Types of customer loyalty: What drives consumers to keep buying
Research from SAP Emarsys reveals the different kinds of customer loyalty drivers and how they're changing.
With advanced AI algorithms serving customers a curated and instant experience in so many areas of their lives, CX expectations are high. In addition, rising prices have made consumers more discerning about spending, with 48% of consumers ready to abandon their favorite brands.
In this environment, how can you build brand loyalty?
One innovative answer is customer advocacy marketing. It uses first-party data to provide a deep understanding of the sentiments and feelings motivating buying decisions.
What is customer advocacy?
Customer advocacy is the term for any action that customers take to promote a brand. They could refer a friend, or they could share the brand’s name on social media or leave a positive review.
An advocacy marketing strategy is one that seeks to turn your customers into active promoters of your brand. It uses first-party data to identify your biggest fans and nurture customers into advocates.
Unlike Net Promotor Score (NPS), which measures intent, customer advocacy allows brands to measure the sentiment of their customers and the actions they take in support of those intentions.
How does advocacy build loyalty?
If the challenges of building customer loyalty are intimidating, take heart from the treasure trove of data that’s right under your nose. Customers continuously provide insights on how loyal they are; you just have to find a way to tune in.
Their actions, from sharing your brand with others to giving feedback, are powerful indicators of their future engagement.
Analyzing how actively customers promote a brand reveals where they are in the loyalty journey. It lets companies identify their most valuable customers — those who not only buy, but advocate for the brand — and provides information to nurture and activate more like them. You also can use the data on their actions along with their sentiment to understand where to improve customer experience.
With a fuller picture of what’s motivating customers, you can more meaningfully personalize experiences and tailor campaigns.
Customer advocacy offers big benefits for retailers looking to boost loyalty:
- Delivers value from the customer base: Brand advocates have up to 2x customer lifetime value (CLTV) and 23% higher engagement rates with personalized email. Identifying and nurturing the best and most loyal customers unlocks revenue within an existing customer base.
- Attracts the best new customers: Advocacy marketing doesn’t rely on anonymous ads or promotions to raise awareness. It works by encouraging customers to spread the word to their friends and family. It’s a form of marketing that comes pre-packed with warmth and positivity. On average, this increases new customer acquisition by 10-30%.
- Drives organic growth: With an army of loyal customers willing to promote your brand, you don’t have to spend as much money on marketing campaigns. It means Earned Growth – the amount you’d grow by if you stripped out all the effects of paid campaigns – is much higher.
The six stages of customer loyalty
Marketing professionals have modelled how loyalty is created through the customer journey. It’s a journey that contains six (or occasionally five) steps. This process is sometimes referred to as the loyalty ladder.
While the terminology can vary by industry and objective, the basic concepts of how customers behave at each stage of the journey remain the same:
- Awareness: The customer becomes aware of a brand and its products or services. If this initial awareness comes from a trusted source, the journey to building genuine loyalty is a lot easier.
- Research: This stage involves gathering information. With a well-developed customer advocacy marketing strategy, a brand has a wealth of positive reviews, social mentions, and recommendations to rely on here.
- First-time customer: This is a critical moment where the quality of your product and customer experience can turn a one-time buyer into a frequent shopper.
- Repeat customer: After a positive initial experience, the customer returns to make additional purchases. This stage is key for establishing trust and reliability, showing that their first impression wasn’t a one-off.
- Client: They’ve gone from making one or two purchases and are now a steady repeat customer who will shop with you over another brand as a matter of routine. Notice that although there’s already some degree of loyalty here, you still have work to do to maintain and cement the relationship.
- Advocate: You’ve nurtured customers to the point where they feel a genuine connection to your brand and are enthusiastic enough to start recommending it.
There are two important things to note about these stages:
- Creating advocates signifies the highest stage of customer loyalty. When customers are actively promoting a brand, it’s a result of hard work across the customer journey to understand and appreciate them.
- An advocacy marketing strategy builds loyalty at every point along the customer journey and pushes more of an active customer base to the ultimate loyalty stage: advocate.
How to win back customers: 4 ways to reignite lost connections
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Reimagine brand loyalty with customer advocacy marketing
In the process of building a successful advocacy marketing strategy, you’ll also build brand loyalty. If you want customers to promote your brand, you have to provide a customer experience so outstanding that you can’t help but create loyalty within your customer base.
No one is about to go out and recommend you to their friends if they’re not satisfied with their experience. The more satisfied, and even delighted, you can make your customers, the more they’ll go out and advocate on your behalf, be that by writing reviews, sharing on social media, or referring their friends and family.
An advocacy marketing strategy offers sustainable growth and a way to build a dependable, profitable foundation for your customer base.
