The 3 stages of customer loyalty

The 3 stages of customer loyalty

August 18, 2016

businessman holding stuffed heart close to chest

For many brands, customer loyalty is the primary ingredient of success. How can you encourage consumers to trust and stay with your brand?

No one can argue against the fact that meaningful customer relationships give brands a competitive advantage. If you want to succeed, you have to think about how to make first-time shoppers want to stay with your brand. Satisfied customers are willing to spend more for your products, and even recommend you to their peers, growing your customer base and bringing you larger revenues.

Brands that are able to secure customers’ approval are more likely to stay in business far longer than those who fail to nurture people’s loyalty. This makes earning people’s trust a worthwhile - and at the same time critical - mission for all entrepreneurs.

The real key is to communicate with customers directly and bring them exactly what they need. Satisfied customers easily transform into frequent patrons when business owners treat them in a special way. You can only do this, however, if you understand how customer loyalty is formed.

According to Forrester, regular clients go through the following three stages as they grow with a brand.

The first stage: Customer retention

smiling man with headphones holding credit card doing online shopping

Retention occurs when a buyer decides to stick with a brand. Surprisingly, however, it has been shown to rank low among entrepreneurs’ priorities. It’s only in recent years that the tables started turning. More and more business leaders are now boosting their retention marketing strategies after realizing that existing customers are indeed more important than prospective ones. A study by Harvard Business School demonstrated that a 5% upswing in retention rates could translate to 25% to 95% more profits.

It wasn’t supposed to be jarring, but these figures, released by Bain & Company in collaboration with Harvard Business School’s W. Earl Sasser, startled business leaders and re-shaped their priorities. Now, brands’ customer retention strategies are in full swing, such as those listed by digital marketing and ecommerce solutions provider MageMail. All these were developed in the hopes of adding more value to people’s lives with every transaction.

The second stage: Enrichment

smiling woman using tablet outdoor cafe table with shopping bagsIn the enrichment phase, customers make additional purchases from the same brand and avail products or services they haven’t tried before. This happens when people trust brands enough to believe that every item they offer is of high quality—a result of consistently good performance and the right marketing strategy.

Launching a proactive customer service and marketing approach can help you usher customers toward this stage. But what does it really take to be a “proactive” brand?

In this age, the most proactive companies implement strategies that are driven by data. This allows them to anticipate people’s needs and ultimately create a more positive experience, mainly by initiating conversations with their customers. When you’re able to make individual clients feel valued this way, you’re gaining their trust and nurturing loyalty.

Another way to build customer loyalty is by implementing a reward program for your most valued patrons. Exciting deals, promos, and rewards can convince customers that the value of every transaction with your brand goes beyond the monetary amount.

The third stage: Advocacy

goup girls in mall with shopping bags

In the advocacy stage, customers take part, albeit indirectly, in your marketing efforts by spreading word about your brand. They recommend you to their peers or post on their social media accounts about your commendable services, both of which are forms of word-of-mouth marketing. When customers transition to this stage, they become brand advocates.

What’s astounding is that word of mouth is a crucial influencer in people’s purchasing decisions. According to Ogilvy, as many as 74% of all consumers identify referral from peers as a key factor predicting their likelihood to buy from a brand.

Therefore, impressing your existing clients with reliable customer service and high-performing products should be your top agenda. Customer loyalty strategies are worth every penny and effort, as it’s one of the pillars of a truly resilient enterprise.

 

Faith is a digital media enthusiast aiming to become an active part of the tech world by sharing her insights. She likes to blog about everything digimarketing, technology, and social media.

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