There was a time when acquiring new customers was the sole purpose of marketing your product. Technology companies used to sell their products to a customer and then move on to the next one. Those products are mostly physical devices or one-time installation software which would last for years or may be for lifetime. Hence, customer loyalty was not a major goal for companies of those previous eras. Even if the customers would return to the same brand for buying another product, that represented a very small percentage of the company’s overall customer base.
But things have drastically changed within the last decade. Specially in the SaaS industry, where upfront payment has reduced to a minimal amount, customers are more free to reexamine their choice of product at any given time. They have the freedom to switch to a competitor anytime they find themselves unsatisfied with the product. Businesses have started realizing this and hence have been investing heavily, both financially and intellectually, into a customer loyalty program. So, in this article, we are going to explore this topic in much detail.
What is Customer Loyalty?
Customer Loyalty is the customer’s commitment towards using your product consistently and regularly. Loyal customers choose your brand repeatedly over your competitors to buy the product or solution they need. Because of the delightful experience they had with your brand in the past, they don’t mind keeping up with the changes in your pricing or product features.
A loyal customer is the biggest asset of your business. They continue to generate revenue for your company without you spending any amount on acquiring them like a new customer. A bunch of loyal customers can keep your business running even when you don’t acquire new customers. They form a substantial percentage of revenue for any successful brand.
Why Customer Loyalty is Important?
Having spoken on what is customer loyalty above, let us look at some of the benefits you can reap from the loyalty of your customers. There are four main benefits that are listed below:
- Brand Advocacy
- Customer Retention
- Attracting Investors
- Business Expansion
When customers are happy with your brand, they would attract more business to your company. When you provide exceptional service to your customers and exceed their expectations, they would feel happy to share their experiences with others. This will create a positive impression of your brand in your business community including the new prospects. Through word of mouth marketing, they would attract more customers to your business.
A loyal customer is easier to retain for a longer duration. Through a customer loyalty program you can make sure that the customer stays subscribed to your business for a longer period. This will increase their Lifetime Value (LTV) and that brings many benefits to your business.
For investors to put further investment into your brand, customer loyalty is a major parameter. Investors consider LTV to evaluate the strength of any business. A higher LTV would give them more confidence to invest further into your business and that would enable you to expand your business operations.
Through your existing customer base you get many opportunities to expand your business. To your loyal customers, you can approach for upselling and cross-selling. This will generate extra revenue for your business. Subscription renewals are another source of business expansion. Through a higher number of loyal customers, you can achieve a net negative churn rate. Businesses cherish net negative churn as it is that ideal situation where you can grow your revenue even without acquiring new customers.
How to build Customer Loyalty?
There are numerous benefits you can reap from the loyalty of your customers. The above mentioned points are the most important ones and I feel those are enough for you to realize the immense potential it possesses in your business. So, once you have realized it, you must find ways to build it to reap those benefits. Some of the ways you can build loyalty are:
- Setting up a roadmap for customers
- Give customized support and services
- Measure customer satisfaction
- Reward your loyal customers
- Provide value
Setting up a roadmap for customers
In your initial meetings, set clear expectations of your customers with your product. Correct them if they are expecting more than you can deliver. They might be expecting everything at once. Hence, you need to show them a roadmap and prepare them for meeting their expectations through each milestone. This will keep them bound to a longer plan and fetch their coordination needed for reaching those milestones.
Give customized support and services
Most of the customers do not like off-the-shelf solutions. When you provide customized solutions, they become dependent on your brand. They would avoid looking up to your competitors because of getting started with them from scratch. This way you can nurture a long term relationship with your client based on mutual understanding.
Measure Customer Satisfaction
You must send them customer surveys occasionally. Through this, you can know what they feel about your brand and what improvement in service they seek. Then it becomes easier for you to act on those feedback and fine-tune your service to suit your customers. The feedback should include both the pros and cons of your business. The more detailed feedback you get, the better it is for your business.
Reward your loyal customers
One of the best ways to increase SaaS loyalty is by rewarding your repeated customers. You can offer them anything from free-space, number of subscriptions to bonus time-limit who renew their subscriptions. Your reward would feel them privileged and that would encourage them to stick to your business for a longer duration.
You can be friendly in your relationship or you may show deeper empathy with your customer’s challenges, but nothing can beat the value you give to them. Every touchpoint you make with them should add immense value to your relationship. It should be done in such a manner that the customer should always be looking forward to conducting more meetings with you. As long as you are providing value to their business, customer loyalty would stay intact.
As someone has rightly put it – “it takes years to build trust and seconds to break it”. You earn customer loyalty through months and years of efforts you put into the relationship. Every interaction you have with your customers adds a delta value into the dynamics between both the parties. As long as you are honest and caring about your client’s success, they would continue to do the business with you.
It takes the whole company to build loyalty of the customers. The product management plays its own part in building an exceptional quality of product that adds business value to the customers. The support team has to be always on their toes in providing a greater customer experience. And the customer success team has to continuously demonstrate the value of the product. They have to keep the customer always engaged with the product. If all the strategies are orchestrated in the right manner, customer loyalty would be a natural outcome of your prolonged efforts.