Building Customer Loyalty – Best Practices

I really thought we were all done going on about customer loyalty at this point. We’ve talked this completely and utterly into the ground, even over this last week or so, so I don’t at this point know what else to say. You may recall our retention discussions of very recently, and as I said then, this is the same exact thing.

So, customer loyalty and customer retention being identical, this is absolutely a blatant repeat of the same exact discussion. So, those who read those may find this to be as tedious of a repetitive read as I do writing it.

The Definition Again:

Once more, let’s go over the analogy of thermodynamics. In that field of science, energy put into a system, and work that comes out of it are calculated carefully, the latter being desired as higher than the former.

Efficiency is the name of the game for engineers, programmers and all manner of other creative applications of science. Likewise, efficiency of money going into customer acquisition tends to be very high, by volume of revenue from new customers.

A complete from zero customer experience is a costly process for both sides. However, an experience traveling over a loyalty curve cuts out some of the most expensive parts.

So, there’s a lot to be said for these return customers being the primary revenue source. It simply costs less money put into it, so the volumetric revenue is higher. Along with this, loyal customers compound, broadening your gain on top of it.

Things Often Done:

And once more, there are a few strategies often employed to garner loyalty in your customers. All of these have their merits, but it depends on your side, which if any of them is right for you. Chances are some of it is.

#1 – Reward Systems

These are the oldest sort of model. Long term customers carry a membership card, and rack up points for using a service or purchasing a product. Points can be redeemed for prizes, sometimes extravagant ones.

This is a costly strategy, but it works famously, as we’ve seen with car rental, hotel and airline companies for quite some time.

#2 – Discounts

Services hold long term customers by locking rates or offering gradual reductions that lock once they cap. Products have to do this via rebate, which is something a bit more of an inconvenience. But, even with that mild annoyance, it still works.

It just means being wise about how generous you’re being, but being generous enough to matter.

#3 – Extra Privileges

This only works for services, but some companies offer loyal customers of a service access to select features normally available to a higher tier service. I don’t know how to implement that with a product, but I’m sure there’s some way to do it.

There are some more complex theoretical strategies beginning to form for this as well, but right now, I don’t really understand them, nor does anyone else in the practicing field.

When I need to cultivate customer loyalty, I tend to hybridize those above approaches in different combinations, depending. That’s the good side of this somewhat under-developed science – you can pick and mix and be creative and most likely succeed.


Matthew Thomas
Matthew is the Lead Author & Editor of CXperience Blog. Matthew established the CXperience blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to Customer Experience.
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