Customer loyalty illustration

Building customer loyalty is one of the most challenging issues all businesses face. Technological advancements and the popularity of social media contribute to customers having more choices than ever before. We’re all flooded with vouchers, special offers, and social media ads, so trying out new brands is often a no-brainer for a money-conscious consumer.

Comparably, businesses go to great lengths to try and attract new customers. Customer acquisition is one of the fastest ways of growing any business and reaching short-term revenue goals. However, it can be costly as the crowded market place sees an increase in the cost of acquisition. Unless your business is at the beginning of its lifecycle, you should be allocating resources to re-engage with your clientele – drive repeat visits, increase spend per customer, and grow profitability of existing customers.



According to a recent research study conducted by Invesp Consulting, it can cost up to seven times more to acquire a new customer than to retain an existing one. Balancing resources for both customer acquisition and retention could help reduce your costs and increase revenue.

Returning customers spend more over time and are more likely to purchase more expensive products or services.

Customers who are continuously satisfied with your offerings are more likely to recommend you to their friends and family or leave a positive online review. Word-of-Mouth helps increase brand awareness and create trust, which as a result makes customer acquisition inexpensive.



Delivering consistently strong customer service could be what sets you apart from your competitors and makes customers come back to you time and time again. One of the biggest factors in good customer service is speed. As social media gives consumers the opportunity to message their favourite brands, they expect instant replies and quick resolution to their queries. To ensure the service is fast and accurate, you should provide your employees with training that gives them the tools and confidence to improve the entire customer experience. Consider personalising your messages and don’t be scared to go the extra mile to delight your audience.



Understanding the processes and principles of collecting customer feedback are important steps in driving both customer satisfaction and loyalty. Having customers who are willing to provide you with their valuable feedback is a business gold mine, so ensure you ask the right questions at the right time and know how to analyse the collected data. Avoid spamming your customers and pick the right medium. Offer multi-channel feedback so that customers are able to comment on their experience via an app, email, or a survey kiosk, at their convenience. There is no one-size-fits-all approach, so make sure you have clearly defined objectives – and act on your customers’ comments. Translate the feedback into product or service innovation and quick problem resolution.



Effective loyalty schemes help make your customers feel valued and encourage them to stay with you. As there are several types of loyalty schemes, choosing the right one for your business will largely depend on your customer base, marketing goals, and budget.

A points system is the most common and simplest loyalty scheme. Your customers receive a certain amount of points depending on how much they spend. If you opt-in for this scheme, remember to keep the conversions easy and intuitive. It works best for businesses which encourage frequent purchases.

A tier scheme works best for high-commitment, higher price-point companies, such as airlines or hospitality businesses. Each rank is defined by a set of rewards which increase in value as the customer progresses. It’s important to offer some benefits in the early stages to hook the customers into coming back.

A partner scheme could provide your customers with relevant value that goes beyond your business offerings. Consumers remain loyal to schemes which offer the most rewards and convenience. Partnering with another company makes that possible. However, defining which company would be a good fit for a partnership could be challenging. It will not only depend on your customer base, but also on business values and goals.

A subscription scheme offers convenience and upfront VIP benefits, such as free delivery. Amazon Prime is a great example of a subscription service; It keeps its subscribers engaged and interested by offering relevant rewards and personal content.

A referral scheme works by offering an incentive to your existing customer in exchange for recommending your brand to a friend or family member. It’s a good way to grow your audience, increase customer value, and expand your database at the same time.


Once you define your customer retention goals and strategy, it’s important to choose the right metrics to help you analyse the effectiveness of your tactics. There are several ways to measure customer loyalty:

Customer Retention Rate (CRR) reflects the percentage of customers who remained loyal over a specific period of time. The higher the rate, the more customers are loyal to your business.

Customer Churn Rate (CCR) represents the ratio of customers you acquire and lose soon thereafter. A low CCR indicates higher customer loyalty as fewer customers were lost.

Customer Lifetime Value (CLV) is the total worth of a customer to a business over the entirety of their relationship. In simple terms, when your customers are loyal, they are more likely to spend more on your products or services, yielding a greater lifetime value.

Repeat Purchase Rate (RPR) and Potential Repeat Purchase Rate (PRPR) should be measured together and against each other. If your PRPR is 40% but your RPR is 7%, that indicates a room for improvement.

If you decide on implementing a loyalty scheme, you should also be looking at your Redemption Rate (the percentage of points you issue that are redeemed for rewards) and Participation Rate (calculated by dividing the number of members by the total number of customers).



Building customer loyalty is a time-consuming process which brings many benefits if done correctly. All efforts will get lost if your customer service and product quality are not up-to-scratch, so turn your attention to these first. Remember to regularly communicate with your customers via the right channels and listen to the valuable insights.

Listening to customers and acting on their suggestions is a crucial element of a retention strategy. It allows you to improve and innovate products and services. Customers are more likely to form emotional connections and stay loyal to your brand when they’re given a voice and have complaints resolved quickly. Combine this with rewards for faithful customers to build a loyal group of brand ambassadors to boost revenue and grow your business.

By Natalia Kaczmarek