To stay competitive and perform better in the market, businesses must invest in loyalty management platforms like LoyaltyXpert and reward their highest-value customers. A dedicated loyalty program can help businesses to increase customer retention and attract new customers as well. Generating loyalty is the foundation of a good customer program and a vital factor in enhancing overall retention and business growth. Over the past few years, more and more retailers have turned to loyal customers to improve their sales instead of attracting new customers. More than 75% of retailers have accepted that they are more focused on their existing markets to augment their overall growth.
Today’s business era is such where customers play a most powerful role in the success of a business. Therefore, businesses must prioritize nurturing relationships, gratifying customers, and creating personalized experiences. All this can help a business in enhancing its success rate. One important thing to note here is that customer retention is not an easy task. It needs a proper strategy and a well-defined plan to retain the existing customer base. However, the customers who are a part of a persistent customer loyalty program are likely to spend about 65% more on a brand.
Let’s look at some of the key stats and trends related to customer loyalty programs:
- More than 68% of customers say that loyalty programs greatly influence their choice of seller.
- About 55% of customers join a loyalty program with the intent to save money. On the other hand, about 37% of customers join loyalty programs to get rewards or incentives.
- About 50% of customers are ready to change their behavior to achieve a higher level of the customer loyalty program.
- More than 75% of customers think that loyalty programs have the power to make their relationship stronger with brands they purchase with.
All these stats provide a better understanding of the role and importance of customer loyalty programs and how these programs can influence customer buying decisions.
How to calculate customer retention rate
- Customer Retention Rate (CRR) is the percentage of customers a business has managed to retain over time. CRR can be calculated as:
- Subtract the number of new customers acquired over a while from the number of customers remaining at the end of the period.
- CRR= (number of new customers acquired) – (number of customers remaining at the end of the period)
- To determine the percentage:
- Divide that number (CRR) by the total number of customers at the start and multiply by 100.
Ways to create a successful customer retention strategy
To keep the existing customers happy, satisfied, engaged, and inspired to stay loyal to a brand, businesses need to create a retention strategy. Below mentioned are some of the most effective ways to create and carry out a customer retention strategy and generate loyalty in the best possible manner. Have a look:
- Focusing on a two-time buyer instead of a one-time buyer: There is no doubt that a loyal customer brings considerably more value to a business or brand as compared to a one-time sale. When a customer comes back to make a repeat purchase, it increases the Customer Lifetime Value (CLV) for businesses without extra acquisition costs. It would be correct to say that CLV data is the best way to perform a partial measurement of customer loyalty. Besides, having a second interaction with the customer is a significant milestone for building loyal, long-term, and highly profitable relationships. Even some research has revealed that two-time buyers are nine times more likely to carry out repeat purchases than one-time buyers.
Thus, businesses must focus on customers who make the second purchase. By observing their buying pattern, businesses can develop a customer retention strategy and target the right customers at the right time, with the right message delivered via the right channel to increase customer retention and drive customer loyalty.
- Use data-driven insights to create targeted loyalty programs: Instead of focusing on Customer Acquisition Cost (CAC), businesses must pay great attention to building a loyal customer base. To engage customers, businesses must first understand their customers. The best way to achieve higher customer engagement is to use the available details about the customers. Data-driven insights can help businesses generate timely and targeted loyalty programs. When carried out perfectly, these programs can keep customers highly engaged, happy, and satisfied. Businesses can even use this data to determine which products or services are most likely to generate a second sale. Accordingly, they can plan their loyalty program management process.
- Provide incentives to customers to develop long-term loyalty: Offering incentives or rewards can help businesses nurture loyalty amongst their customer base. Rewards help in increasing the excitement level among customers and encourage them to come back to generate and claim more rewards.
- Consider loyalty as a top priority: As per various studies, customer retention costs 5 to 25 times less as compared to customer acquisition costs. Therefore, businesses must embrace loyalty as their top priority. Some of the best ways to increase customer loyalty are: (a) Offering personalized and unified experiences across various channels and devices. (b) Incentivizing customers to boost their interest and make them stick by a particular brand. Keeping loyalty as a top priority can assist businesses in improving overall customer experience and customer retention strategy.
All in all, it would be right to say that loyalty is the foundation of customer retention. By executing proper customer retention, businesses can keep their customers long-term and turn them into loyal customers.