Loyal customer

How to retain loyal customers: 5 learnings from industry experts to instantly earn customer loyalty

Written by on February 19, 2019

Retaining loyal customers is a hard day’s job, but a job that’s undoubtedly worth every bit. As customer-brand relationships gain more importance in today’s economy, brands are realizing the gravity of having loyal customers and the positive outcome that tags along with earning customer loyalty.

What is customer loyalty?

Customer loyalty in a subscription-based economy is more like an evolving marriage. You build meaningful relationships, you want your customers to be loyal, you want them to be happy, and want them to talk about you all the time. In an ideal world, you have a straight shot at acing this marriage. The customer sees your product, buys it, uses it, loves it, and stays true to it forever. But, just like any normal relationship, this can only happen in dreams.

I somehow always thought that every person can learn a lesson or two about customer loyalty by observing their marriage. After all, loyalty is a gamechanger in every relationship, be it between people or between people and brands.

Who are loyal customers?

Simply put, loyal customers are your customers that stay faithful to your brand and genuinely love your product and service. They don’t essentially need ‘gifts’ and ‘loyalty programs’ to keep them happy or persuade them into buying your products. They buy your products to satisfy their needs and truly believe that your product does a good job at doing so.

In most cases, loyal customers act as your brand’s advocates.

They are not shy to speak good things about your product. They help you grow. They are interested in providing constructive feedback to help you get better.

Why should you care about customer loyalty?

Now, in this process which is comparable to marriage, your customers have dreams; they want to be successful, they want to get to a place. It’s up to you to decide if you want to travel with them and help them be successful and it’s up to them if they want to remain loyal to you. Because let’s face it, they have a lot of good options around.

With the high supply of good products and attractive services, customers have an option to play a powerful game of choice. ‘Choice’ has opened gates to the natural law of likeability — you lose if you don’t keep up. So, if you don’t spend your breath creating an environment that can be liked by your customers, they are just going to leave you, oh so soon!

How do you measure customer loyalty?

Marketers use an arsenal of sophisticated tools to measure different aspects of customer engagement, loyalty, and happiness. Brands spend millions of dollars to try and understand how to make the customer use their product more and how to improve customer retention. I’m sure you are aware of metrics like NPS, customer retention rate, customer effort score, and so on. Since a lot has been said about metrics to measure customer loyalty, I’m not going to talk about that here. I’d rather like to point out the ‘how’ or in other words the one shift that you should try to observe while you measure customer loyalty — attitude to behavior.

Behavioral metrics are the actual measure of what the customer ‘did’ as opposed to attitudinal which addresses what the customer ‘would do’.

Attitudinal loyalty relates to how loyal a customer ‘feels’, and behavioral loyalty refers to how loyal a customer ‘is actually’. Decide on which group are you speaking to. For obvious reasons, behavioral metrics are a more accurate measure of loyalty.

Attitudinal loyalty is aspirational and comes down to how people associate with your brand and how differentiated you are.

Behavioral metrics provide a more accurate measurement of loyalty and happiness.  

Behavioral loyalty is a matter of being present, with content tailored to your audience when they need it most, across channels and devices. Can you serve them at all points? Can they engage in conversations at any point through their most prefered channels?

5 learnings that can instantly boost your customer’s loyalty — lessons from the industry’s best brands

All right, I think I’ve said enough about customer loyalty and also about it being comparable with marriage. However, considering the fact that even the person who invented marriage has not been able to figure out the scheme of loyalty within relationships, let’s leave it to brands that are industry experts in customer loyalty to teach us things about earning customer loyalty.

But before we start, remember, customer loyalty is a marathon and not a sprint. Take it slow; make it meaningful. Here are five mini-case studies that can teach you how to earn loyal customers.

Engagement and habit-building — the Netflix way

With around 130 million loyal subscribers, Netflix warrants to be one of the best examples of brands that excel in customer loyalty and retention. Here is the churn percentage of Netflix as opposed to other media houses. You can clearly see that Netflix has the least churn rate.

Loyal customers

We all know that great customer service is the first gate to loyal customers; however, with the competition in the market skyrocketing to forbidden heights, more companies are ready to offer great service, sometimes better than yours. But very few companies get the engagement route right.

Netflix created a revolution in the content commissary business, so much so that they are competing against large enterprises like Disney and HBO which have been all-time stars. And they did all of this using the powerful tool of customized engagement and habit-building.

If you to go the Netflix way, you can be assured of maximum retention compared to any other method. Here is a glimpse of the trend in their current churn rate.

Retention

The best part about this case study is that Netflix doesn’t really follow a loyalty program or strategy. They make their service so good that users are engaged at all touchpoints and build a habit. Here’s how Netflix did it.

Building great content

Yes, I know Netflix is primarily a content-based platform, so it makes sense for them to produce great content. But I’m not talking about the shows that they produce. I’m talking about the branding they create with the help of content, through their ads, blogs, and podcasts. That being said, whichever domain you are part of, whatever solution you are offering, it’s important to understand that content is the foundation for engagement. Content is one channel that lets you voice out your brand’s opinion and what you stand for. You can share your company’s story, the problem you are trying to solve, how to make use of your product better, trends, benefits, the ‘why’ factor, and so on. Try to roll out content in different formats like blogs, podcasts, newsletters, and videos. Offer variety and give your audience the freedom to choose what they want to learn from you. Let them discover their taste through you.

Listening to data that matters

Netflix is one company that pays attention to behavioral metrics as opposed to attitudinal metrics. Here’s what Reed Hastings recently had to say about measuring the right data at Netflix:

Everyone would rate “Schindler’s List” five stars, and then they’d rate Adam Sandler, “The Do-Over” three stars. But, in fact, when you looked at what they watched, it was almost always Adam Sandler. And so what happens is, when we rate, we’re metacognitive about quality, that’s sort of our aspirational self. And it works out much better to please people to look at the actual choices that they make, their revealed preferences by how much they enjoy simple pleasures.

Netflix believes in observing what people watch rather than asking them what they would like to watch because they realized that the results were almost always aspirational and not accurate.

Personalized engagement

As stated before, Netflix observes things like the number of users who watched a particular episode, users who watched an entire series, how much of a gap was there between when the user watched one episode and the next, and so on. This, in turn, allows them to churn out content that is customized to the customer’s preference.

Netflix goes to the extent of personalizing trailers and posters for the users. To give you a simple example: Netflix didn’t just settle on one trailer to introduce users to House of Cards. Kevin Spacey’s fans saw trailers that exclusively featured him. Women who watched Thelma and Louise saw trailers featuring the female protagonists of House of Cards and big-time film buffs saw trailers that reflected Mr Fincher’s finest directing moments.

personalization

Emails and in-product messaging

Netflix is a brand that stands for sophistication and individuality. They believe in being as non-intrusive as possible and let their engagement play at the back of our heads instead of hitting us bang-on. Netflix sends personalized in-product messages and email notifications just to let you know whenever the next episode of something that you have been watching comes out. They also subtly talk about what you have been missing on just to ensure retention.

push notifications

Breaking the barrier — the Hostelworld way

The best way to earn loyal customers is to solve their biggest problem.

This is one of my most favorite stories. Hostelworld allows travellers to book hostels in any part of the world. They wanted to increase brand stickiness and wanted people to come back and use their app more frequently. They did not have a problem with getting new users but somehow found it to be really difficult to achieve customer loyalty in the travel industry. There is always someone offering lower prices than you, or someone offering better cashback.

Look before you leap

To start with, Hostelworld decided to understand the likelihood of travellers coming back to their app. They wanted to understand what it takes for a traveller to be a loyal customer. This step is extremely important before you jump into conclusions and engineer a loyalty program. Because, at the end of the day, your customers might not really look for a rewards-based loyalty program at all. Hostelworld found that loyalty programs were not the primary reason for customer loyalty. Their research showed that loyal customers preferred innovative and proactive customer service as opposed to loyalty programs.

listen

Engineer your service to solve a problem

The best part about travelling is meeting people from all over the world. But if travellers can only talk to people who speak their language, experiences are limited. 72% of Hostelworld’s customers were solo travellers. Hostelworld decided to solve this language barrier to in turn help with retention.

To help hostel visitors communicate, Hostelworld added a translation feature to its app and promoted the functionality on social media. They positioned themselves as an app that allows you to meet the world, instead of calling themselves a hostel-booking app, allowing users to engage in fluid conversations in up to 43 languages, which turned its app into a truly assistive travel companion.

Loyal customers

The results of Hostelworld’s “Speak the World” campaign show how relevant this utility was: it saw an increase in user engagement, app installs, and a reduction in the estimated consumer price index.

Truly special experience — the Amazon way

Amazon is known to have loyal customers who fail to switch to other competitors. One straightforward takeaway is that Amazon offers A-class service. They truly bend their rules for their customers and go above and beyond to give their customers what they want. Another great lesson that you can learn from Amazon on retention and customer loyalty is how the product incorporates a subscription model inside of its e-commerce platform. Amazon members have access to ‘Amazon Prime’ which offers special features truly customized for their loyal customers.

Ecommerce churn

Amazon provides some incredible benefits like one-day delivery, exclusive access to original content, personalized discounts, and so on to its loyal customers. Though this feels more like instant gratification, you need to understand that this is part of their customer retention strategy. Amazon understands that their loyal customers want to enjoy a premium treatment at a lower cost compared to others and that is exactly what Amazon offers.

Social proofing, for the win — the Beardbrand way

We are in the age of thorough connectivity and social influence. Beardbrand decided to leverage this validation-seeking behavior of the current generation and create a community that engages and encourages communication between like-minded people. Beardbrand sells premium grooming products for men, a domain that is difficult to crack. They decided to sell their vision instead of their products; ergo, creating a community that believes in the same vision.

Their vision for the community and the brand is to collaborate with like-minded men and to foster style amongst urban bearded men.  

Reduced churn

Beardbrand sells exclusive membership to it’s Alliance club at a monthly subscription cost of 30$. Through this membership, you can meet and interact with like-minded people. You also get points that can be used to purchase any of your favorite Beardbrand product on a monthly basis.

The community in itself has a CSAT score of 5 (showing 100% customer satisfaction) and also fosters loyalty in its customers.

Take the conversational pledge — the Freshdesk way

Freshdesk is an intuitive customer support software. One main problem that the Freshdesk customer success team faced was that they did not have a proper channel to interact with their customers on a regular basis. Especially the ones who are about to churn. Till then their customers directly went ahead and cancelled inside the product without really responding to the customer success team’s emails. Enter Freshchat — a modern messaging software. Freshdesk ran multiple in-product campaigns to engage with the customers and saw a tremendous increase in the response rate which is an important leading metric for customer success. Freshdesk saw ~50% response rates as a result of chat triggers which is 10x higher than the standard email response rate from risk accounts.

Live chat

Deploying a live chat solution on your website and product truly changes your engagement game and provides a conversational solution to most of the problems related to retention. Your loyal customers want to interact with you at all times and expect you to be accessible. The best part about using a live chat tool is its versatility. You can use the tool for multiple use cases — running in-app campaigns, sending push notifications, engagement, conversational support, capturing lead details, send and receive feedback, get real-time reports, monitor customer metrics, and so on.

That’s all folks! Remember this — loyal customers are delicate and must be handled with care. It’s always good to learn from the big players in the industry to formulate a retention strategy that works for you. You can test the waters and stick to the one strategy that helps you build your army of loyal customers. After all, attracting loyal customers involves learning more about your customers and helping them succeed in their journey. Hear them out, stay true to them, and win together!

Blog cover illustration by Karthikeyan Ganesh!

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