New customers are great — but for real longevity in any marketplace, what you really need are regular customers, returning customers. While new customers can signal an exciting expansion to your footprint in the marketplace, you want to turn those new customers into regulars as quickly as possible. Moe’s Tavern has stayed in business for 34 seasons and counting because, although he only has four customers, one of those customers is Homer Simpson.
This is true in the real world, as well: loyal customers spend a lot more money than new ones, cost less to retain than new ones cost to acquire, and provide a valuable source of free word-of-mouth advertising in your target market. When it comes to customers, having a loyal bench of regulars is all upside.
So how do you build customer loyalty in 2023?
Step One: Create Customer Loyalty Programs — Especially Personalized Ones
Yes, it’s an oldie-but-goldie here: if you want your customers to come back, then you’ve got to incentivize them to do so. These range from the simple, like a coffee shop or restaurant providing a punch card for a freebie after a certain number of purchases, to the complex, like an app or site that tracks customer points and provides personalized offers based on their particular behavior.
Every customer is different — once you get beyond the “your tenth cup of coffee is free,” it’s essential to tailor your customer retention program to match what will actually retain that customer.
Market research will be an important component of this — while every customer is different, they’ll likely fall into one of several broad categories that will allow you to create and manage incentives that work for big swathes of your marketplace.
Additionally, though it’s still early going with this technology, A.I.-managed loyalty programs may be able to zero in on individual customers and provide feedback and incentives in real time. But your loyalty program won’t manage itself. Which is why it’s important to…
Step Two: Provide Exceptional Customer Service
You, uh… were doing this already, right? If you want happy customers who trust your business, come back for more, and tell all their friends, then you’ve got to do a good job at your core business. Solid fundamentals provide the foundation for all your other marketing strategies.
The key to providing excellent customer service is in your frontline employees. All the marketing strategies in the world won’t help you if your boots on the ground aren’t putting a good face on your company — and make no mistake, they are the face of the company.
So make sure your onboarding process for new hires is solid — efficient, well-trained employees make for a smoother customer experience. And additionally, make sure you’re always well-staffed for business. Harried, tired employees won’t be able to give customers the big smile and excellent service that brings them back again and again.
Ensuring customers have a good experience is crucial for employees, but it’s equally vital for them to evangelize for your business and push all the resources available to your customers. This means motivating employees to actively promote the loyalty tools you’ve gone through all the trouble of creating. To achieve this, make sure employees are getting their cut, somehow: give them a small bonus for every sign-up to the loyalty program, or create a prize for whichever employee gets the most each month. Otherwise, a big influx of returning customers is just making your employees’ day busier and harder – you want them to see it as an opportunity.
Step Three: Turn First-Time Customers Into Repeat Customers
So, you’ve done it: you’ve created a loyalty program and you’ve trained your employees on all the benefits it has. Now is the time to work your magic on those new customers.
After all, every new customer is a loyal customer you haven’t converted yet, and that first purchase is the best time to make sure you get a second. So make sure that your employees have a solid script for outlining the benefits of your loyalty program.
Moreover, your first-time customers may not yet be sure whether they want to become second-time customers, so providing a benefit to signing up is a must. A percentage off your first purchase with signup, or an extra freebie tacked on – even if they’re still debating whether they’re going to be return business, that sort of up-front benefit will be hard to turn down.
Transitioning your new customers into loyal customers can have a difficult curve, but if you’re providing that excellent customer service we were talking about, with motivated employees, it should be a bit easier.
And for your already-loyal customers, getting them to sign up for extra benefits should be relatively easy.
Step Four: Leverage Your Social Media Marketing
Great job! You’ve created a loyalty program, trained up your employees, and you’ve got a solid script to convert new customers into repeat business. Now you’ve just got to get the word out.
Social media marketing is a great, low-cost way to generate more word of mouth and customer retention. You can alert your customers about new sales opportunities and incentives, promote offers and events, and encourage followers to share positive feedback. Contests where a customer with the best photo of your product in action gets a prize, customer bonuses for referring a friend, special offers for social media followers – all of these help put your business and its loyalty programs on the map.
There are many proven strategies for expanding the reach of your social media – which we’ve gone over before – and this is a great force multiplier for your other marketing efforts.
Step Five: Monitor Your Metrics
Running marketing campaigns for a business is a lot like a garden – very few things will be set-and-forget, and many aspects will require near-constant tending. To do this, you need to monitor and measure various metrics to see how effective your strategies are for customer retention.
Metrics can include:
- Customer Lifetime Value
- Repeat purchase rate
- Churn rates
- Customer satisfaction scores
- Social media feedback
- Take rate on your sales incentives
Some of these would be easy to track with hard numbers – if customers with a loyalty account are purchasing more than customers without one, then you’ll be able to tell that pretty quickly. Things like customer satisfaction scores will require surveys and polls, which can range from a quick response at the point-of-sale to a more in-depth survey you fill out on the phone or online. Social media feedback will be harder to quantify, but if you’re seeing a solid influx of new followers on your accounts, that’s a good sign things are working. And of course, you’ll have to balance the cost of your prizes, freebies, and incentives against the sales they’re generating to make sure your ROI is good.
Like anything else in franchise marketing, generating customer loyalty isn’t easy – but it is simple. Provide your customers with good service, create a loyalty program that your customers will want, incentivize your employees to talk it up, get the word out, and monitor your results. Focus on the steps we’ve outlined, and customers will be boomeranging back to your door.
If you want more tips and tricks, check out our blog. And if you’re ready to supercharge your local marketing, check out Balihoo’s many offerings in social media ads, paid search, and more, all on our site. Contact us to get started!
Sean Kelly, Senior Content Writer
Sean Kelly is a Senior Content Specialist, St. Louis-based engagement expert with 20 years of experience in content writing, and 8 years in adtech.