What is customer loyalty?

By Nicholas Weber
Commerce | Strategy & innovation

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In this mini-series, we will explore the topic of ‘customer loyalty’, defining what it means, uncovering its growing value to businesses, and dissecting the methods used to cultivate it. As a digital agency, we create experiences that engage customers on a deep level, creating an emotional connection that inspires loyalty towards our clients’ brands and their services. We have identified ‘customer loyalty’ as a huge focus for 2021 and a great way, if done right, to future-proof a business in these uncertain times. 

What really is customer loyalty?

The importance of customer loyalty in 2021 cannot be overstated. The pandemic has brought a fundamental and permanent shift in consumer behaviour and purchasing preferences. In a frantic scramble to survive, many businesses have had to adapt their product and service offering, or aggressively chase new customers, but many brands are still missing out on the value of ‘customer loyalty’ during this difficult period.

Customer loyalty is a broad subject that encompasses numerous aspects of consumer behaviour and it can mean different things to different people. It can be built upon multiple types of loyalty programmes and platforms, such as point schemes, subscription services, discounts, add-ons, CRM tools, bonuses, partnerships, refund policies, gamification projects, and more. How loyal your customers are can be measured in multiple different ways, from the frequency of repeat purchases to net promoter scores and customer lifetime value. However, beneath the different platforms and measurements, customer loyalty is essentially an ongoing, positive relationship between the brand and the customer. 

At its core, it isn’t about using one particular platform or scheme; it is about developing a personal and emotional connection with your buyer through delivering excellent products and customer satisfaction. This is Inviqa's working definition of what 'customer loyalty' truly is. This positive relationship can only be cultivated through a deep understanding of the customer and applying that understanding to provide a superior experience for them at every touchpoint of the customer lifecycle. A huge part of this connection is now done digitally. So ensuring your digital experiences are performing to their full potential should be a priority. 

The value of developing and reinforcing a positive emotional connection with your customers is supported by the evidence. 

  • 56% of customers stay loyal to brands which ‘get them’
  • Emotionally connected customers deliver 52% more value over and above that from customers who are described as highly satisfied but not emotionally tied to the brand

This concept of ‘getting them’, speaks to a real desire to be understood by a brand on a human level and is often missed by those who focus on pure transactional value that they can quantitatively measure. Once you have understood and reinforced a true emotional connection, the KPIs and bottom line will start to benefit! Businesses are increasingly recognising the importance of loyalty and are investing time and resources into it: more than 90% of companies now employ some form of customer engagement or loyalty programme. 

Building customer loyalty is now hugely predicated on the digital experience provided. User research and usability testing is essential to understanding what you are getting both right and wrong for your customers across their digital journey. You then need UX design experts and engineers to take these findings and create experiences that deliver for your customers. However, the process of implementing improvements does not necessarily need to be a large-scale and disruptive project; incremental changes can be made to areas like the customer journey flow, returns policy and key touchpoints with relative ease, whilst the results can be truly game-changing.

Our work with Brompton Bicycle is just one example: they wanted their customers to build an emotional engagement with the brand rather than solely a transactional one. 

“Inviqa gathered unparalleled insights into our users, using this to build a customer experience strategy and website that far exceeded our expectations.”

Harry Mann, digital lead, Brompton Bicycle

Customer loyalty: an ideal time to nurture

Those who focus resources on perfecting their customer journey, which is now almost entirely in the digital space, and invest in identifying what customers find valuable and rewarding, will build the security they need to weather the economic storm and the foundation required to expand in search of new loyal customers. The businesses that find a way to go beyond the cold, transactional, one-time interaction and instead create a real, lasting bond with their customer (our definition of 'customer loyalty') will ultimately thrive. This has always been the case, but it is particularly important during this period of uncertainty.

If you found this interesting, why not check out our other 4 articles on customer loyalty?

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