Understanding the 6 Different Types of Customer Loyalty
It is every brand’s dream to have a loyal customer base that not only makes repeat purchases but also promotes their brand.
Understanding types of customer loyalty can facilitate the nurturing of deep relationships with clients and the creation of a sustainable brand.
As Bill Price said,” Smart companies have realized that Customer Loyalty is the biggest sales and marketing tool that they have.”
What is Customer Loyalty?
Customer loyalty means a customer’s inclination to do business and collaborate with a company regularly. It’s a willing decision of the customer to buy from the same brand repeatedly.
This is mainly due to the customer having a pleasant experience, satisfied and fulfilled with a product or service,or the final value that customer got from the transaction.
In more simple terms, the customer is beyond simply satisfied with the products.
It’s about the feeling of belonging, loyalty, and connection the customer feels with the brand.
- This usually happens:
- Provides an amazing client service
- Provides personalized customer experience
- Meets regular expectations of the client
- When the brand fulfills its commitments consistently
Loyal customers are the ones who do more than just return time and again.
They also promote the brand and encourage others to make purchases from it.
As a result, organizations that want to expand and grow in today’s market should focus on generating a loyal customer base.
Types of Customer Loyalty
1. Transactional Loyalty
Transactional loyalty means a potent tool for retaining your customers from time to time.
This type of loyalty is offered to the customers by providing them discounts or special offers.
This loyalty can be offered via various channels like in store purchases, subscriptions,online purchases through apps, third party retailers ( code scan, receipt uploads).
- Incentive-driven: Customers who frequently come back to your brand are attracted by special offers, discounts, or reward programs.
- Short-term focus: Customers who are attracted for short periods of special offers rather than building long-term brand connections.
They can easily switch brands if they get a better deal or better bargain elsewhere.
2. Emotional Loyalty
Emotional loyalty means a powerful tool to build a deep relationship between brand and consumer.
Customers grow emotionally attached to your brand because of shared trust and values.
Analyzing the emotional loyalty of your customer base can guide you to build loyalty marketing strategies and enhance your bond with customers.
- Strong connection: Customers form a personal link or feel a connection with a brand due to a pleasant customer experience.
- Brand Loyalty and Advocacy: Customers who are emotionally devoted to your brand are more inclined towards suggesting your brand to others.
- Resistant towards competitors: Customers are less likely to get swayed away by competitors’ offers because they have an emotional attachment to your brand.
3. Behavioural Loyalty
Behavioral loyalty is a key concept where customers purchase the products from your brand because of their habit.
These customers don’t have any specific preferences for a brand.
It’s just mere repetitive purchase behavior without any psychological considerations made by the customer.
- Constant Purchases: Customers get habituated with the brand and make purchases regularly often because of convenience and trust.
- Low Switching Costs: They might switch if another brand provides them with a better experience or greater convenience at lower costs.
- Minimal Emotional Investment: Their loyalty is driven completely out of habit and not because of emotional connections.
4. Cognitive Loyalty
Cognitive loyalty is the most basic loyalty where the customers make rational purchases on the basis of price, quantity, convenience, quality, availability, etc.
These customers are not emotionally attached to your brand, and can switch to other options where they find a better deal.
- Rational Choice: Customers believe that the brand offers the best value, quality, or service.
- Informed decisions: They choose a brand after careful consideration and assessment, and making deep dive comparisons with alternatives.
- Less emotionally driven: They have a more logical mindset rather than being emotionally resonated.
5. Attitudinal Loyalty
Attitudinal loyalty means that a customer is deeply committed to your brand. These customers are constant supporters of your brand and keep on making repeat purchase.
They enhance the brand value and associate themselves with the products of the brand.
- Also with the advent of social media, attitudinal loyal customers can show their satisfaction or resentment levels towards your brand.
- Positive perception: Customers have favorable opinions toward your brand and prefer it over others.
- Willingness to pay more: They may choose a premium quality brand thinking that higher priced products will be of superior quality.
- Supportive potential: They are most likely to speak positively about the brand and give recommendations to others as well.
6. Situational Loyalty
Situational loyalty means a loyalty where customers don’t have a choice but to buy a specific product from a brand.
It’s a form of short term loyalty where the customers can switch the brand with their changing situations and wherein they find a better alternative.
- Context-dependent: Specific situations like location, and availability are major factors that can affect customer loyalty.
- Temporary loyalty: Customers may only remain loyal till the time conditions are favorable and the brand is meeting their expectations.
- Easily changeable: The loyalty of the customer is altered if there is some new condition in the market or moving to a new location-like circumstance occurs.
Examples of 6 types of customer Loyalty
Why is it important to build a loyal customer base?
Increased Purchases
- Loyal customers tend to buy from their favored companies and are more likely to make frequent purchases from the same.
- They value good service and are inclined to make future deals as well if they have a good experience.
Cost Effective
- Retaining existing customers is cheaper than obtaining new customers.
- Hence it’s easier to lock deals from an established customer than to acquire a new one.
Word of mouth Referrals
- Satisfied loyal customers frequently promote your brand to their friends, family, and acquaintances, in turn, which facilitates your business.
- Recommendations from reliable sources are quite effective in acquiring new clients.
Valuable feedback
- Loyal customers are the ones who can provide you with genuine and thorough feedback.
- New customers simply back from the deal if they don’t like the product or service being offered.This feedback can be useful for identifying and fixing issues that can be hidden from new customers.
Protections from Competitors
- Loyal customers don’t get swayed away by the pricing and are more dedicated to your brand because of the perceived value and the trust they have built with your brand.
- Building customer loyalty takes time, but once completely done, it enhances corporate stability and customer retention.
How to identify your loyal customers?
Here are 5 ways to identify the loyal customers of your brand:
- Consistent purchase patterns: Customers who purchase from your brand frequently are loyal.
- Higher spending: Loyal customers always make huge transactions and have a higher average order value. This also means that they prefer your brand over others.
- Early adoption of a new product: Loyal customers are early birds. They sign up in advance for the launch of new products of your brand.
- Low Churn Rate: Loyal customers who mostly buy products from your brand will have a low churn rate. It also means they are loyal to your brand and have retention.
- Personalized interactions: Customers who positively reply to your personalized messages or communication are most engaged with your brand. They are the ones who try to give their inputs and proper feedback to the brand, so that the products can be improved or improvised.
How to keep your customers loyal?
Locobuzz: Your Customer Loyalty Compass
Customer loyalty isn’t one-size-fits-all. It’s a multifaceted concept encompassing emotional bonds, advocacy, transactions, social influence, engagement, and behavioral patterns.
To navigate this complex landscape, you need a powerful tool.
Locobuzz provides data-driven insights to understand your customers deeply.
By measuring sentiment, tracking social mentions, analysing purchase behavior, and monitoring engagement, you can identify which type of loyalty drives your business.
Implement a customer service program:
Always deep dive into your customer data. Keep your loyal customers engaged by sending them personalized messages, in their own emails and social media.
This makes them feel valued and understood.
Attract your customers by offering them tiered levels of benefits. Encourage them to level up providing them with perks and rewards with increasing levels.
This will also make them accomplished and they will be more likely to return to your brand receiving benefits and special offers.
Deliver high-quality products and services:
Always remain transparent with your customers. Communicate to them the whole process of product manufacturing, distribution, quality control, etc.
You should be committed to them in providing good quality service.
Make sure to improvise and improve your products regularly.
Product improvisation is important to enhance customer satisfaction and meet their expectations.
Provide excellent customer service:
Train your customer service executives to deal with your clients with patience and empathy.
Even if they are encountering issues you should be responsible for proactively supporting them and giving appropriate solutions.
Have regular interactions with them and make them feel valued. Keep them entertained via your social media content, blogs, newsletters, email updates, chats, etc.
Be in constant touch with them and make enough follow-ups via phone calls or messages.
Communicate regularly with your customers:
You should ensure that you’re always on the top of the minds of your customers.
Keep your brand buzzing by scheduling regular social media posts, blogs, and newsletter updates.
Ensure taking their feedback and reviews so that they also have an input in your brand.
A customer’s presence is very important for every brand which is thriving towards success and growth.
How to measure customer loyalty?
You can measure and quantify the loyalty of your customer using the following methods:
Net Promoter Score (NPS):
Net promoter score is measured on a scale of 0-10.
Promoters are the ones who are the most loyal, ranging from 9-10. And detractors range from a scale of 0-6 points.
The net promoter score is calculated by subtracting the no. of detractors by no. of promoters.
Locobuzz is a comprehensive customer experience platform that can play a pivotal role in tracking and analyzing NPS feedback. It offers real-time analytics, sentiment analysis, and the ability to categorize feedback into actionable insights.
Customer Retention Rate:
The customer retention rate is calculated for the most loyal customers acquired by a brand in a certain period.
This rate is calculated as follows:
Customer Retention Rate=(E-N/S)×100
In the above formula:
E= Total no. of customers at a given period.
N= The no. of new customers acquired during the period
S= The number of customers who were since the beginning of the given period.
Repeat Purchase Rate:
Repeat purchases rate defines that a customer has made multiple purchases over a given period.
To calculate this, determine a period, divide the no. of total customers with the customers who have made repeat purchases, and multiply that number by 100.
This metric indicates the retention rate of customers to your brand over some time.
Customer Lifetime Value (CLV):
Customer lifetime value is the amount of revenue a brand should expect from its customers after being in a relationship over a certain period.
This metric is calculated by multiplying the average purchase value by the average purchase frequency rate by the average customer lifespan.
Customer Feedback and Surveys:
Conduct surveys and generate feedback and reviews from your customers.
This can help you to analyze the areas of improvement in your product or service and improvise your brand accordingly.
Social Media Behavior:
Behavioural data is a very important metric to analyze customer loyalty.
Keep looking for keywords in your brand’s social media page ( using social listening software) to analyze what your customers are constantly telling about your brand.
It would also help to identify customers who have a positive outlook towards your brand.
Buying Patterns:
Constantly keep in touch with loyal customers of your brand- they by default keep on making repeat purchases.
Using both qualitative and quantitative research methods, can help you get insights of your customers’ faithfulness towards your brand.
Account Upgrades:
Account upgrades help you to identify that your customers are happy with your product or service and are willing to pay more.
If they are willing to increase their financial commitment, that means they are loyal customers.
Customer satisfaction scores (CSAT):
The customer satisfaction score is a customer experience (CX) metric and key performance indicator (KPI) that measures how satisfied a customer is with the overall experience with your brand.
Brands assess CSAT by conducting a survey that asks, “How satisfied are you with [product/service/experience]?”
Along with the question, there is a five-point scale and a remark section where customers can support and justify their rating.
Strategies for increasing Customer Loyalty
The ideal way to build customer loyalty is to understand customer values and build around their needs and wants.
Following steps can help you nurture the relationship with your customers:
Make things easy for your customers
The most convenient way to keep your customers loyal is to create convenient consumer experiences for them.
It’s all about providing them a great user experience in all their digital platforms.
Give customers an omnipresent channel, wherein you’re able to communicate with customers with a consistent and reliable approach across all devices and channels.
For example, provide your customers with live chatbot and self service options so that they don’t need to keep waiting for a live agent to solve their issues.
Provide an excellent service
Provide a seamless experience to your loyal customers. Always provide them with solutions when they are in a problem.
Be proactive, don’t wait for new issues to arise. Become your customers’ strategic partners not problem solvers.
Hire a well trained team who have great soft skills and communicate well with your customers, establishing a good rapport with them.
Build personal connections with them, by sharing experiences creating a big community.
Meet customers where they are
Nowadays a lot of customers want to interact with businesses on the same channels where they interact with their friends or family.
Hence social media interaction is very essential to build emotional customer loyalty. Communication channels can include
- Social media apps
- Messaging apps
- Chatbots
- SMS
- Voice or video calls
Keep your business evolving
With a changing landscape your brand needs to evolve from the traditional mindset of customer experience.
With the current trend, your brand should responsibly use data to make customer-centric decisions, personalize customers’ marketing experiences, meet them on their support channel of choice, and respect their time.
Nowadays customer loyalty is a two way interaction between brand and customers.You must remember that buyers have plenty of options. To make sure your brand stays on the top of the mind, show loyalty to your customers.
Create an emotional connection
Identify customers who create a high impact to your brand, Analyze their emotional data to analyze who can increase the customer lifetime value.
Trust is an important factor to build long lasting relationships. Provide your customers with personalized experiences, transparency, implementing customer feedbacks and protecting their sensitive information if any.
This helps crafting emotional connections and personalized experiences.
Develop Customer Loyalty Programs
Start with creating loyalty or referral programs and choose rewards for them which will be appealing.
It’s a retention strategy that encourages your customers to keep buying your products instead of your competitors.
Some types of loyalty programs include:
- Points programs
- Tiered loyalty programs
- Refer-a-friend programs
- Spend-based programs
- Mission-driven programs
- Subscription programs
You can give your customers prizes based on how much money they spend, how frequently they purchase, or how many people they refer to. Not sure what your customers prefer? Ask them.
Conclusion
Customer loyalty not only provides your brand with a competitive advantage but also enhances your journey towards long-term success.
Brands who want to strive towards growth and success look for an understanding of their customers.
In essence, for any relationship to be strong and long term it takes time but if you want to build your brand first you need to work to set up customer loyalty.
