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Why Customer Loyalty will likely fail when you do these things

Why Customer Loyalty will likely fail when you do these things

Loyal customers are the primary source of attracting more sales into your business. Loyal customers make repurchases with you and also attract other customers into your business through their good word-of-mouth. When you have your loyal customers with you, nothing can stop you from attaining excellent business success.

Customer Loyalty is one of the most critical factors that drive your business towards success. Researches suggest that 65% of the business is generated from the existing customers that are loyal to your brand. But it is not easy to gain good Customer Loyalty, especially in the competitive market where various businesses open up every day with new offers and services.

Still, studies suggest that it is easier to retain your existing customers than to attract new customers each time. If you increase customer retention even by 5%, your profits will boost by 25% to 95%.

This article will explore some significant aspects or mistakes that directly affect Customer Loyalty and cause you to lose your valuable customers. Before we go ahead, let’s define customer loyalty and explore how it is beneficial for your business in several ways.

Know what is Customer Loyalty and its importance? Jump directly to the ‘Things due to which Customer Loyalty fails.

What is Customer Loyalty?

Customer Loyalty is an ongoing relationship between you and your customers that causes customers to choose your brand for buying certain products and services again and again over your competitors. Customer Loyalty is most notably the result of the Customer Experience you provide that helps build trust and an emotional relationship with your customers.

Importance of Customer Loyalty

Customer Loyalty is essential for business growth. If your customers are loyal, they will stay with you and keep providing you business for years even if they are offered a somewhat better deal or a lesser price. Therefore, it is important to measure Customer Loyalty and try to improve it. Let’s list out some benefits of Customer Loyalty that make it vital for business growth.

Benefits of Customer Loyalty

  1. It helps in Brand Promotion
  2. It helps to Increases Sales
  3. It helps to Attract New Customers
  4. It helps to Predict Future Growth
  5. It helps to Develop Long-term Customer Relationships.

Let’s learn more about these benefits.

1. It Helps in Brand Promotion.

Your loyal customers are your most important marketing resource. 64% of the marketing executives agree that word of mouth is the most effective form of marketing. And who spread good word of mouth? It is none other than your loyal customers with whom you create an emotional relationship and win their trust.

Studies suggest that the businesses that are able to create an emotional connection get three times more word-of-mouth than the other businesses. This facilitates your brand promotion, and that too is free of cost!

2. It helps to increase sales

Customer Loyalty is the driving factor that leads to more and more repurchases because loyal customers are the ones that choose you again and again. Studies say that loyal customers tend to spend 67% more on a business than new customers. This helps to increase your sales and generate more revenue from your existing customers. Thus it is necessary to Build Customer Loyalty for Improving Business Revenue.

3. It helps to attract new customers

Apart from repurchases, your loyal customers also attract new customers because they will most likely recommend your brand to their friends and relatives. And 92% of the customers trust their friends and relatives when they recommend a brand for choosing products and services. 

4. It helps to Predict Future Growth

Customer Loyalty is an efficient way to predict future sales and growth of a business. Loyalty metrics like Net Promoter Score helps to find out the trends with which a business is increasing or decreasing and thus predict business growth in the years to come.

There are various software and apps available in the market nowadays that help you conduct NPS Surveys and calculate your Net Promoter Score to measure Customer Loyalty. You can choose a good NPS Software for this purpose and easily track the growth of your business with periodic NPS Surveys.

5. It helps to Develop Long-term Customer Relationships

Long-term customer relationships are fuel for your long-term business growth. Researches suggest that 77% of the customers maintain a relationship for around ten years or more with the companies they are loyal to. Whereas other customers can readily switch to another brand even for a little better deal.

For gaining Customer Loyalty, you need to provide the best product and services to your customers. You must ensure Customer Satisfaction with the experience you provide to your customers.

Things due to which Customer Loyalty Fails

There are certain things that you must avoid if you want to win Customer Loyalty. Let’s explore what are the things that result in the failure of the Customer Loyalty or Customer Loyalty program.

Cause of Failure of Customer Loyalty

  1. Insufficient Rewards
  2. More Focus on New Customers
  3. Not responding to Customer Feedback and complaints
  4. Complex Customer Loyalty Programs
  5. Poor Customer Service and Experience

Let’s learn how these things can ruin your Customer Loyalty and result in the failure of your Customer Loyalty Programs.

1. Insufficient Rewards

Insufficient Rewards are a sure shot way to lose Customer Loyalty. When customers are loyal to you, or they join a loyalty program, they expect something valuable in return. If you do not care for their wants, you can lose them. Researches suggest that more than 50% of the customers consider rewards as necessary for big and small purchases. 

And when after being loyal customers, they do not get rewarded for their loyalty, they tend to switch to other brands. 75% of the customers prefer companies that offer rewards. Now what rewards they expect can be different choices and preferences for different customers. Some may expect discounts on repurchases; some may like gifts or coupons; some may want to have new products available for them before they come to the market for other people, whereas some may have different expectations. You need to identify what your customers want and expect and work towards providing such rewards.

You can also provide them different options to choose from. The key is to offer something valuable to them to make them feel that their loyalty is not under-rated.

2. More Focus on New Customers

Focussing much on new customers and ignoring the existing ones can be another big reason for a fall in Customer Loyalty. Sometimes companies focus more on attracting new customers by giving them various first-time discounts and exciting offers. There is nothing wrong with this from the sales point of view, but remember that your loyal customers also know what you provide to newcomers.

You should ensure that the customers who are with you for a long time get more rewards and valuable offers than those who purchase the first time. Like you give rewards to new customers, your competitors can also do. When your loyal customers see you providing exciting offers for newcomers, and not to them, and at the same time, your competitors offer such offers to them, they feel to be rewarded only when disloyal.

You need to keep in mind that the more your customers invest time and money with you, the more rewards they deserve. The right approach is to reward their loyalty. It’s good to focus on sales and provide incentives to new customers, but existing customers must not be devoid of those incentives.

3. Not responding to Customer Feedback and complaints

Gathering Customer Feedback is necessary for every business to grow. But merely gathering will not work unless you put it into action and utilize it for improving Customer Satisfaction. Not responding to Customer Feedback is one of the biggest mistakes you can make, leading to your loyal customers' churning. It can lead to increase your customer churn straightaway by 15%.

When you get Customer Feedback, you should respond to it immediately, whether it is positive or negative. For positive feedback, you should thank the customers. For neutral feedback, ask them what you can do to make their experience better, and pay special attention to the negative feedback.

Apologize to your dissatisfied customers for their bad experience, ask them where things went wrong, take corrective actions as soon as possible wherever required and tell them what you have done or are doing to improve their experience. Doing this will ensure Closing the Customer Feedback Loop effectively and even changing the negative perceptions of the customers into positive ones. Whereas, if you leave the feedback unattended, the customers will feel more frustrated and most likely churn.

4. Complex Customer Loyalty Programs

Customer Loyalty programs are an excellent way to give reasons to your customers to be loyal to your brand, but complexity in those programs results in their failure. Ensure to make your processes seamless for the customers at every touchpoint.

Whether it is joining your loyalty program, earning rewards, or redeeming them, make everything smooth and straightforward. Avoid keeping your customers busy in filling various forms and fulfilling formalities more than required. Smoothen the process and make everything clear and concise for them.

Tell them what rewards they will get, which should be pretty simple, instead of involving tough and complex calculations.

5. Poor Customer Service and Experience

Customer Service and the overall Customer Experience are the primary aspects that lead to customers staying with your brand or switching to another. In recent years, customer experience has become even more potent than price. 67% of the customers and 74% of business buyers are willing to pay more for better customer service and experience.

So you must provide an excellent service to your customers and ensure Customer Satisfaction with all your actions.

Conclusion

There may be several reasons responsible for a low or decreasing Customer Loyalty. The key to ensuring Customer Loyalty is to focus on your existing customers and reward them fairly for their loyalty. You should not treat the most loyal customers the same as your new customers. It would be best to create seamless and simple Customer Loyalty programs that provide some value to your loyal customers.

At the same time, you must provide a great Customer Experience which is one of the Most Direct Causes of Customer Loyalty. You must ensure Customer Satisfaction and take action on Customer Feedback if you want to win Customer Loyalty.

Published on Jul 27, 2021. Updated on Jul 27, 2021.



Nikhil Dawer

Written by Nikhil Dawer

Jul 27, 2021

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