such a simple, scalable initiative can drive tens of thousands in profit.
When improving customer loyalty is a priority, in can provide positive lift across all areas of your business, from acquisition to retention and product to experience. These shifts toward brand loyalty and profitable customer lifetime value can take time, but their significant impacts are far-reaching and sustainable.
