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customer loyalty

Maximize Customer Loyalty: The Guide to Creating Passionate Fans

Rhys Williams
By Rhys Williams — May 7, 2024 -

Read time: 15 mins

Creating loyalty around your brand requires passion and enthusiasm. Not only do you have to deliver more value for your customers than your competitors, you have to be exciting, unique and engaging. Creating genuine loyalty means winning your customers’ hearts.

A tough challenge. And not one every brand meets.

Those that do have something in common: a methodical, strategic approach based on customer data. Well-rounded first-party data is the quantifiable foundation on which your customer loyalty strategy can be built. Insights into how your customers perceive your brand, their feelings towards you, and the actions they take to promote you, provide many more opportunities to convert your first-time or casual shoppers into devoted fans of your brand.  

 

What is customer loyalty?

Customer loyalty refers to Loyal customers are those who consistently choose you over your competitors.  It provides many benefits, including a reliable source of revenue, increased lifetime value (LTV), and greater brand visibility thanks to your enthusiastic followers.

But more than anything else, customer loyalty marketing is about establishing an emotional connection. Relationships built on customer love will always trump small differences in price and product specs. 

You have to make sure of two things:

1. Your products are outstanding: Ultimately, if the quality of the product or service is not up to par, a bounty of loyalty points or an expertly crafted email campaign will not convince people you’re worth sticking with. Quality is a key driver of customer loyalty, independent of any additional incentives.


2. Your customer experience is even more outstanding: If you offer a similar product or service to several others in the market and can’t differentiate on quality alone, the best and boldest way you can mark yourself out is through your CX. If your customer journey is convenient, engaging and personalised, customers are going to want to shop with you again. Getting this right across every place you interact with your customers, from personalised acquisition ads to responsive customer service, is the only real way of building true loyalty.

 

Why is customer loyalty important?

The importance of customer loyalty is not to be understated. As McKinsey and Fred Richeld show, “a company’s most loyal customers are also its most profitable”. The more deeply customers identify with your brand, the more exciting and robust your business fundamentals will become. The value of customer loyalty cannot be overstated as loyal customers are:

  • Less expensive: It’s far cheaper to keep your current customers than to find new ones. Enjoying high repeat purchase rates doesn’t eliminate the need for marketing, but the cost of maintaining a happy customer is massively lower than attracting a new one. 
  • More adventurous: Loyal customers are more open to trying out new products. Because you’ve already built a relationship of trust, existing customers are 50% more likely to give your newly launched product or service a go than their newly-acquired counterparts.
  • Steady buyers: Loyal customers don't just come back; they tend to spend more each time they do. They buy 90% more frequently and spend 60% more in each transaction. A steady stream of sales from people who already love what you do is crucial in building a sustainable business.
  • Potentially, your most enthusiastic promoters: By cultivating a strong bond with your loyal customers, You can bring them to the point where they just can’t help themselves from becoming vocal champions of your brand. Get them to this high peak of loyalty and you’ll have a passionate customer advocacy marketing machine from right within your own customer base. 

 

What’s the difference between customer loyalty and customer retention?

Customer loyalty is not just a matter of repeat spending. Of course, maximising revenue from customers is a fundamental business goal. But when your customer makes a repeat purchase, it’s the end of a process, the culmination of their journey. 

The KPIs that you use to measure customer retention and loyalty are sometimes the same. For example, there’s no meaningful way to assess where you are as a brand on either score without knowing:

  • Repeat purchase rate: Not all customers need to buy from you again immediately for you to effectively build loyalty, but you need to increase this percentage over time to drive sustainable growth.
  • Customer lifetime value (CLTV): The total value customers bring to your brand is a crucial reference point for understanding and building retention and loyalty.

But customer loyalty touches something deeper, reflecting an emotional commitment to your brand. Loyal customers don't just continue to use your product or service out of habit or convenience, or because of the points you offer through your loyalty programme, they do so because they have an affinity with your brand that is hard to shake.

To measure this, you need to look at indicators that more specifically measure loyalty:

  • Engagement metrics: These include metrics such as email open rates, social media interactions, and time spent on the website. Higher loyalty engagement makes building loyalty easier, the more you’re able to interact with your customers, the more chances you have to build a relationship with them. 
  • Customer satisfaction score (CSAT): This metric is gathered through customer feedback surveys post-purchase or post-interaction. Satisfied customers will reward you with their loyalty, so measuring your performance gives you a good idea of your prospects for boosting loyalty.
  • Net Promoter Score (NPS): NPS is obtained by asking customers a single question: "On a scale of 0-10, how likely are you to recommend our brand/product/service to a friend or colleague?" Based on their responses, customers are categorised into Promoters (9-10), Passives (7-8), and Detractors (0-6). The NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters. A high NPS indicates that customers are more likely to act as brand advocates, reflecting a strong emotional commitment. 
  • Customer feedback and reviews: Analysing feedback and reviews can provide qualitative data on customer sentiment and loyalty. Positive reviews and proactive feedback suggest a loyal customer base that’s invested in your brand.
  • Loyalty programme participation: Participation in loyalty schemes offers insights into how committed customers are. Metrics here can include sign-ups, active participants, and redemption rates.

 

What’s the difference between customer loyalty and customer advocacy?

Think of it this way: loyalty is the foundation that allows you to build customer advocacy into your customer base. 

Customer advocacy is when customers promote your brand through referrals, reviews, word of mouth and social media. When customers are so satisfied and committed to your brand that they actively promote it to others, they’re showing you a very high level of loyalty, driving sustainable value to your business by sharing their positive experiences and influencing others to spend with you too.

The transition from loyalty to advocacy is significant because it represents an evolution from passive satisfaction to active promotion. To nurture this transformation, you need to exceed expectations in your interactions with customers: 

  • Make your referral programme attractive: exclusive offers, rewards, and opportunities to provide feedback can incentivise customers to take that crucial step from repeat buyers to brand advocates.
  • Use the right kind of customer data: There’s much more to gathering data than collecting purchasing history. To build a passionate base of customer advocates, you need to understand what motivates their buying (or non-buying) decisions. Actionable data that maps out the degree to which your customers are engaged with, devoted to, and willing to promote your brand is the master key to building genuine loyalty. 

 

Strategies to build customer loyalty

A good loyalty strategy builds personal relationships with customers. High-quality data that's intelligently and sensitively used, and a deep understanding of your customers’ motivations are the building blocks of genuine brand loyalty.

 

Your customers have feelings 

Customers are people, not just buyers! If you can find a way to tap into their feelings and understand the motivations behind buying decisions, you can establish a durable emotional connection with them. This is one of the biggest advantages of customer loyalty.

Shared values, brand personality, and your commitment to high-quality products are all great ways to demonstrate to customers that you care about them beyond their purchases. If you do this well and often enough, they’re much more likely to feel a sense of loyalty to your brand.

 

Customers are individuals

Personalised CX that treats your customers as individuals enhances loyalty. High-quality customer data allows you to anticipate needs and preferences, tailor offers and messaging, and create a more engaging and relevant experience. 

 

Moments of delight stick with customers

If you can craft truly magical moments in the customer journey, you’ve gone a long way to winning the affections of your customers. These moments don’t have to cost you the earth or take years of planning, you just have to be willing to do that little bit extra, be a tiny bit more creative and thoughtful, and you’ll find a way into your customers’ hearts. 

 

Active loyalty is better than passive loyalty

Sometimes, customers have a certain degree of loyalty but not enough to promote your brand. With a good understanding of how your customers feel about your brand, you can turn passive customers into enthusiastic promoters. 

 

You need more than a loyalty programme to build true loyalty…

With rewards, discounts and incentives designed to keep your customers yearning for more, you might think the most important part of brand loyalty is your loyalty programme. But the mission to build lasting and genuine loyalty is far bigger and more important than a single scheme. 

We’re not saying loyalty programmes are a bad thing, far from it: the rewards and discounts you offer play an important role in incentivising repeat business. Used in the right way, loyalty programmes are a crucial stepping stone on the path to true customer loyalty. You can use the information you get and the incentives you give as a way to build deeper, emotional connections with your brand. 

But on their own, they are not enough. To get your customers to really care, you need more.

 

But you also need an excellent loyalty programme!

With all that being said, you do need a loyalty programme to make customer loyalty work. While the core of customer loyalty hinges on emotional connections and trust, a good loyalty programme can serve as a powerful tool to deepen these relationships. It provides a structured way to recognise and reward customers, which, when done right, enhances the overall loyalty-building strategy of a business.

 

How to use loyalty programmes the right way

Using loyalty programmes effectively means seeing these tools as part of a broader customer engagement and retention strategy:

  • Align loyalty programmes with customer values and expectations: Your loyalty programme should fit the values and expectations of your customers. It should reflect what's important to them, whether that’s sustainability, premium experiences, or cost savings.
  • Use data to personalise rewards: Customer data can help you offer rewards that are meaningful to each customer. Purchase history can feed into this, and advocacy data can play a decisive role in making customers feel valued and understood.
  • Create tiered rewards systems: Implement a tiered system within your loyalty programme to encourage more frequent and higher-value purchases. You can allocate points based on purchases and also recognise actions that promote your brand — like social media shares and referrals — within your rewards structure.
  • Consider an experiential loyalty scheme: Experiential rewards such as exclusive events, early access to products, or unique services can create memorable moments that reinforce the emotional bond with your brand and are an attractive alternative to points-based loyalty schemes. 
  • Integrate the loyalty experience across all channels: Your loyalty programme needs to be easily accessible across all customer touchpoints, including in-store, online, and mobile. A seamless experience across these channels enhances convenience and usability, encouraging more active participation.

 

Use advocacy marketing to build true customer loyalty

An advocacy marketing strategy can be a huge driver of customer loyalty. Customer advocacy — when your brand fans actively promote you — is the highest stage of customer loyalty. But you don’t have to wait for your customers to reach the peak of the loyalty mountain to take advantage of advocacy marketing. 

An advocacy marketing strategy can inform all your efforts to build customer loyalty, and its methods work at every stage of the loyalty journey. You can use it to:

  • Get to know your customers better: All the reviews, social media engagement and referrals your customers make are telling you a huge amount about how loyal they are and how they feel about your brand. If you have the right tools to harness that data it can put a rocket under your loyalty-building efforts. 
  • Build more engaging experiences: Once you have access to data that isn’t limited to past purchases but also provides information on customer sentiment, you are armed with the knowledge you need to create messaging, offers and journeys that are more relevant, personal and exciting. 
  • Nurture customers along the loyalty journey: No matter if your customers are occasional shoppers or longtime repeat buyers, advocacy data will help you take the next best action with them. Sentiment analysis and information about advocacy behaviour allow you to predict how much value they can potentially drive to your business over the next 12 months. It helps you retain and build loyalty with customers who might otherwise lose interest. It also identifies those who might never become devoted fans, saving time and money on marketing budget and allowing you to relocate it to customers who are potentially much more valuable.  

 

Build your business on customer love

Building customer loyalty is both an art and a science. Navigating this terrain to build genuine loyalty, connection and affinity within your customer base means taking a strategic approach. 

Building a loyal customer base means creating a community of advocates around your brand. Mention Me's Customer Advocacy Intelligence Platform allows you to harness the power of their enthusiasm and commitment, offering the insights and tools necessary to transform customers into passionate brand fans and unlock the hidden value in your customer base.  Request a demo.

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