To understand the importance of retaining customers for as long as you can, consider the concept of customer lifetime value (CLV). CLV is the total profit a customer brings to your business while loyal to your brand after deducting the cost of customer acquisition. It\u2019s an easy calculation, and the emerging number can be somewhat shocking<\/a>.<\/p>\n Improve customer loyalty with our Customer Retention Survey template<\/a>!<\/strong><\/p>\n Say, historically, your company generates $4,000 sales revenue yearly per customer, and, on average, it costs $1,000 to bring the latter under your brand umbrella. Then, you calculate that the average stay of customers in your business is five years.<\/p>\n Putting these metrics together, your company\u2019s CLV is $4,000 x 5 – $1,000 = $19,000. It means:<\/p>\n So, suppose it takes one loyal customer to emerge from five new ones. In that case, it costs the company $5,000 (i.e., $1,000 acquisition cost x 5) to replace a loyal customer lost. This should be enough to show you that customer loyalty programs should be a central strategic focus of every business.<\/p>\n It\u2019s vital to remember that a 5% increase in customer retention has the power to accelerate your customer revenue by at least 25%.<\/p>\n In addition, your retained customers spend significantly more than prospects entering the customer circle, and they do it without the need for incentives to keep the buying momentum going. The double-whammy benefit of growing revenue with lower costs is nothing to sneeze at.<\/p>\n However, customer retention is frustratingly elusive unless your marketing team can drill down to the fundamentals of customer experience (CX)<\/a> and the chain of touchpoints that drive it forward. It involves covering a few essential activities:<\/p>\n Obtaining regular and accurate customer feedback with tools like the Net Promoter Score<\/a> or the Customer Effort Score<\/a>.<\/p>\n Contemporary methods and tools for analyzing brand loyalty can transform the customer experience into something bigger. These will help you address the challenges of customer loyalty programs.<\/p>\n The secret to expanding your ROI through customer loyalty programs is giving customers every reason to see your brand as part of their lifestyle. It involves creating a brand visualization that stands head and shoulders above the competition. You can only do that if you follow a methodical path:<\/p>\n When conducting a CX audit and addressing complicated issues, keep in mind that effective communication generates sterling results in customer loyalty programs. Many modern marketers see promotional creation, website content, and social media messaging as primary differentiators. In other words, it’s the way you express things and the vehicles you speak through to create more of a customer impression that matters. It\u2019s the differentiator that counts, adding emotional layers to your brand that transcend pure functionality. Also, it cuts across every crucial marketing activity from support agents to in-store sales, from logos to vision statements, and more:<\/p>\n Wherever you get the chance to add value or reward loyalty without giving away too much gross margin, do it. All kinds of situations arise to offer rewards to long-term clients (e.g., discontinuing lines, seasonal clearances, regional overstocks). In addition, selective gifts and discounts to truly loyal customers reinforce the likelihood that the latter is ready to pay more for brand gratification outside of the promotional activity.<\/p>\n Brand loyalty programs are substantially ROI-centric. Investments in brand loyalty efforts will show results quickly if the right strategy is in place.<\/p>\n","protected":false},"excerpt":{"rendered":" Let\u2019s face it, when all is said and done, sales revenue is the lifeblood of your business. Without sales, there\u2019s nothing to talk about \u2014 no bottom line, no ROI \u2014 nothing! Unless the company has stable, low-cost customers buying repeatedly, it\u2019s unlikely you can achieve and sustain the P&L’s top-line. Indeed, everything points to customer loyalty programs as a priority within corporate strategy. To understand the importance of retaining customers for as long as you can, consider the concept of customer lifetime value (CLV). CLV is the total profit a customer brings to your business while loyal to your brand after deducting the cost of customer acquisition. It\u2019s an easy calculation, and the emerging number can be somewhat shocking. Improve customer loyalty with our Customer Retention Survey template! Say, historically, your company generates $4,000 sales revenue yearly per customer, and, on average, it costs $1,000 to bring the latter under your brand umbrella. Then, you calculate that the average stay of customers in your business is five years. Putting these metrics together, your company\u2019s CLV is $4,000 x 5 – $1,000 = $19,000. It means: Every customer you lose to competitors in the early stages is robbing you of potentially $19,000; Every loyal customer lost is cutting off $4,000 additional sales revenue per year by failing to extend their stay beyond five years. So, suppose it takes one loyal customer to emerge from five new ones. In that case, it costs the company $5,000 (i.e., $1,000 acquisition cost x […]<\/p>\n","protected":false},"author":39,"featured_media":49239,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[204],"tags":[657,176,409,427,351],"yoast_head":"\n\n
The foundation of customer loyalty programs: customer retention<\/h2>\n
Building customer loyalty programs<\/h2>\n
![\"Customer](\"https:\/\/www.sogolytics.com\/blog\/wp-content\/uploads\/2021\/08\/loyal1-1024x684.jpg\")
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Communication in customer loyalty programs<\/h2>\n
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![\"Brand](\"https:\/\/www.sogolytics.com\/blog\/wp-content\/uploads\/2021\/08\/loyal2-1024x683.jpg\")
<\/p>\nFinal thoughts<\/h2>\n