The Many Benefits of Customer Loyalty For Your Brand
Customer loyalty pays in more ways than one. According to Bond Brand’s ‘The Loyalty Report’ 2021, 68% of surveyed consumers say they adjust the amounts they spend in order to maximize their brand loyalty program benefits. In addition, 73% of consumers affirmed they are more likely to recommend brands they frequent, while 80% want to continue doing business with brands with which they are loyalty program members. Let’s take a look at how brands can realize the various benefits of customer loyalty.
Benefits of Customer Loyalty
With the convergence of multiple historic global events—the COVID-19 pandemic, international conflict, and widespread economic instability—customer loyalty is proving to be a crucial component in a brand’s survival as well as its profitability.
When compared to new customers, loyal customers are more likely to repurchase and spend more on repeat transactions. They are also predisposed to try new offerings from preferred brands and refer more family and friends, compared to newly acquired customers.
In times of market instability and disruption, these loyalty behaviors form the metaphorical bedrock on which businesses thrive and survive. And yet, by building and improving upon those relationships with faithful customers, companies stand to gain even more. Some of the ways customer loyalty and retention can benefit businesses include:
Improved Customer Engagement and Experience
The data generated by loyal customers during their journeys can help personalize their own experiences and improve other customer journeys. For example, customer experience (CX) teams find converted customers frequently highlight delayed checkout transactions as a common area of friction. By analyzing historical transaction data and customer behavior patterns, brands can pinpoint the cause of the bottleneck and take steps to refine the process for future guests.
Brand affinity—a positive preference for a specific brand in a given product/service category—is more common among loyal customers than new leads. Once trust is established and reinforced by several positive interactions, converted customers are more likely to share a brand’s values. Brand affinity also strengthens loyal customers’ emotional connections with a brand, encouraging advocacy and promotion.
Retaining loyal customers costs less than acquiring new leads. Marketing and advertising costs can add up when reaching out to a broader field of prospects. In contrast, brands spend less on nurturing smaller audiences of faithful customers.
It also takes time to break even with new acquisitions. Brands can spend weeks or months targeting a new lead, and longer to persuade them to convert. On the other hand, loyal customers need little persuasion to repeat transactions once they establish trust with a brand.
Increased Sales and Revenue
Repeat customers make for easier sales, compared to new leads. Informed by experience and past impressions, loyal customers know their preferred brand is dependable, offers good value, and provides a good experience. In contrast, because new leads are still considering alternatives, they require more convincing before committing to a purchase.
As Bond Brand reports, the majority of surveyed customers spend more to maximize their loyalty benefits. Some loyal customers may not even consider prices when buying from a known brand. This can increase sales and revenue for brands with a strong base of loyal customers.
Reduced Attrition Rate
Loyal customers are less likely to drop out compared to new leads. The wealth of competition—especially in online markets—makes it harder for customers to find a source that meets their purchasing needs. Once customers find a brand they’re happy with, they are disinclined to repeat the search process for an equally good option, particularly if their preferred brand understands and serves their unique needs. This leads to reduced attrition, or churn rates, and increased customer lifetime value (CLV).
First-party Data Access
Loyal customers are happy to share personal information with brands they trust. In Bond Brands’ report, upper affluent consumers said they have greater loyalty when a rewards program safely and securely manages their information. Thus, loyalty affords brands access to valuable customer data that can be used to improve CX, personalize journeys, and even create lookalike audiences. First-party information on customer identities and activities will become even more important when third-party cookies are phased out.
Increased Customer Lifetime Value
Each time a customer repeats a transaction, they increase their lifetime value. Multiple purchases over time also increase loyal customers’ average order value compared to first-time buyers. Brands can further increase CLV by determining the right upsell and cross-sell offers relevant to converted customers’ needs.
In summary, the benefits of customer loyalty go beyond a simple repeat transaction. Loyalty benefits include improved customer engagement and experience, higher brand affinity, lower marketing and advertising costs, increased sales and revenue, reduced attrition rate, and higher customer lifetime values. Together, these benefits help businesses thrive and survive, despite uncertain times.
Improve and Build Loyalty With Treasure Data
Treasure Data Customer Data Cloud is an enterprise-grade customer data platform trusted by Fortune 500 and Global 2000 companies around the world to improve customer experience and build loyalty. See what you can do with Treasure Data:
- Collect and centralize customer data from all sources
- Unify customer profiles using online + offline data
- Analyze customer journeys
- Derive actionable customer insights using machine learning techniques
- Personalize customer experience at all customer journey stages
- Track and improve performance of CX initiatives
- And more
Treasure Data Customer Data Cloud is an integrated suite of cloud-based customer data platform solutions. Treasure Data provides insight by collecting and centralizing customer data, unifying profiles, and analyzing journeys to surface hidden trends in customer behavior.
To learn more about how you can use Treasure Data Customer Data Cloud to improve retention and enjoy the benefits of customer loyalty, consult an expert today. Want to learn more? Request a demo, call 1.866.899.5386, or contact us for more information.