6 Myths You Should Avoid to Build and Boost Customer Loyalty

First our wallets started filling up with cards, then we started earning reward points. Soon afterwards, mobile technology entered our lives, and printed cards have been replaced with virtual ones. All businesses, young and old, are fully aware of the value of their customers. And almost all of us have something to say about customer loyalty. In this article, I would like to shed some light on the degree to which these convictions are either correct or mistaken. When it comes to customer loyalty, misguided assumptions abound. Let’s evaluate some of these and learn right from wrong.

Myth #1: Customer loyalty emerges naturally

There is a widespread belief in the marketing world that as long as you have a good service or reliable product, eventually customers are bound to become loyal to you. This perspective is not only inaccurate but even somewhat dangerous, since it leads companies to neglect the development of a customer-focused approach and a customer management strategy. Offering products that meet consumer needs and treating customers well certainly helps to establish long-term loyalty, but winning this devotion is a process that must be pursued by means of a conscious strategy. Rather than leaving customer loyalty to chance, companies must aim to interact with their clientele and increase its loyalty by making full use of their know-how, communication channels and innovative ideas.

Customer loyalty does not emerge naturally, but it is the result of careful thought and planning that must constantly evolve over time.

Myth #2: Customers do not develop loyalty until they make a purchase

Another common misconception about customer loyalty is that it cannot be established until a sale or subscription takes place. Purchases of your products or services are an undeniable indication of customer interest in your brand, but they do not equate to customer loyalty. In reality, the seeds of such allegiance are first sown when a customer first discovers or learns about your brand. This first encounter might come from a visit to your website, from one of your Facebook posts, or indeed from a visit to your store and time spent shopping in it. These are all key moments when loyalty begins to be formed, and companies must therefore make judicious use of them.

The more a customer interacts with a brand before he or she makes a first purchase, the more the number of truly loyal customers increases. Some of the alternatives channels for this communication that are becoming increasingly popular among consumers include product videos, online training sessions and seminars, in-store awards and prizes, social media posts, email campaigns and blogs. Waiting for customers to make their first purchase, rather than investing in establishing loyalty early on could ultimately be a big mistake. Communication with customers must be based on a satisfaction-focused approach that makes full use of all available channels from the very first moment that a brand "touches" them.

In short, the foundations of loyalty are built way before any shopping experience, and the customer’s first visual encounter with the brand is key.

Do you want to build on your company's powerful first impression throught engaging loyalty offerings? See how PayFlex Loyalty Suite can help you.

Myth #3: Establishing customer loyalty is the responsibility of the customer relations team

Turning a customer into a loyal one and keeping him/her that way is not as easy as it looks. Since customer satisfaction and orientation are at the heart of creating trust, it is not feasible to assign responsibility to one specific department or group: customer loyalty is the duty of everyone in the business. But how can such a critical process be coordinated across departments? What is certain is that in a successful company all employees must adopt the customer loyalty ideology and contribute to making it work.

Everyone must play their part, and making customer loyalty a reality is not a departmental but an interdepartmental undertaking.

Myth #4: It is not possible to measure customer loyalty

Although we may still refer to our period as the modern age, in reality we are living in the information age. So much information is now available that the key challenge is to analyse it appropriately. As data are processed, methods of analysis become more efficient, making the task of quantifying customer loyalty less arduous than it might seem. Just as creating loyalty is a joint effort, measuring it also requires coordination between departments. Since each part of a business uses different metrics, levels of customer loyalty can be assessed by measuring customer lifetime value by making good use of parameters like the number, frequency and duration of customer visits.

Although such parameters may seem meaningful on their own, it is more important to evaluate them together. An increase in the number of customers visiting your store or the duration of their visit does not necessarily mean that things have improved. For this reason, when gauging loyalty all available data must be evaluated optimally and collectively. Although the task is not as simple as determining the profitability of a company by checking two or three values with the accounts department, with sufficient willingness and effort customer loyalty can in fact be measured.

By making full use of the right parameters it is in fact quite possible to measure customer loyalty.

Myth #5: Loyalty applications are too costly for small-scale businesses

When it comes to loyalty investments, large, mature companies with significant market share are the most likely to allocate sufficient financial resources. So-called small- and medium-sized businesses are much more hesitant and liable to inaction when faced with a decision on paying for loyalty platforms, often seeing the cost as being beyond the grasp of their budget and resources. However, thanks in particular to the development of cloud technologies, it is now possible to find a loyalty application to suit every budget.

In fact, it is best to see your company's loyalty application as a vast sea that will grow as you invest. In the past, it was necessary to engage consulting companies to establish loyalty applications, conduct largescale data analysis and organize major campaigns, but times have changed. Even the local corner shop is now taking giant strides in terms of customer loyalty, and several platforms exist that can be set up at minimal expense. Although they may not be a top priority for small-scale companies, loyalty systems are increasingly structured to be tailored to any budget and altered to suit every stage in the evolution.

In summary, loyalty applications have become affordable tools that offer a wide range of options suited to all budgets and can be customised to suit any company’s requirements.

Myth #6: Younger customers are no longer loyal to brands

Generations Y and Z, or millennials, have a complex relationship with loyalty, having been born into a world of mobile technology and being used to searching and testing for new products without depending on specific brands. A misguided conclusion widespread in the world of marketing is therefore that it is not worth investing to secure the loyalty of these consumers, since any outlay would simply go to waste.

It is not possible, however, to seek absolute truth in relation to customer loyalty, since every company has its own strategy. In fact, thanks to the power of social media, brand loyalty has begun to change face. Loyalty is no longer to the brand itself but instead to those representing the brand and to social media gurus. Furthermore, thanks to the power of mobile communication, the brand loyalty of the newer generations directly influences others in their circles, growing like a snowball.

In a nutshell, while it is common to assume that the new generations display little brand loyalty, mobile technology gives companies opportunities that they could only have dreamt of in the past.

The world of opportunities

To recap, if issues relating to customer loyalty are managed correctly, the concept remains full of opportunity. The important thing is to be ready to make the right move at the right time and in the right place. PayFlex Loyalty applications, which are designed around a modular structure to serve any customer loyalty requirements, are perfectly placed to enable companies to take decisive steps to increase the loyalty of their customers. There is no longer a need for six-figure budgets to allow customers to earn points and discounts, or to launch campaigns based on their interests. It is now possible to design highly optimized loyalty schemes by adopting new modules as the need arises.