Ever tried to put a number on how much a loyal customer is worth to your firm. David Aaker has and here are the results:
- Increasing brand loyalty by only 5% results in 85% more profit in a major bank.
- Increasing brand loyalty by only 5% increases profits 50% in an insurance business.
- A 5% increase in brand loyalty generates 30% more profits at an auto parts firm.
- A single lost customer for Club Med costs $2400 in 1990 – now more than $12,000.
Wow – those are some impressive numbers ! What would your firm look like with 85% MORE customers without increasing marketing expenses?
So, let’s take a look at what a firm can do to increase customer loyalty.
Steps to Increasing Brand Loyalty
It turns out the steps to increasing brand loyalty are the same concepts forming the backbone of social media marketing – creating valuable customer relationships, increasing engagement with customers, and rewarding customers for their loyalty.
Sure, you can hope the customer loyalty program created by your marketing department will help keep customers, but there’s a real limit to how much these programs can do. Customer loyalty programs are passive and inclusive, while customer relationships are more involving.
1. Harness the Power of Peer-to-Peer Relationships
Even before social networks spawned from the minds of Mark Zuckerberg marketers knew that customer relationships used the power of peer interaction and engagement to bind consumers to brands. Look no further than MUDs (Multi-User D) like World of Warcraft to see how peer engagement drives fierce loyalty; generating massive profitability through monthly access fees, auxiliary items, and books, magazines, and other fan media outlets.
2. Increase Engagement
First, you have to create a brand personality – people have relationships with people. They only have relationships with things that reflect a human personality – otherwise, they might like the brand and even be loyal to it, but they won’t have a relationship with the brand.
To create customer engagement:
- Ø You have to respect customers and treat them like a friend.
- Ø You have to develop a voice; disclose something of your personality.
- Ø You have to give them things they value.
- Ø You have to work as a team with your customers.
- Ø You have to empathize with your customers.
- Ø You have to listen to your customers.
These actions create engagement and drive trusting relationships.
3. Reward Your Customers
Give customers a REASON to be loyal. It’s not enough to provide quality and functional benefits, you have to give customers emotional and self-expressive benefits – things that make them feel good themselves and about using your brand.
Look at the success of the Dove Campaign for Real Beauty that sold millions of Dove products by making women feel good about their bodies – telling them they don’t have to look like a fashion model.
Or look at what happened to Pepsi when they took the money they normally spend on Super Bowl advertising and let its community suggest local charitable projects that deserve the money.
American Express is another example of a company spending millions to generate passion. In this case, they’re spending money to help small businesses – sponsoring Small Business Saturday which urges Americans to shop small businesses and maintaining a website bringing advice from experts to help small businesses maximize their potential.
Passion is what draws people to these brand communities. And, the selflessness of companies sponsoring the communities draws folks in and makes them customers.