Getting Started With Loyalty Marketing Strategy
The word strategy can mean different things to different people. Many companies equate marketing strategy with hitting financial goals. However, many marketing strategies go beyond profit and sales. Loyalty marketing is one among them that mixes the needs of the customers and the businesses to offer a solution that increases customer satisfaction and loyalty. Moreover, it is also about remarketing old customers with offers and new products. We’ll discuss loyalty marketing in detail.
What Is Loyalty Marketing?
Believed to have originated in the 1700s, loyalty marketing has stood the test of time and has managed to redefine the industry with its peculiar characteristics. Unlike other marketing strategies, loyalty marketing does not equate success with profit percentage or sales figures. Instead, it evaluates success with the relationship shared by the brand and the customer.
In simple words, loyalty marketing is a marketing strategy built around growing and retaining the existing customer base through different incentives, including discounts, free samples, exclusive offers, etc. Interesting, trust between the customer and brand is the foundation of this popular marketing strategy.
Recently, many companies have started implementing loyalty marketing into their advertising and promotion plans to incite customer loyalty. Moreover, to retain customers and attract the old customers who switched brands due to undisclosed reasons.
What Is Customer Loyalty?
Customer loyalty is the cornerstone of loyalty marketing strategy. It is referred to as the bond shared by the brand and its customers. Many times, it extends to the emotional relationship between them. Often customer loyalty is a paradigm to evaluate the impact of a brand on its audience. Loyal customers show these common characteristics:
- Repeated purchases
- Interact with the brand regularly
- Do word-of-mouth advertising without any initiation from the brand
With loyalty comes retention. Customer loyalty and retention work together. While loyalty is a mindset that forces customers to engage with the brand continuously, retention is a metric used to monitor customer engagement. A loyalty marketing strategy helps in increasing customer loyalty and retention. In the succeeding part of the article, we will discuss how can loyalty marketing be used to retain customers.
How To Use Loyalty Marketing To Retain Customers?
Here are some ways loyalty marketing helps in retaining customers in the current complex business milieu:
A dictionary defines personalization as “the action of designing or producing something to meet someone’s individual requirements.” Loyalty marketing helps in providing personalized products to customers. For instance, a small written note from the brand can be the kind of personalization that triggers loyalty and retention among the customers. In other words, a simple gesture of kindness is what the customers seek from the brand they are purchasing goods or services from, and loyalty marketing fulfils the need.
2. Referral programs
In the traditional referral program, a brand advocates its product to the customers and allows them to refer it to an ally and earn discount coupons or money. Referral programs are widely used across industries to lure customers to a brand. However, it has been seen as a great way to retain customers and increase loyalty for the past few decades.
Providing a small reward for buying your products or services motivates customers to purchase from your brands often. The potency of ‘offers and discount coupons’ has come to light when brands have started providing heavy offers to customers in the past few years. They see it as a great alternative to building trust between them and the customer.
4. Making customers feel special
Making customers feel special is one of the best customer retention strategies that brands adopt. They bombard them with immense offers, discounts, coupons, and free gifts, which makes them feel like a voice to reckon with in the brand. These intangible gestures also increase customer loyalty.
5. Ask and improvise
Integration of modern technologies has opened floodgates to easier ways of communication between brands and customers. Today, companies can directly interact with customers about the product or service. Additionally, they can collect feedback, listen to grievances, and instantly offer help to customer issues and problems.
Using these marketing strategies can increase customer loyalty and lead to higher retention. Brands struggling to survive in the current business milieu must adapt multifaceted and progressive marketing strategies like loyalty marketing and others to improve their position in the market.
How Do You Measure Customer Loyalty?
There are many ways of measuring customer loyalty; here we enlist a few:
• Repurchase ratio
The repurchase ratio is referred to as the percentage of customers who have repurchased the company’s products or services in a fixed period. Measuring the repurchase ratio helps managers and executives ascertain customer loyalty.
The repurchase ratio is calculated by dividing the number of loyal customers by the number of new users. By using the formula, you can mathematically find out customer loyalty.
Net promoter score (NPR) is summarized as the willingness of the customers to recommend the brand and its product and services to others. Moreover, it is also used to gauge customer satisfaction by brands.
NPS is a ranking system that asks the customers to rank the company’s product from 1 to 10. Then, based on the points, customer loyalty is measured and estimated.
The customer loyalty index (CLI) is measured by asking the customer a similar set of questions. Interestingly, brands keep the same sample population while calculating CLI and NPS. Then, the average of three scores is calculated, and the customer’s loyalty is judged. It is also a simple way of understanding the target audience’s preferences.
Besides the above-mentioned metrics, there are other ways of measuring brand loyalty, which you can learn about in our marketing courses. Emeritus India has partnered with renowned education institutes to offer the best diploma, post-graduate, and certification marketing courses that will help skyrocket your career.