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The Challenges of a Good Customer Relations Loyalty Strategy

Written by

 Alexis Le Bagousse

Building customer loyalty is not an exact science. The phenomenon of attrition is, unfortunately, an intangible fact, and a satisfied or even a very satisfied customer is not necessarily a loyal one. And an unsatisfied or disappointed customer is even less likely to be loyal. According to a study by Bold360, 38% of people claim to have had a mediocre customer service experience, taking into account all types of channels (telephone, email, live chat, social networks, etc.). This is a large percentage of unsatisfied customers.

Of course, for brands, the goal is to maintain a robust base of satisfied customers. The rate of customer satisfaction, therefore, must remain the cornerstone of all efforts to perfect a loyalty strategy.

To surpass the “simple satisfaction” of a purchase responding to customer needs, it’s necessary to propose a real, quality customer experience.

The goal is to retain as many customers as possible, and if possible, to increase the level of engagement of some of them, turning them into active brand ambassadors.

Why build customer loyalty?

From an increase in revenue to a decrease in management and amortization costs, benefits of customer loyalty are, in reality, quite numerous.

Here’s everything you need to know on the subject.

Customer loyalty in customer relations: 3 complementary dimensions to take into account

The best chance to maximize your customer retention rate is to play simultaneously with three psychological factors.

1. Customer loyalty: the affective dimension for creating an emotional attachment

This is probably the most basic recipe for generating loyalty. The customer must simply love the brand and feel a real affective closeness to it.

Marketing services dream of establishing this special connection between the brand and the customers but the task is not so simple.

A brand looking to generate affective loyalty will make sure, above all, to cultivate a strong and proudly claimed identity, by, for example, displaying strong values.

A brand could also lean on the evolution of digital customer relations and CRM software to personalize the treatment of each customer and generate adhesion (special promotions for a customer birthday, a dedicated customer service agent, etc.).

Voice allows you to add proximity to your clients and to better measure their feelings by allowing them to directly address their requests which require a high value added response. Voice management solutions, like those by Axialys, simply favor human interactions and contact between brands and their customers in order to provide an optimal customer experience.

2. Customer loyalty: the cognitive dimension to publicize the brand’s strengths

The cognitive dimension of loyalty is, for its part, more rational. It’s founded on the knowledge that the client has –  or believes they have –  the strengths and qualities of the brand.

This time it's about a more deliberate relationship between customer and brand. The customer chooses to stay loyal to the brand because they think it’s in their interest, that it’s about a higher quality of products, or more attractive prices, or any other reason put forth.

To generate more customer loyalty on a cognitive level, it’s certainly important to take care of the competitiveness of the brand’s offer, but also to publicize its competitive advantages, via large-scale promotional campaigns, for example.

3. Customer loyalty: the conative dimension to encourage action

A loyalty policy also involves the use of certain “conative” elements, which means by the creation of a customer’s behavioral intentions in regards to the brand.

Midway between the rational and the emotional, conative loyalty is that which manifests itself, for example, when a prospect has the idea of testing a brand product to get a better idea about it, after having been seduced by an ad.

This largely determines certain elements of customer behavior, notably the purchase frequency.

Customer Satisfaction Checklist

Customer relations: How to make clients loyal

The famous “8c” model by S. Srinivasan published in the Journal of Retailing in 2002 sheds new light on the necessary ingredients for good customer loyalty.

The brand’s priorities can be summed up in these eight principles:

1. Customization 

The personalization of relations with the customer should be at the center of all your efforts. Only a client treated as an individual can develop a real attachment to the brand.

2. Choice

This is about the depth and diversity of your offer. Retaining your client in the long term requires that you propose to them a sufficiently wide range of products and services to meet all their needs.

3. Contact

The quality and availability of customer services should never be neglected.

4. Community

The management of your customer community, whether on social networks or a community forum, is an essential component of generating a feeling of belonging.

5. Character

Add personality to the offer as well as to the customer interface! The more the brand is recognizable, the more it will generate brand adhesion.

6. Convenience

Make sure, in all circumstances, to offer the customer comfortable, practical and easily accessible support. Setting up an omnichannel customer service strategy is more relevant than ever!

7. Care

Show your customers that the brand cares about their satisfaction. Order tracking tools or the right information about available products can be enough to make all the difference.

8. Cultivation

Yes, client loyalty can be cultivated! Provide rich brand news, likely to engage the client (new products, cross- or exclusive promotions, etc.).

customer-loyalty

The challenges of customer loyalty in customer relations are often underestimated...

Building customer loyalty is a good habit which can have numerous virtuous effects on the value creation and profitability of your company!

Customer loyalty is something in which all brands should invest: the goal is to capitalize on satisfied customers who buy and consume your products and services in order to generate regular revenue. Loyal customers convert and spend more with the companies they consider, talk about and discuss with friends, family and colleagues, which helps drive referrals...for free! Brands can also enjoy many benefits from implementing a customer loyalty program

In a context where a multitude of options are offered to customers, the fact that customers show their loyalty to brands is very telling. It indicates that a customer appreciates and trusts the business. It also shows that their perception of brand value outweighs the price or quality of competing brands.

Knowing that it’s more costly to acquire a new customer than to keep an existing one, mobilizing and activating your loyal customers in order to recruit new ones is an essential consideration for customer relations and marketing professionals.

The challenges of customer loyalty include the following effects:

1. A better return on customer acquisition costs

Brands know that it’s much less costly to keep a customer than acquiring a new one.

Different studies have already demonstrated the difference in amortization costs between a company that knows how to retain its clients and one that undergoes strong turnover.

A purchase made by a prospect comes out to 5 to 7 times more expensive for the company than a new purchase made by a loyal customer.

2. An increase in revenue per client thanks to customer loyalty

To take the old adage, a satisfied client is one who comes back, and therefore one who multiples their purchases!

An excellent level of customer loyalty for a company is characterized by an increase in customer lifetime value or the “life value” of each client, which means the updated sum of expected purchases over the course of their relationship with the brand.

It’s the reason for which a loyalty strategy also has a beneficial impact on the revenue of the company.

Loyalty and profitability, some key figures:

  • A gain of 5% in the customer retention rate can generate a 20% increase in return
  • A mere 5% reduction in customer attrition can increase the gains of the company in a range of 25 - 95%

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Less price sensitivity thanks to customer loyalty

Building customer loyalty will lead to certain customer inertia. 

Satisfied with your products and services and used to interacting with the brand, a loyal customer will develop a lower price sensitivity compared to a customer that is not loyal, as the non-loyal customers are always on the lookout for the best deal on the market.

If a brand can count on a large community of loyal customers, it will undergo a lower rate of brand attrition, especially after a change in its pricing.

A decrease in management costs

A loyal and satisfied customer has, by definition, fewer reasons to make any kind of claim and allows the company to reduce the overall costs of their customer services.

Customer self-service solutions like chatbots and dynamic FAQs allow you to propose a better customer experience and therefore to extend customer loyalty while reducing support costs.

According to a study by Futurum Research, by 2030, 67% of interactions between brands and consumers will be treated by intelligent machines rather than by humans.

The choice of solutions must be as relevant as possible based on the needs and specificities of your sector of activity.

Customer loyalty: the effects of recommendation

In the best of cases, a good loyalty marketing strategy allows you to identify real brand ambassadors.

Word of mouth effect is fundamental and a satisfied client will share their positive brand experience with three different people.

Why and how to build customer loyalty? Two questions to always keep at heart. By taking care of all aspects of customer experience and keeping an eye on financial results as well as surveys of satisfaction, you’ll know if you’re heading in the right direction.

Alexis Le Bagousse

Hello! I'm Alexis, your customer Self-Service expert. With my background and experience in digital customer service, I'm happy to share my insight & practical advice on how to create the best online customer experience for your users. Happy reading!

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