When working to grow their business and revenue, companies often focus most (if not all) of their resources on attracting new customers. The problem, however, is those efforts are wasted if the new connections don’t stick.
Customers expect (and deserve!) personalized, convenient, and fulfilling experiences. If a customer tries a new brand that fails to deliver on their needs—especially during the earliest interactions—they have little reason to support it. And this is about more than just customer service.
That’s why the most successful companies prioritize customer retention and loyalty alongside acquisition.
There’s a common belief that it can cost 5 to 25 times more to acquire a new customer than retain one (with the exact cost depending on the industry and how the cost is calculated). But there are additional reasons to retain customers. When customers are loyal to a brand, they:
It’s hard to deny those advantages! Retention is a smart investment for your budget that can cement your customer loyalty and boost their lifetime value. But now comes the big question:
What does it take for customer experience teams to build loyalty and retention?
The answer and best strategies are backed by science and decades of social behavior. Let’s explore the ideas you should know to build loyalty, increase referrals, and deliver a win-win for your customers and your organization!
Brand leaders often associate “customer loyalty” with a customer’s likelihood of making repeat purchases. That’s certainly a benefit of customer loyalty, but there are deeper forces at work.
Loyalty as an emotion spans several areas, including trust, competency, reliability, transparency, and value. Customers need to gain a clear value from your product or service, believe your brand is an authority in your space, and trust you with their time, money, and data. They also need consistent experiences that prove they can count on your team.
Every interaction at every stage of the customer’s journey can affect loyalty. But first and foremost: even the best customer retention strategy won’t save a bad product.
Half of customers say their loyalty is won or lost based on the quality of the product or service they purchase. Simply put, the quality of what a customer buys is table stakes and one of the first areas to improve if you’re experiencing customer churn.
Ask yourself the following questions to assess if you have a product or service quality issue:
If your core offering delivers on what your customers need, you can now focus on nurturing the relationship and earning loyalty in calculated ways. This involves understanding the emotions your customers have when engaging with your company, whether in-person or online.
We like to think we’re in full control of our actions. However, there are psychological factors that we often don’t realize influence our behavior.
By understanding how human brains work, brand leaders can better engage customers in ways that address their subconscious needs and deliver experiences that promote positive emotions.
To start, there are a few chemicals and neurotransmitters that have a strong impact as customers interact with your brand and organization:
The three are complemented by a few behavioral science concepts that also sway customer behavior.
Humans have a constant need to justify their choices and feel good about them. Cognitive dissonance is the tension we feel when we hold two conflicting feelings at the same time.
“I know I deserve this new sweater and I love its premium quality, but the price is high—I could afford two of a lower quality.”
Support positive post-purchase rationalization by reinforcing the value propositions at all stages of the journey. Importantly, your team must understand what your customers value most to promote these details on pre- or post-purchase materials. AND this has to come from a place of integrity. If you believe your customer will get value, then focus on the value they will receive.
When people own something, they place a higher value on it than they otherwise would. This is why it can be incredibly difficult to pull customers away from a competitor.
Free trials are often a smart way to attract customers and get them to realize the value of your product. In an ideal scenario, the customer will see an immediate benefit of your solution and start to feel as though they already own it (or should, at least!). Once they feel this sense of ownership, they are more likely to move past the trial phase and become an official customer.
Personalization can help customers feel ownership, too. Consider how YOUR Netflix playlist or Amazon recommendations help you move forward with your next decision.
The herd mentality is powerful in guiding customer shopping behaviors. When people see their friends, family, and those they admire using a product or service, they want it, too! This is why many brands invest in influencer marketing and employee brand advocacy.
Constantly listen for and promote customer testimonials, and ask happy customers to leave reviews. Encourage customers to tag your brand on social media or use specific hashtags to connect with other customers and your brand’s larger community. And don’t be afraid to recognize the community at large. Lady Gaga has her Little Monsters and Taylor Swift has her Swifties. There’s a reason they named them—calling out to all of them helps each person feel individually connected as a community.
By bringing all of the brain science together, your customer experience team can find new ways to engage customers and strengthen your connection with them. The following are just a few ideas to help you get started:
There is immense value in understanding the psychological drivers behind customer retention and loyalty. Providing reliable and valuable customer interactions will gradually earn their trust, and activating your brand community can generate even more momentum behind your business.
Incorporate these insights into your retention strategies for more meaningful and lasting customer relationships. These psychological drivers also reinforce the need for your team to show up for your customers consistently, at every stage of their journey.
By consistently showing up for your customers, you can reinforce their loyalty and satisfaction, ultimately driving business success. And loyalty is a driver for the best relationships!