5 Ways to Build Customer Loyalty in the Digital Age

7 minutes read

Did you know that retaining an existing customer is anywhere from five to twenty-five times more cost-effective than acquiring a new one? It makes sense: getting a customer takes a lot of time, effort, and money, especially for businesses catering to a niche market.

According to studies, customers are more likely than ever to switch to competitors if dissatisfied with the company’s current services. PwC has found that 32% of all customers decide to stop shopping with a brand after just one negative experience.

Building customer loyalty is valuable: financially and reputationally. In today’s blog, we’ll share 5 ways to build customer loyalty in digital age.

Metrics of Customer Loyalty You Can Measure

Before taking a closer look at possible ways to increase customer loyalty in the digital era, let’s first check how you can measure the results of your efforts. You’ll probably agree that having the right data is important, but it adds little value if you don’t know how to read it.

Lifetime value (LTV): loyal customers can be easily identified by checking how much they spend. Such customers tend to spend more over time, so measuring LTV is a great starting point. To calculate this metric simply multiply the average order value (AOV) by purchase frequency to get the overall customer value. Then, multiply the customer value by the average store lifetime (how long customers tend to stay with you before dropping off).
Customer churn rate (CCR): this metric shows how many current customers your company is losing. The Higher the value of CCR is, the less loyal customers are in your portfolio. To get your CCR, count the percent of customers you have at the end of a set period, deduct the number of new customers from that, and divide this new number by how many customers there were at the start of the set time period. To get a percentage value simply multiply the outcome by 100%.
Referral tracking: If you have a referral program in flight, where you grant your customers discounts or other benefits in case they get a friend or family member to sign up/make a purchase, you can use the referral information to determine customer loyalty. If you observe a high volume of referrals, this might be a good indicator that people talk about your business and are loyal to your brand.

5 Ways to Build and Improve Digital Customer Loyalty

The digital age has transformed the way we live and do business. We have many more opportunities and yet many more challenges, as the bar of customers’ expectations is continuously rising. So, how to obtain customer loyalty in times when loyalty is limited?

Efficient Usage of Data

It is difficult to underestimate the impact of all the digital tools and processes introduced over the last few decades and the volume of data those tools bring to business, which is often called big data. And if used wisely, organizations can benefit a lot from this data.

There are many applications to the data an organization can gather when building customer loyalty.

For example, data can contribute to personalized experiences. According to the survey, conducted by PwC back in 2022, more than 80% of people would like to share some personal details if that improves customer experience. Having access to this kind of information and real-time feedback, businesses can tailor the experience to customers’ needs and wants.

There are multiple ways of data gathering. Numerous digital platforms collect information about user behaviors, demographics, and preferences from websites, social media platforms, or applications to later derive some insights from this data. In addition to this, business can directly reach their customers or prospects via social media, surveys, and other means.

The obvious thing is that having the data is only part of the success, another thing is how the data is used. Nowadays more and more businesses realize the benefits they can gain with the help of data professionals – data scientists, analysts, and others – to make sense of all the information collected to date. These professionals will mine, clean, evaluate, and assess your data to take the insights that bring value. Once the initial assessment is done, they can make recommendations on how your services can be improved to meet the goal of building consumer relationships, as well as boosting your businesses in other areas.

Provide the Human Touch

In the same survey, PwC reports that depending on the type of business and industry, between one-third and 50% of individuals say that human interaction is an important factor in their loyalty. But what does it mean to “provide the human touch”? How this can be applied to a digital platform?

In simple words, this means prioritization of consumers and putting them at the center of your processes. To build customer loyalty you need to ensure trust and cultivate relationships. Your customer experience (CX) is about finding a way to demonstrate your humanity. One of the ways of achieving this might be a demonstration of your values as a brand and incorporating them into what you do.

According to Salesforce’s State of the Connected Customer report, sixty-eight percent of customers admit that they trust companies that act with society’s best interests in mind. Whatever your company’s mission is, there must be a way to connect with your customers and demonstrate your humanity as a brand and as a leader.

Increase Your Digital Presence

This might sound obvious, but a solid digital presence is no longer optional for businesses. Your digital efforts are now one of the prerequisites of your success, so how do you use them to build consumer loyalty? There are a few ways to do so – proving to your customers that you are a modern and relevant organization.

A good place to start is taking a closer look at your website. As mentioned before, in the modern world you have to use more than one means of interaction with your customers, however, the website is a key element of your digital strategy. It is a great place to place some engaging content like videos, a blog, and so on, but please remember to keep your website constantly updated with new content, news, and relevant information, ensuring that no link is broken.

Another powerful tool to build trust and loyalty with your customers is social media. Here you can not only share the content you put on your website, but also use various ways of interacting with your audience using polls, comments, or direct messaging features.

Email marketing is another great way to build and increase your consumer loyalty, offering special deals and information to your loyal customers. Worth remembering, though, that in order to get your audience subscribed for regular emails from you, you need to offer something valuable to them – like additional discounts or some insights. If you simply spam your customers with no reward offered, there is a high chance of losing that previously built loyalty.

Use CRM Tools

Customer relationships management software is an integral part of customer retention strategies. It enables businesses to develop stronger relationships with customers by keeping all customer-related data in a single database allowing for thorough analysis that leads to data-driven decisions and strategies.

A good CRM platform is not just a database, it also provides you with means to automate processes, visualize key business metrics and, in general, provide a big-picture overview with the option to go deeper into details if needed.

One example of useful CRM platform features might be customer labeling or categorizations by various parameters like frequency of purchases, average order size, length of relationships, interactions with your website, etc. Those small things are key to adjusting your marketing campaigns to a specific customer segment’s need, so you have greater chances of cusses.

Introduce Customer Loyalty Initiatives

Consumer loyalty programs were invented decades ago, however with the beginning of the digital era many new opportunities to incentivize customers to engage with brands and encourage them to make more purchases arose. Below is the list of the most common types of loyalty programs:

Points for purchases
Rewards for referrals
Tiered levels of engagement
Perks for using the business’ app
Early sales or previews for members

Basically, this is all about recognizing potential customers and making those who are really loyal feel special. Establishing rewards programs strengthens the bond between you and your happy customers. And even new joiners can participate in those programs, in the longer run it might still encourage them to return to your products or excellent customer services.

You can use rewards programs in combination with previously described ways of increasing customer loyalty, offering gifts or bonuses on customers’ birthdays, rewarding them for reposting social media posts sharing purchases on social media platforms, or offering a discount for signing up for your email list or newsletter. It’s about positive feelings and emotional connection.

Why You Shouldn’t Be Afraid of Implementing New Customer Loyalty Strategies

Focusing on loyalty helps your business grow more quickly. Investing in building customer loyalty today will definitely pay off in the long run. Think about Apple. The company gives its customers much more than just using their product. It’s an entire journey of exclusive product reveals, presentations, and very strong marketing campaigns.

Don’t be afraid to implement these ways to improve customer loyalty in your business and stand out in a competitive market. Be afraid to stand still.

Summing Up

We hope these 5 ways to create customer loyalty will come in handy while building relationships with your clients. Remember, existing customers spend up to 67% more than new ones. So, make sure you develop, monitor, and constantly improve your brand, communication, and each channel of interaction with your customers.

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