So, What Is Customer Loyalty Anyway?

Liraz Tenenboim
January 7, 2021
3 min read
what is customer loyalty

If you are a local business owner, you’ve probably seen the words “customer loyalty” spread across every website and magazine dedicated to entrepreneurs. You’ve been told by industry leaders and business consultants that 20% of your customers who are loyal to you are responsible for nearly 80% of your profit.

But what is customer loyalty anyway and how does it work?

Customer loyalty can basically be defined as a customer’s faithfulness and commitment to a business. It is a measure of how emotionally invested customers are in a brand and helps businesses to segment their customers by how often they purchase.

Two examples of customer loyalty:

Example 1: Sam visits ABC Pub 4 times a month because he likes the music they play and is always greeted with a smile by their friendly staff. In addition, he gets an extra pint of beer if he accumulates enough reward points by the end of the month. He chooses ABC over all the other pubs in the area because he feels acknowledged, validated, and rewarded for his loyalty.

Example 2: Grace is a mother of two kids and works at an ad agency as a creative professional. She visits a nail salon on the way home from work at least twice a month because she appreciates how they take hygiene very seriously. What’s more, they also offer her a free welcome drink before each manicure session. And she never has to reach for her wallet, because the nail salon has enrolled her into a members club with her card on file. In addition, she gets a 10% discount if she subscribes to their bi-monthly nail spa service.

As you can see, both Sam and Grace feel acknowledged and respected by businesses they frequent. They are also rewarded for their continued patronage in the form of rewards and exclusive membership benefits. Both the pub and nail salon have adopted a multi-factorial approach by considering the demographic details of their customers and giving them the rewards that are most likely to interest them and keep them motivated to return.

Customer loyalty is a complex strategy made possible by cutting-edge technology

Customer loyalty is a multi-pronged approach that brings real value to customers so that they make repetitive purchases. This helps small and relatively unknown businesses to keep their clientele close to them and tackle the competition head-on.

Both the pub and the nail salon above examples probably use an automated loyalty manager, which identifies buyer personas and creates reward programs to keep customer interest and loyalty alive.

Customer loyalty is an essential marketing strategy in order to survive in a hyper-competitive world and establish real relationships with your customers. It makes use of artificial intelligence, automation, and inside analytics to help businesses thrive.

Here are a few quirky tidbits about customer loyalty

  •   It is not just conceptual and theoretical – it has practical applications.
  •   It is reliable. The results of loyalty programs are usually very consistent.
  •   It is valid. Customer loyalty really means what it claims to mean. It is a measure of how invested your customers are in your brand, and how faithful they feel. “Feel” is the keyword here, as much of customer loyalty is based on consumer psychology.
  •   It is measurable. Customer loyalty is not just a vague concept –  you can track its success with the help of analytical tools.
  •   Technology is the basis for any successful loyalty program. Emerging fields such as artificial intelligence and automation play an important role in identifying and sustaining customer relationships while making loyalty programs work hard to achieve the results you desire..

Put a loyalty management tool to use

As you can see, customer loyalty is a tangible measure of how likely your customers are going to purchase your products and services again. It gives you a practical and realistic strategy to identify customers that are most likely to return.

Loyalty management tools such as Glue help you put reward programs in place that will sustain customer interest and loyalty. This is made possible by technologies such as artificial intelligence and automation.

To find out how you can use Glue to enhance customer loyalty, contact us today. We take care of your customers, while we take care of your business.