Loyalty is no longer like it used to be. For years, many startups have been adopting rapid growth models with continuous rounds of investment, focusing mainly on getting new customers by smashing prices and leaving aside certain crucial aspects for the consolidation of the company in the long term. But it is not only an attitude of the companies themselves. With the pandemic we have seen how 75% of consumers in the United States have switched brands since the start of COVID-19.
If your profile is not that of an unscrupulous shark who is only looking to make a killing and you want to build a company with benchmark products and services, the key to success lies in getting loyal customers to your products, guaranteeing recurring income in the future.
The Value of Fidelity
Brand loyalty is the propensity to buy products from the same brand to satisfy the same need. Loyalty reflects the likelihood that a customer will switch to another brand despite changes in prices or product features.
Building a loyal customer base for your brand has many advantages and can provide you with great benefits (sources: Reichheld and Schelfer at Harvard Business School and Customer Acquisition Vs. Retention – Sailthru):
- A 5% increase in customer retention rate increases profits by 25% and 95%.
- Retaining an existing customer costs 5 times less than acquiring a new one (that doesn’t meant it’s easy).
- Your customers behave as prescribers within their group of influence.
- Thanks to their knowledge of your product, your customers can provide references about its characteristics, operation, etc., making your product known even before trying it. This will considerably reduce the risk of purchase.
- The strong recognition generated by your customers cannot be achieved by other means of advertising.
- 50% of your existing customers are more likely to try any new product you launch and spend 31% more than a new customer.
- Because of the strong preference they have for your brand, your customers will bet less price-conscious than those who do not even know it.
- The probability of selling to an existing customer is between 60% and 70%, while the probability of selling to a new one is between 5% and 20%.
- A loyal customer will look more favorably on any marketing or promotional action you take.
- Customers are one of the best sources of information to improve your products.
- If you want to sell your company or get investment, there is a good chance that the best buyer or investor will end up being a previous customer of yours.
For all these reasons, if you want to grow your business sustainably, invest in retaining your customers.
Factors that Have an Impact on Retention
Loyalty begins when a user or customer has discovered one of your products because they have tried or bought it and it is the result of numerous factors such as user experience, recognition, brand association, and perceived quality.
Let’s see below how we can increase the value of each of these factors.
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1. Make it easy to contact you
When you have just purchased a product or service, there may be many reasons why you need to contact the company providing the service. You may need an invoice with certain information, you have encountered a problem, you need to make a change, etc. Finding it difficult to contact the company is very frustrating. Surely, if you have had a bad experience in this aspect, you will not repeat it again. Except for some exceptions, such as airlines, where we often have no choice but to buy from the same company again.
Whether it is a user or an existing customer, offer the same facilities so that they can contact you easily. Via phone, mail, contact forms, chat, or whatever means of communication you think is most appropriate for the type of customers you have.
When a customer contacts you for any reason, give them the peace of mind that you will treat their contact information exclusively to answer or resolve the issue they have contacted you. Don’t use their contact information to spam them or sell it to third parties. Otherwise, they will feel annoyed and will lose confidence in you and will try to avoid repeating a transaction with you.
At most, if they are satisfied with the resolution of their issue, invite them to comment on your product. Or offer them any other commercial action, but one that makes sense in the context of the interaction you are having.
3. Don’t Rush and Be Positive
Sometimes the person contacting you is angry (which doesn’t have to be with you), is having a bad day, or is just plain rude. Other times, you are the one who is frustrated, angry, confused, or stressed about problem or concern.
In any case, it’s best to keep a cool head when interacting with customers. Even through text messages or email. Don’t let your negative feelings create unnecessary tension. You will only give them reason to doubt you, the work you do, and your response.
4. Treat Your Customers Like Partners
If it is clear to you that customer retention is the key to your company’s success, look at them with great affection. Listen to them and make an effort to understand what their problem is. Instead of thinking of a quick fix to get them off your back, think of them as your partners. Just like you, they are interested in your product being the best.
In this way, you can be sure that your service will improve. In fact, many of the improvements and new features that we have been adding over time in Nelio A/B Testing and Nelio Content have arisen from requests or ideas from our own customers. But not only that, the better they feel treated, the better ambassadors they will become.
5. Speak Their Language
Doesn’t it bother you when an “expert” in any subject other than “your specialty” uses exclusively technical terms you don’t know? Don’t do the same to your customers!
Keep in mind that you can have all kinds of customers. Some will want more technical details and others just want your product to work, but without knowing the details. The vast majority of the time, by the type of question they are asking you, you will probably identify the level of technical knowledge of your interlocutor.
For those with whom you already see that they don’t understand how your product works, don’t forget that they are not fools. They may not know about this subject, but they can be great eminences in a thousand others. Therefore, be patient. With an language understandable to everyone, make sure they will know how to follow your instructions. Remember also to explain the why of things. It helps make sense and helps them retain the information.
If your customers are already experts in your subject, make sure that you offer them information at the level of detail that you would like to receive yourself.
6. Be Willing to Teach
As I have already told you, some customers just want you to serve them their product or service and make it all work. They don’t want to know anything else.
But others, whether they know about your product or not, are curious to learn more. In our experience, it is these types of customers who become the most loyal ones. And it makes perfect sense, don’t you think? If you are going to buy any product at a store (be it a hardware store, a pharmacy, a florist, or what not) and not only do you leave the store with the product you wanted, but also with additional information on how to use it to its fullest advantage, when you have the same need again, you will know where to come back to.
7. Accept Your Responsibility
No one is perfect. We all make mistakes. Sometimes, the experiences of our users and customers, for whatever reason, are not as satisfactory as we would like them to be.
I am not referring to the type of damage that can result in a legal complaint and/or the closure of a business: I hope you have taken the legal, technical, and economic precautions to minimize this type of risk. Here I am only referring to experiences in which the maximum risk you are exposed to is that the customer is dissatisfied, which means they not only tell you they’re not happy, but they also demand the return of what they have paid.
It is not about always agreeing with the customer. But you should humbly apologize and offer some compensation, if applicable. We have proven that openly acknowledging our mistakes, apologizing, and offering compensation in return has not only calm the customer’s anger, but also that our honesty has strengthened the relationship with them.
If you want to avoid having unhappy customers badmouthing you on social media, accept the fact that you can also make mistakes (and you will) and be responsible.
8. Manage Toxic Customers
At some point in your professional life, you will have been threatened, “blackmailed” or even insulted by a disgruntled client (rightly or wrongly) to get better terms or favorable treatment.
In these cases, do not lose your temple and do not play their game. It is also particularly dangerous if you show your anger on social networks. There, everyone can add to the discussion for free and your reputation can end up in the dust.
Set clear limits on what you do and do not offer. Keeping a record of all the interactions you have with users is helpful. And remember that, in the worst case, it is better to lose a difficult client than not to sleep well.
9. Do not Harm Your Loyal Customers
There are situations, especially in SaaS, in which you continually change your offering. In these cases you should never lose sight of the deal you have with your customers who have been with you for some time.
For example, imagine you offer a service to which you add more features and you want to raise prices. Are you going to offer the service with the added features to your existing customers or are you going to raise the price automatically? Another example: you want to offer a special promotion to attract new customers with prices lower than the current ones. What do you do with the loyal customer who feels aggrieved because they’re now paying more (compared to the deal you’d offer them if they were a new customer)?
Think about it. In the long run, a loyal customer will bring you much more revenue than one who buys impulsively in a special promotion.
10. Surprise Your Loyal Customers
Before the pandemic, and although our service is entirely digital, we liked to surprise our customers who had been with us for more than three months by sending them a thank you note including a detail. It was so unexpected that they immediately contacted us.
Of course, there are other ways to surprise them. You can offer them special discounts or an upgrade to the plan they are subscribed to (in the case of SaaS). The idea is, precisely, to give them recognition for being loyal to you and continuing to buy from you.
To Sum Up
Your current customers are the ones who are providing value to your company. To maintain their loyalty it is vital that you continue to provide them with exquisite support and that they perceive that they are your top priority.
I assure you that one of the most rewarding things about owning your own business is seeing your customers satisfied with the service you offer them. Besides, if one day you consider selling your business, what better buyer than a great satisfied customer who knows how to appreciate the value you bring?