Loyalty Blogs

Living intoday’s hypercompetitive market, brand loyalty is often considered the holy grail of any business. Brand loyalty is when customers consistently choose your brand again and again over competitors. However, the big question is whether loyalty is a one-way approach. You may have observed a growing gap between customer dedication and brand reciprocation. This imbalance is a thing to worry about and can even threaten the foundation of customer-brand relationships.

For instance, let’s consider that you have been a big fan of the Apple brand for many years. Today, you may ask yourself when the last time that brand demonstrated its loyalty to you. Tech giants like Apple have nearly 1.5 billion iPhone users and even if you switch to another brand, Apple would hardly notice about losing a single customer. This is where brands are making mistakes by not rewarding customer devotion.

In this blog, we will find out why brands must keep their focus on reciprocating customer devotion with the help of a well-planned Customer Loyalty Program for long-term growth and success.

Reasons Why Brand Loyalty Must Go Both Ways

One common mistake by many companies is to neglect their loyal customer base to focus solely on gaining new customers. However, existing loyal customers are the ones who tend to spend more over time. A study conducted by Harvard Business Review in 2014 says that a minimal 5% increase in customer retention can lead to a profit increase of up to 25% to 95%. This is because long-term loyal customers are the ones who tend to buy additional new products, upgrades and premium services.

Rather than focusing on a traditional marketing funnel that guides potential customers only through the strategic path to conversion, brands must focus on post-purchase engagement and long-term loyalty cultivation as well. Customers today are no longer excited about free upgrades or priority lines for being loyal to the brand. Customer loyalty should be proactive rather than reactive, which means getting into action only when a customer threatens to leave. Don’t let your customers think that your loyalty programs are just discount schemes but for genuinely appreciating customer value.

Some of the ways to integrate a new shift in how we approach loyalty through next-gen brand loyalty programs–

1. Personalized Experiences

Brands must go beyond standard free upgrades and instead focus more on creating tailored experiences that truly demonstrate appreciation for a customer’s support.

2. Integrated Systems

Make use of a robust integrated system that can help to trigger alerts based on the change in customer behaviour. For example, if the customer who usually spends around $50k in a year suddenly drops to $49k, then the brand should trigger immediate attention to take action.

3. Proactive Approach

Avoid taking action only when customers come up with problems. This means brands must check in regularly with customers, ask them for feedback from time to time and show genuine interest in their evolving needs.

4. Transparency in Communication

Always be open to changes in policies or services and make sure that your customers are aware of them by providing clear explanations for any updates and how it is going to impact them.

5. Offer Tangible Value

Ensure that your brand offers exclusive and valuable services, insights and experiences that add tangible value to loyal customers.

Significance of Reciprocity to Boost Customer Loyalty

Businesses often think that acquiring new customers is more costlier than retaining old ones and maintaining existing relationships. Research says that businesses have around 60-70% chance of selling to an existing customer rather than selling to a new prospect where chances dropped between 5 to 20%. Additionally, customer acquisition costs are not cheap with a growing number of ad blocker tools available in the market today. That is why, brands must master reciprocity to boost customer loyalty.

Reciprocity, in simple terms, can be defined as a social norm of responding to a positive action with another positive action similar to the concept of mutual benefit for both parties. For instance, if a customer is loyal to your brand, the brand must reward the customer’s dedication with exclusive experiences, personalized rewards or any offering in return. Customers will feel more appreciated and valued making them more likely to go back to the same brand over and over to give back the kind of behaviour they have received.

Let’s consider the example where brands offer free product samples encouraging customers to buy the product in return. One brand that takes advantage of this concept is Amazon’s Prime service with a free 30-day trial, which enables customers to experience the convenience of Prime making them more likely to pay for the continued service. This demonstrates a reciprocation of the initial free experience without requiring customers to pay for the service.

Here are some of the ways that show how the reciprocity between brands and customers plays a huge role in building and enhancing customer loyalty-

• Increase Repeat Purchases

Customers who get more than they expect like getting rewarded for their purchase from the brand are more likely to make repeat purchases in the long run. This helps in instilling a feeling of goodwill, which makes the customer more likely to ‘return the favour.

• Build Customer Trust

Generous acts like special offers on occasions like birthdays and anniversaries can build trust. Once customers trust the brand, they’re more likely to stay loyal over time, even in a highly competitive market and price surge.

• Boost Brand Reputation

Brands offering excellent customer service or generous acts will have a strong reputation as compared to competitors. Customers are more likely to stay loyal to brands having positive brand reputations and may even become brand ambassadors, sharing their positive experiences with others and bringing in new customers.

• Strengthen Emotional Connections

By offering free value-added services or products, your brand can build stronger emotional bonds with customers, thereby leading to long-term loyalty.

Final Thoughts

Loyalty programs have come a long way and have transformed tremendously over the years to meet changing market demands and customer expectations. When you build your loyalty program, make sure that you integrate the latest technologies and innovations like predictive analytics, hyper-personalized rewards, tailored communications, sentiment analysis, automated triggers, etc.

If you are planning to create a loyalty program that is more responsive, more personalized and more valuable, connect with the experts of Novus, an all-in-one Enterprise Loyalty Software that will help your brand strategically demonstrate genuine customer dedication. Having years of experience in providing custom loyalty solutions to several brands, we have helped them step up their loyalty game to boost long-term relationships and brand loyalty. Book a demo to learn more about Novus today!