The concept of customer loyalty has dramatically changed over the last decade as we have borne witness to an information and technology revolution. Many businesses are now at a crossroads, they are aware that customers want more than just the product but are not yet sure what the next step is. The answer to this is informative, high quality data which, despite needing analysis and financial commitments, can transform an organisation beyond recognition.
A 1997 study found that customer loyalty was common. Consumers weren’t price sensitive, and instead focused on their feelings towards particular brands or products. Fast forward to 2015, however, and the notion of customer loyalty has arguably evaporated. Instead of honoring long-standing relationships, customers are regularly comparing offers and prices on products and services and seeking out reviews and comments from their peers. Recommendations are now one of the biggest drivers when influencing a purchasing decision.
This trend holds true for B2B organisations as well as consumer facing businesses. Consequently businesses and service providers must now work much harder to convince a one-time customer to return; a task for which they are largely unprepared. Customer loyalty has a direct and financial impact to a business’s profitability. According to Forrester, retaining a customer is thought to be five times cheaper than acquiring a new one. Not only that; maintaining loyalty means a reduction in customer turnover, a reduction of five percent can yield a profit increase of between 25 and 125 percent. Working out what makes customers tick and how to earn their loyalty pays dividends.
Another key advantage to knowing your customer is the ability to collect brand advocates, which help firms to maintain a strong reputation as well as increase income, reduce price sensitivity, and improve the accuracy of projections. 80% of revenue is likely to come from 20% of a customer base (Gartner), therefore having a strong and steady number of customers facilitates forecasting, hiring and strategic planning.
In recent years, confusion over how to ensure customer retention has led to the creation of many reward schemes, something that was undermined by research showing that 70% of customer departures were not product-related. Now, with a rise in real income, loyalty is about getting closer and identifying the needs of the consumer.
A lot of this valuable high quality data can be garnered from recording telephone interaction, and is often overlooked. Often seen as a negative experience, each customer call should be seen as an opportunity to learn and grow. For every customer that contacts a company, approximately 26 will remain silent so those interactions with those who opt to contact you are in-fact invaluable. This demonstrates just how important the contact, and subsequent insight, can be for organisations looking to maintain loyalty. Not only can it be made into a positive, painless experience for the customer, it can also provide a goldmine of information for the business to find new ways to deliver better customer experience.
In an increasingly competitive world where customers are ever more fickle – it is crucial to put the customer at the heart of your strategy.