As coaches, it’s important to run our businesses sustainably and promote meaningful client interactions and positive experiences. We want to maintain customer satisfaction to keep our clients happy and engaged, ready to make progress toward achieving their goals. This encourages more purchases after our first session as our clients will return for our expectational services and recommend our business to friends and family.
We compiled everything you need to know to keep your clients happy, grow your business, and develop deep customer loyalty.
What is customer loyalty?
Customer loyalty, or client loyalty, is a great ongoing relationship between a customer and a business, influencing customers to choose businesses over competitors and driving repeat purchases. You may be familiar with “brand loyalty,” where a client feels connected to a specific brand. This leads to loyal customers forming relationships with brands and businesses.
Client loyalty isn’t about a one-time customer experience. Customers become loyal to a brand over time as a result of ongoing positive interactions indicative of the business’s trustworthiness and value. While not every interaction with brands has to be perfect to retain customers, clients appreciate a consistent level of customer satisfaction and value from interactions with our businesses.
Customers who’ve had a negative experience are often wary to trust companies; however, if the business quickly remedies the issue, customers are likely to be more loyal because of the proactivity. By addressing mistakes and handling the situation with excellent customer support, brands demonstrate good problem-solving and communication skills making them more favorable to customers. This inspires trust and strengthens the customer-business relationship.
Why should customer loyalty matter to you?
Customer loyalty does more than just inspire confidence in our existing client base — there are many concrete, profit-maximizing benefits for our businesses, such as:
- Increased profits: Retaining existing customers is cheaper than customer acquisition because businesses don’t need to spend on marketing and promotion.
- Loyal customers: Happy customers who’ve had great experiences with our businesses are 60% more likely to be repeat customers.
- Brand advocates: Word-of-mouth recommendations and good reviews on social media are useful tools to bring in potential clients. Brand advocates are existing customers whose referrals grow our businesses and promote customer acquisition.
- Higher customer lifetime value: This metric is the total worth of a customer to a business over the course of the entire client relationship. A high customer lifetime value (CLV) means customers often make purchases, purchase high-value goods and services, and stay with our business for long periods of time.
- New clients: Organic brand advocates have a strong impact on a wide range of demographics outside of our target audience. They leverage their network of friends, family, and acquaintances to draw new customers to our business.
Loyal customers help us grow our businesses and run them sustainably. While client acquisition is important for continued growth, customer loyalty acts as a continual buffer to maintain profits and bring in new clients.
How to measure customer loyalty
We can quantify customer loyalty by measuring Net Promoting Score (NPS) and Customer Loyalty Index (CLI). We can break down the components of these calculations to figure out how to improve our customer loyalty scores.
NPS measures how likely customers are to recommend our product or service to other people. This metric uses a scale from 0–10 and it helps our businesses identify ways to improve customer support to boost customer loyalty. Providing follow-up questions as part of an NPS survey will give us insight and more details into the customer experience. Examining this zero to 10 scale, we can sort respondents into three groups:
- Detractors aren’t likely to recommend our businesses to others and score the NPS between 1–6.
- Passives rank in the 7–8 range and aren’t factored into the NPS calculation.
- Promoters choose 9–10 on the scale and are among our businesses’ biggest fans and potential brand ambassadors.
Calculate NPS with this formula:
NPS = %Promoters - %Detractors
It’s best to check this score regularly (after every purchase, if possible) and consider any relevant feedback.
CLI tracks customer loyalty over time and considers factors such as the NPS, repurchase rates, and upsell rates. To measure this metric customers respond these three questions on a scale of one to six:
- How likely are you to recommend us to friends and family?
- How likely are you to buy from us again?
- How likely are you to try our other products?
Calculate the CLI as an average of responses to these three questions, with one representing “definitely yes” and six representing “definitely no.” Like NPS, we should evaluate the CLI periodically to determine how to better adapt to what customers want.
Now we know how to measure customer loyalty, but what if a business starts losing customers?
The opposite of customer loyalty: Customer churn
Customer churn is the opposite of customer loyalty and refers to the rate at which clients stop doing business with us over time. No matter the quality of our businesses' customer service and products, it’s natural to experience some churn, but we should keep this rate as low as possible.
To calculate customer churn rates, use the following formula:
Customer Churn Rate = (Customers at the beginning of the month - Customers at the end of the month) / Customers at the beginning of the month
Client churn and loyalty are two sides of the same coin; using strategies to increase loyalty can lower churn. However, if we notice our businesses have high churn rates, we’ll need to reevaluate whether we’re targeting the correct audience for our products. Plus, we’ll need to assess whether our customers require more resources and support. This will help us identify and understand the causes of customer churn.
After we find out why our businesses are experiencing customer churn, we’ll be better equipped to offer better solutions and services to improve customer retention and acquisition. This gives our businesses the opportunity to grow, implement meaningful changes, and improve customer loyalty by adapting to their needs.
What’s the most direct cause of customer loyalty?
Customer loyalty is a result of constant and ongoing client relationship management and various customer service methods. These strategies include:
- Exceeding customer service expectations. Going above and beyond to make our clients feel valued and heard shows we care about the relationship and inspires trust.
- Personalizing products, communications, and services for each client. Customers tend to trust individuals over businesses — that’s why organic brand advocates are so effective. By personalizing interactions, we show our care about our customer-business relationship and demonstrate we see our clients as more than just profit and numbers.
- Building a community using social media, newsletters, online forums, and groups. A peer-to-peer community allows clients to engage with other customers and businesses. Plus, forums provide benefits such as feedback and product pitch ideas allowing us to improve our businesses and help our customers feel heard.
- Starting a customer loyalty program. What better way to encourage loyalty than directly rewarding customers for staying with our businesses? We can provide incentives for customer loyalty through rewards programs and access to special communities and events.
- Gathering feedback and letting customers know we hear them. Responding to customer feedback is crucial to building customer loyalty. We can implement ideas to better align with customer needs and show we care about creating an emotional connection.
We can support our customers and businesses by providing positive experiences and services focusing on customer retention rates and implementing strategies for client loyalty.
At Practice, we want to make your customer-business relationship as smooth and effective as possible. Try Practice’s all-in-one client management system today to take your business’s client loyalty to the next level.