Did you know that it costs five times as much to attract a new customer than it does to keep an existing one? And did you know that existing customers are 50% more likely to try out new products and spend 31% more when compared to new customers?
It is even proven that the probability of selling to an existing customer is 60-70%, while the probability of selling to a new customer is 5-20%.
Finally, according to research by Invesp, increasing customer retention rates by 5% increase profits from 25-75%.
It may come as a surprise then that only 18% of companies focus on customer retention as opposed to the 44% that keep their attention directed on customer acquisition.
It should be clear by now that you need to focus on nurturing your loyal customers for increased profits in the long-term. There are already many companies who invest their marketing budgets in customer loyalty programs. However, this doesn’t seem to be the perfect strategy either: according to KPMG, only 37% of consumers believe that those programs are effective in earning their favor. Additionally, 95% of the Brits who participated in this research, said that companies need to find innovative ways to reward their loyalty.
At Fangage, we believe that using these innovative ways to reward fans’ loyalty is key nowadays. Here are 4 ways to reward your loyal fans or customers today.
Own their data
First and ideally, you are the owner of your loyal customers’ data instead of third parties owning this valuable information. You can put this data to use in your marketing efforts towards loyal customers. Think of using e-mail addresses or phone numbers to communicate with loyal customers. Using these marketing channels, people will feel that they are receiving additional, special treatment.
As mentioned before, people love being treated specially. Offering them exclusive products is an excellent way of doing this. According to research by Harvard Business Review, many companies treat all of their customers equally, offering them products of equal value regardless of how much they spend or how long they have been a loyal customer.
However, in today’s rapidly changing markets, this strategy is becoming a bit outdated. You don’t want to waste your resources on offering average products to your loyal customer base and decrease their satisfaction.
On the other hand, you don’t want to waste your resources by offering products that only your loyal customers would love to your less profitable customers.
Another way of using exclusive sales to give loyal fans exclusive early access to purchase a particular product.
Using tailored pricing for your products' sales can also be a great way of rewarding your loyal customers. You can offer discounts to high-spending or returning customers for a sense of exclusivity, which is valued, especially by loyal customers.
All of the ‘exclusivity’-based strategies listed above focus on offering value, but one of the most critical factors for customers to become loyal to your company is trust. Trust can be built by offering exclusive experiences to those who value this the most. For example, this can be done by uploading exclusive content or by organizing exclusive events. This way, your loyal customers will feel even more recognized by your company, which raises their levels of trust concerning your company.
Rewarding your customers' desirable behavior seems like a lot of work, but it will benefit your company in the long-term. Other companies are already noticing the importance of customer loyalty and adjusting their strategies accordingly. You need to invest in your loyal customers to gain a competitive advantage in the long-term.