How to build customer loyalty

Learn how to build customer loyalty and get tips for building a customer loyalty strategy in this section.

Table of contents:
Understanding customer loyalty
How to build customer loyalty
Measuring customer loyalty
Customer loyalty case studies and industry-specific strategies
Customer retention: Long-term strategy
More CRM and call center learning tools
 

 

  How to build customer loyalty  

Figuring out how to build customer loyalty is a complex task. Businesses can use many methods to build loyalty among their customers. It's usually a combination of carefully selected marketing initiatives and excellent customer service that will keep a customer loyal -- but an individual business must find the combination that works best for them. Employee loyalty and satisfaction also play a role in building and sustaining customer relationships.


Tools for building customer loyalty
Customer self-service technology can be a customer acquisition strategy if used correctly, according to expert Lior Arussy. "There are two types of online customer service initiatives: efficiency-driven and customer-driven. The efficiency-driven initiatives are based on internal goals to save money and they can often damage the customer experience and loyalty. The customer-driven initiatives respond to certain market segments that prefer convenience and lack of human interruptions in their customer experience. In the case of customer-driven initiatives, customer loyalty can be increased as long as the Web experience is pleasant and customizable. However, one of the risks is that with online customer service all competitors might look the same. There is value to the human touch that comes with a call center interaction and the ability to transmit passion and commitment between employees and customers. These abilities should not be underestimated."

When using newsletter marketing campaigns for building customer loyalty, there is no standard schedule for any communication with customers, according to expert Michael Lowenstein. The content and method, as well as the frequency, of messaging to customers is what determines value. In research conducted by Lowenstein on this topic several years ago, "customers reported an interest in receiving communication from suppliers as long as they could see personal value in each message. This should be tested and reviewed on a continuous basis."

How to build customer loyalty in banks
Banks are trying new ways to keep customers coming back. The latest marketing campaigns from TD Waterhouse and WashingtonMutual have everything to do with something they are not doing: charging ATM withdrawal fees. Giving up on fees of any kind is not easy for the banking industry. Fee income has more than doubled as a share of commercial bank operating income since the early 1980s. But banks are starting to understand the effect fees have on customers. They are starting to adjust their fees based on customer value. They're even getting rid of some fees in the interest of building customer loyalty and retention.

Quality monitoring software tools are helping to shift the vision of the contact center as a place to derive business value rather than just a cost center. Traditionally used as a compliance tool and to review and train agents, quality monitoring technology is evolving. Some of the major vendors are developing analysis tools to get business intelligence (BI) from recorded customer interactions. Organizations are realizing there is a wealth of information stored in these interactions. Tools like speech analytics can map words or phrases to help find what causes customer service problems. Word spotting or phrase identification can provide information about the call record, and emotion detection tools can recognize customer emotions through changes in energy, volume and voice pitch to identify problem customers.

This excerpt from Donna Fluss's The Real-Time Contact Center gives an overview of the way call centers can use real-time analytics to create and sustain customer loyalty.

"Practically speaking, all contact centers that handle live inquiries from customers, partners, investors or prospects are real-time organizations and always have been. However, a real-time contact center is designed to take advantage of every customer-initiated transaction in real time or near-real time, either when the customer is on the line or immediately thereafter, within time frames established by the customer, to ensure a great experience and complete satisfaction. It's a service and sales environment where, after the initial customer inquiry or sales request has been addressed, the agent or self-service system uses the information provided by the customer, in real time, to extend the relationship. This means that the contact center must hire and train agents who are as comfortable with selling as they are at servicing. It must have real-time systems that are able to spot and assess a customer opportunity while the customer is still on the line and supply the agent with one or more new revenue, retention or loyalty-enhancing opportunities to present to the customer."

 Learn more on how to build customer loyalty and keep loyal customers with these tips:

  • Four tips in four minutes: Building customer loyalty: Get up to date on technology that can help build loyalty, and find new ways to use these tools as part of a loyalty strategy.
  • Ten myths about your customers: Strategies for creating customer loyalty: This sample chapter from Who Stole my Customer? Winning Strategies for Creating and Sustaining Customer Loyalty debunks 10 common myths about customer needs and provides advice on how to keep customers loyal.


Building effective marketing strategies for customer loyalty
More businesses are moving toward relationship marketing in dealing with their customers as more customers expect a personalized experience. Considering relationship marketing vs. transactional marketing for building customer intimacy takes into account a long-term view. According to loyalty expert Michael Lowenstein, "relationship marketing is all about creating longitudinal bonds with customers, which will produce stronger, long-term purchasing and word-of-mouth activity. This type of marketing will also increase referrals, price and service tolerance, plus a willingness to provide information and active inclusion of purchasers in product development. Transactional marketing is all about delivering the rational, or functional, basic table-stakes components of value delivery. This type of marketing generates passive, transitory and reactive relationships with the customer, and tends to be short-term in nature."

Technology may make marketers' jobs more difficult even as it offers more ways to reach consumers. Despite technological advances intended to improve and simplify life for marketers, a recent study finds that marketers are losing touch with customers. Providing metrics and visibility into the customer acquisition and retention pipeline, global competition and new technology are increasing pressure on marketers to the point where they're losing day-to-day contact with customers, according to a recent study from the CMO Council. Although marketers recognize the importance of reliable customer data, two-thirds of respondents to the recent study said they had no formal system for tracking marketing's role in customer acquisition, retention and value creation; more than a third don't have a model or profile of the best customer or opportunity; and just under a third had no reliable data on revenue value and profitability of key accounts. However, there are some marketing organizations that have achieved customer intimacy. Common traits across those companies include marketing control over segmentation and targeting, direct contact with customers and robust data systems that generate reliable customer information.

 Find more on marketing loyalty strategies with this tip on exploring customer behavior, from the book Market-Driven Thinking: Achieving Contextual Intelligence.


Considering employee loyalty and satisfaction
Employee loyalty has an impact on customer loyalty and retention. A recent study from the Strativity Group Inc. found that organizations know they need to differentiate their customers and foster loyalty -- but often, they aren't following up on their promises. Any effort to transform a company into a customer-centric organization will fail if front-line employees do not have faith in the product -- or faith in the company. And, according to the survey results, only 54% of respondents said the company deserves their loyalty. The study also found that while organizations are taking an interest in improving customer loyalty and making their business customer-centric, they are not backing those steps with tools and metrics. In fact, employee loyalty and satisfaction with a product is more of a leading indicator of customer-centricity, while customer loyalty is a lagging indicator.

 Get more on employee satisfaction and customer loyalty with this expert answer from Michael Lowenstein: Customer loyalty through employee retention

 

This was first published in May 2007

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