8 essential steps to building customer loyalty

Retaining existing customers is one of the effective ways for retail businesses to grow their profitability. If loyal customers buy more from a retailer over time, the retailer doesn't need to spend more to acquire new customers. Also, having a repeat customer base proves that a business offers an excellent service experience, which makes potential customers trust them more. Plus, satisfied customers tell their friends and family about the retailer, which helps enhance awareness. 

This article provides 8 essential steps to building customer loyalty.

1. Offer Amazing Customer Service

About 71% of customers say they consider the quality of customer experience when choosing a retailer. Whether a customer is interacting with a retailer’s website or calling the customer service team, they expect a quick response to their inquiry. According to research by Zendesk, 89% of customers say a quick response time for an inquiry determines whether they will buy from a retailer.

Retailers should focus on knowing customers at a deeper level to make them feel valued and appreciated. For example, learning customers' names, remembering their last purchase, asking for feedback, and acknowledging special occasions like birthdays can help enhance customer service and build customer loyalty. 

Additionally, retailers should ensure customers have an amazing in-store experience when checking or trying out new products before purchasing. Providing online ordering services, auto-checkout systems, and mobile offers gives shoppers an easier and quicker shopping experience.

2. Personalize Experience for Different Customers/Segments

Knowing customers and personalizing their experience is another way to build loyalty. Instead of trying to build loyalty through mass incentive programs, businesses can get better results by segmenting customers and personalizing their experiences.

The personalization journey can begin by knowing customer names, stories, and purchasing habits. Retailers can use this information to anticipate customer needs and offer customized solutions.

Another benefit of segmenting customers is that it helps create personalized marketing campaigns targeting a specific group of customers.

A good example of a retail company that uses this approach is Sephora. The retailer sends personalized emails to members with information about exclusive discounts, rewards, and alerts on new products. They also send personalized SMS alerts informing customers about special promotions and discounts. This helps keep customers engaged and makes them feel seen and valued.

3. Reward Customers for Their Loyalty

Offering customers the best product or service is great but often isn’t enough to keep them returning—sometimes, they need a little encouragement. Customer loyalty programs offer an excellent way to recognize loyal customers and make them feel valued.

Loyalty programs like points systems, customer discount or cash back, free items, free shipping, etc., are among the ways to appreciate loyal customers. Usually, these programs encourage customers to spend a certain amount of money to get the reward.

Starbucks, for example, has a loyalty program that allows customers to earn points when they make purchases from their menu. The customers qualify for a free drink or food item when they reach certain points.

Such rewards can keep customers coming back and help build customer loyalty.

4. Provide Consistent Retail Experience

Providing consistent retail experience is key to building customer loyalty and improving customer retention. Customers are more likely to create a relationship with a retailer that provides a consistent and connected experience than those that offer inconsistent experience.

A study in the United Kingdom revealed that shoppers greeted with a welcome and a smile spent about 67% more than those greeted differently. As such, retailers should ensure consistent and seamless customer experiences in all customer interactions, including on social media and in-store.

5. Focus on Employee Retention and Incentives

To ensure a consistent customer experience, businesses should focus on employee retention. Existing employees understand the business better and know the customers, thus can provide a customized experience.

The first step to achieving employee retention is hiring the right employees from the start. Other strategies include:

• Ensuring employees have the right tools

• Providing positive feedback

• Encouraging employee creativity

• Fostering respect

• Creating room for employee growth

• Encouraging employee feedback

• Ensuring a healthy work-life balance

Happy employees are more likely to provide better customer service, which helps build customer loyalty. Offering incentives such as monetary bonuses, salary raises, and recognizing the best employees publicly can encourage them to keep providing stellar customer service.

6. Improve Employee Training and Engagement

Retailers should train customer service representatives and sales people on the importance of listening to customer concerns and addressing their specific needs quickly and effectively. As mentioned earlier, customers want a consistent experience when interacting with a retailer online and in-store. Therefore, it’s important that every staff member understands the company strategy.

One example of a retailer that uses employee training to build customer loyalty is L.L.Bean. This company trains its employees on its values, product knowledge, and customer service skills to ensure they engage with customers effectively and offer a welcoming and knowledgeable shopping experience.

7. Build a Strong Sense of Community

Building a community is an excellent strategy for retailers to achieve long-term customer love. A community of engaged customers helps promote interaction, gives customers a sense of belonging, and offers a great platform for customer feedback.

Retailers can build a community by ensuring they stay connected to customers on social media, via email newsletters, or by organizing launch parties, workshops, or outdoor activities.

For example, REI uses workshops and outdoor activities like camping skills classes, hiking trips, and environmental conservation projects to strengthen its community and reinforce its values.

8. Formalize a Loyalty Program

Loyalty programs offer an excellent way to encourage customers to keep buying from a specific retailer instead of competitors. However, the programs can only succeed if there’s a structured and systematic approach to rewarding loyal customers.

This includes creating rules that govern the program, types of rewards, and mechanisms to track customer purchases, points earned, and rewards redeemed. Retailers should develop a communication strategy to inform customers about loyalty programs, how to participate, memberships, and terms and conditions.

TheLululemon Sweat Collective program is an example of a formalized loyalty program that targets fitness professionals. Members get early access to new collections, product discounts, and free expedited shipping.

Investing in Customer Loyalty Increases Sales and Maximizes Growth

Having loyal customers who make repeat purchases and refer others is key to increasing a retailer's profits. Retailers should invest their time and effort to create strong relationships with existing customers and develop strategies to nurture them into loyal advocates.