Research: How to Create Loyal Customers and Reduce Customer Churn Rate

Yotpo recently surveyed 2,000 American shoppers to learn their views on brands and brand loyalty.  The results gave some interesting insights into brand loyalty in 2018, so I wanted to highlight some of the findings:

Despite the growing importance of customer experience, product is still both the point of entry and departure for brand loyalty. 55.3% of consumers are brand loyal because they love the product, and poor product quality is the number one reason why a brand would lose a loyal customer (51.3%). This echoes the success of modern direct-to-consumer brands that rose to fame thanks to “hero products,” including UNTUCKit, Quip, and Away Travel.

Second to poor product, sub-par customer service will drive away 23.5% of loyal customers, meaning that even for brands with ground-breaking products, the surrounding experience is still paramount.

No big shock here, great products drive higher levels of loyalty. Or put another way, a great social media strategy will not save you if you have a terrible product.

However, I don’t think it can be overlooked that every touchpoint between the brand and customer impacts loyalty. The product may have the most bearing on driving loyalty, but if the customer also receives an exceptional brand experience along every touchpoint, that will also greatly impact how favorable the customer views the product.

88% of Customers Say They Need at Least Three Purchases Before They Feel ‘Loyal’ Toward a Brand

The survey further revealed that the bar for brand loyalty is high — a repeat purchase or two doesn’t mean you have a new brand fan. In fact, 37% of consumers say that it takes five or more purchases for them to consider themselves loyal to a brand.

Bringing back a customer five times is no small feat as consumer demands grow: 67.3% of shoppers expect 24/7 customer service, while 71.0%  anticipate more frequent discounting and 58.4% seek out free shipping in exchange for their loyalty.

Of the respondents:

• 37% said five or more purchases were necessary before they were loyal to a brand
• 33% said brand loyaty took three purchases
• 17.67% said brand loyalty took four purchases

To me, these figures seemed a bit high.  I know from my personal experience, if any brand can get me to buy its product for the third time, I consider myself to be loyal to that product enough to continue buying it. On the other hand, if my first experience with a product is subpar, and very unlikely to buy it again if I have other options.

The Benefits of Loyal Customers

The survey also had three key findings for the value to brands of loyal customers:

1 – 60% of respondents will promote their favorite brands to friends and family (creating additional Word of Mouth)

One of the things I always advise clients to do is to give your advocates the tools and training to better promote your brand. When we find a brand we love, we want to share that love with others.  It’s like discovering something cool and wanting to share it with others, not only to help them, but to feel good about sharing something useful. Happy customers tell other customers about you.  Give them the tools to more easily do so.

2 – 52.3% of loyal customers will join a rewards program

This makes complete sense. Loyal customers want to be rewarded for their loyalty, so it follows that they would be more likely to join a rewards program. However, what most brands don’t realize is that reward programs members are often good candidates for your brand advocacy efforts. Whenever I work with companies who are interested in building a program for advocates, the first thing I ask is if they have a rewards program. That’s because the most active and passionate members of your rewards program are often good candidates to participate in a brand advocacy or customer advisory group that your brand may be considering. This also makes the whole issue of finding and identifying potential advocates much easier. So if you already have a rewards program, start there in your search for your brand advocates.

3 – 39.4% of respondents will continue to buy from brands they are loyal to even if cheaper options are available

Loyal customers are trusting customers. They trust their favorite brands and want to SUPPORT those brands. Price is less important to them, they are willing to pay a bit more for a product from a brand they trust and believe in. This is why it’s so important to create a situation where customers are more likely to become loyal. For instance, combine this with the above data concerning how many purchases are necessary for the customer to consider themselves ‘loyal’ to your brand. If you know that four purchases is the magic number for your brand before loyalty is attained, then you need to think about what you can do to convince the customer during those first three purchases to commit to another one. Think of it as identifying the point at which customers leave The Loyalty Funnel. Find the hole, and plug it!

 

A lot of interesting information and data from the study, which you can find here.