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7 Proven strategies for increasing customer loyalty

12 min read

Customer loyalty has never been more critical. The increased adoption of subscription models has cemented the links between retention and revenue. This article will share seven proven strategies that help you secure loyal customers and better business outcomes.

Introduction to customer loyalty

Running a business is never easy. However, these are uniquely challenging times. Just as economies were recovering from COVID-19, the war in Ukraine started. That situation added to rampant inflation and the cost of living crisis in Europe and the rest of the world.

Central banks have hiked interest rates to curb inflation. These policies meant that access to capital has become more difficult. To make matters worse, business owners have to contend with inflation and worries about a possible recession to think about. In response, many owners are making cuts, and marketing budgets are under threat.

On top of all this, customer acquisition costs (CAC) are steadily rising. Digital marketing has become more expensive and less precise due to increased privacy concerns and the death of third-party cookies

There is a lot going on. But it's not time to lose hope. Growth is still achievable by focusing on customer loyalty.

Why is customer loyalty important?

Growing or scaling your business within this environment is a challenge. But bringing in new customers isn't the only way you can drive revenue. The other part of the equation is to improve relationships with your existing customers.

If you increase customer loyalty, it will translate into revenue growth. Indeed, oft-cited research from Bain & Co. suggests that lifting customer retention by 5% can drive profits by between 25% to 95%. Interestingly, this research was done by Fredrick Reichheld, who is the person that invented the net promoter score (NPS), which is a powerful predictor of customer satisfaction, loyalty, and enthusiasm toward a brand.

Customer loyalty means forging and maintaining strong emotional bonds between you and your customer. When you get it right, you can drive repeat purchases, cross-selling, and upselling. In the case of subscription business models, it can lead to increased retention and contract renewals. 

Benefits of loyal customers

Here are some of the excellent benefits of customer loyalty.

Repeat business: Recurring revenue business models need loyal customers. When customers feel a strong emotional connection with a brand, they will stick around and spend more money. Indeed, research suggests that the number is as much as 67%. Repeat customers are the best source of revenue because you don't need to spend money on marketing to acquire them.

Positive word of mouth: Emerging business models over the last few years have focused on using high levels of customer satisfaction to drive marketing.  Product-led growth, an increasingly popular model in the software industry, uses referral programs and other incentives to get their product in front of users. The idea here is that by building strong bonds, customers will become advocates of your service. The same ideology can be used when selling durable goods.

No matter what marketing model you use, online advocacy is highly influential in purchasing decisions. Positive word of mouth across social media can also provide momentum for businesses and lead to revenue growth.  If you're still not convinced, statistics suggest that customers acquired through word of mouth spend 200% more than average users. Advocacy works!

Lower marketing costs: As we mentioned earlier, marketing and acquisition costs are rising all the time. If you can hold onto your existing customers, you can bring in recurring revenue without significant marketing spend. Finding ways to lower costs is vital for overall profitability. 

How do you improve customer loyalty?

Now that you understand the importance of customer loyalty, it's time to figure out how to improve it. 

Let's explore the seven best strategies for building a loyal customer base so you can reduce customer churn and grow your business.

1. The importance of acquiring the right customers

The best customer retention strategies start at the acquisition stage. While aggressive marketing and advertising can bring in customers, if the product-market fit is wrong, they won't stick around for long.

Knowing your target audience is crucial. Products or services that succeed are built to solve problems or pain points in the real world. 

You should iron all this out at the research and development stage and design products or services to meet a particular gap in the market. Typically, that process involves helping your target audience to achieve their goals more quickly, easily, or cost-effectively.

If your business has been running for some time, you'll likely have valuable insights into who the "right" customer is. Metrics like customer lifetime value (CLV), average transaction value, purchase frequency, renewal rate, etc., can help you understand the type of users most valuable to your business.

Once you know the demographics and interests of the customers who enjoy your services, you can adjust your customer acquisition strategies around targeting the users with the highest potential for loyalty, retention, and advocacy. Then the process becomes much more manageable.

2. Offer exceptional customer service

Customer service can be the difference between turning new users into loyal customers. Problems will inevitably happen from time to time. However, how you resolve them will determine whether you lose customers or not. Research from Harvard Business School shows that if you deal with situations swiftly, you can boost customer loyalty because you communicate how much you value your customers.

To cultivate customer loyalty, you need a strong customer service team. When customers feel valued and heard, they are more likely to trust your business. Because retention is far cheaper than acquisition, investment in customer service can bring about big returns.

But what exactly does excellent customer service look like?


When you personalize the customer experience, it makes customers feel valued, which helps promote customer loyalty. Of course, personalization is about more than just using your customer's name. It's about taking the time to understand their individual needs and preferences and keeping track of interactions with your brand.

For example, if your customer has had some recurring problems, they shouldn't need to explain them repeatedly. Customer relationship management (CRM) platforms can provide the customer data required for this approach.


Customer service should be swift and efficient. Teams should address and resolve problems before they grow and fester. When you get back to customers in good time, it communicates respect and lets them know they are important to your brand.


Empathy is an essential element of building customer loyalty. Customer service executives should do their best to understand customer frustrations and difficulties and go the extra mile to find satisfactory resolutions.


While the human touch is essential, brands should recognize that a growing segment of customers wants self-service options. Sophisticated chatbots, dynamic knowledge bases, and other forms of helpful content offer a way to educate customers and reduce tickets and overheads.

3. Create a loyalty program

Customer loyalty programs are an excellent way to engage and deepen customer relationships. When you reward loyal customers, you can unlock several amazing benefits.

Benefits of loyalty programs

While not every customer will take up your offer of a loyalty program, they are an effective tool for boosting retention.

You are not locked into price competition

A loyalty program will provide added value to your offer, allowing you to compete on more than just price.


When customers are working towards a reward, 80% are more likely to keep spending money with your brand.

Increase CLV

Increasing customer lifetime value through loyalty programs and repeat business means you can justify higher customer acquisition spending.

Create advocates

Word-of-mouth recommendations are highly influential. A strong rewards program should provide value to consumers, which can turn into advocacy, great reviews, testimonials, and impactful content for case studies.

Types of loyalty programs

A customer loyalty program can take several forms. The different models are not necessarily mutually exclusive, but it is also important to keep the program simple enough for your customers to understand its value. Evaluate the suitability of the different models for your business needs and mirror them against your objectives. Here are three of the most popular.

  • Point-based loyalty programs: Customers get points for each purchase, which they can exchange for goods or discounts.

  • Tiered loyalty program: These programs allow customers to unlock a range of benefits based on rank. Benefits and rewards increase as customers spend more.

  • Partnership programs: By working with other relevant brands, you can provide value for your customers by offering discounts and rewards that you couldn't deliver with just your product or service. These partnerships can also double up as a way to gain new customers.

Tips for creating a successful loyalty program

Here are some tips for creating a rewards program to build customer loyalty.

  1. Keep things simple: If your customers don't understand the program, they won't use it.

  2. Make it relevant: Align your rewards with your niche.

  3. Make the rewards worthwhile: You need to motivate your customers with valuable incentives offset by the increased revenue they bring.

  4. Make the rewards achievable: If it requires too much time or money to unlock the rewards, people won't sign up for the program or lose interest.

  5. Offer something to join: Instead of making customers wait to get a bonus, give them something small when they sign up.

  6. Keep them engaged with a few surprises: Many customers sign up for rewards programs but lose steam along the way. A few well-timed surprises or bonuses along the way can revive interest.

4. Seek and act on customer feedback

Customer feedback is crucial if you want to understand your user base. You can get customer feedback in many ways, such as surveys, contact forms, and monitoring social media channels and reviews. Keeping your finger on the pulse of customer sentiment helps you understand what you're getting right and what you're getting wrong.

When you collect feedback on the customer experience, you can use it to improve your service. When customers feel heard, their trust and relationships with your brand deepen.

5. Measure customer loyalty and keep a record of past communication

CRM platforms allow you to gather and keep comprehensive records of your customers, including all your past communications. This data is essential for offering a truly personalized service sensitive to your shared history with each consumer. Understanding past issues, preferences, and any promises that have been made to your customers can help you provide outstanding service.

Collecting this data also allows you to track and monitor the customer experience with various metrics. While cultivating customer loyalty happens on the individual level, it's important to stay conscious of the broader patterns that affect customer retention.

Metrics for customer loyalty

If you want to improve customer retention and loyalty, you need solid data. Here are some of the best metrics to keep an eye on.

Customer retention rate

Customer retention rate is a measure of how many users you've held onto over a specific period. This metric can indicate how many loyal customers you really have.

Customer churn

Customer churn is an excellent way to figure out how many users you are losing over fixed periods. This metric is crucial for subscription-based businesses. It's generally agreed that anything over 5-7% could indicate problems with customer retention.

Monthly recurring revenue (MRR)

MRR is another crucial metric for subscription businesses. When you increase customer retention, your MRR rises too.

Customer lifetime value (CLV)

Customer lifetime value is a measure of the average amount of revenue each customer generates over the entirety of their relationship. Loyal customers tend to bring in the most money over time.

Customer satisfaction score (CSAT)

CSAT shows you how your customers feel about the different elements of your service. The results of these surveys can be used to devise strategies to improve customer loyalty and happiness.

Net promoter score (NPS)

NPS is a simple survey that asks how likely a customer is to recommend your product to a friend or family member. It's deceptively simple and can tell you a lot about customer engagement, loyalty, and happiness.

Of course, these metrics are just the tip of the iceberg. There are plenty more that you can use.

6. Improve the customer experience

A good customer experience is crucial if you want to build customer loyalty. However, it's not something you can just stumble upon. It needs to be deliberate and planned.

Mapping out the customer experience requires first defining what you want to achieve. While your broader goal might be to improve customer loyalty, you'll need to break that down into measurable goals. For example, a CSAT score, revenue objectives, an acceptable level of churn rate, and so on.

Next up, you need to gather information. Speak to current and lost customers, and find out what your rivals are doing right. You can even do focus groups, surveys, and other types of market research to find out exactly what customers want from brands in your sector.

From there, you need to map out the various touch points your customers have with your brand. Common touch points include your website, in-store encounters, customer service, social media, emails, newsletters, webinars, and so on.

Once that work is done, it's time to build a path that goes from brand awareness all the way toward loyalty, advocacy, and the other markers of meaningful relationships with your brand. You need to tailor this customer journey towards your product or service to reflect the steps your consumers take.

Once you've mapped out your customer experience journey, keep measuring and testing. Identify and remedy points of friction by using a mix of the following:

  • Quantitative signals: Surveys, interviews, and feedback on the individual level

  • Qualitative signals: Metrics and analytics that account for the bigger picture

7. Personalize your marketing efforts

Marketing has changed a lot over the last few years. Data analytics, AI, and sophisticated communication tools have changed how customers and brands interact.

Brands that offer personalized marketing can tailor their messaging toward customer preferences, including using their favorite communication channels.

Methods for personalizing marketing efforts

Having a wealth of customer data means brands can target customers with more precision. Here are some of the best methods to personalize your communications.

Targeted emails: Segment your email list to send personalized offers, recommendations, and highly relevant content to each of your customer profiles.

Social media: Social media provides brands with an effective way to engage with existing and prospective users. Some of the most effective tactics involve creating audiences based on their interests, creating content that targets particular customer segments, or content that helps your audience get the most value from your product or service.

CRM systems: CRM systems are a valuable asset in the battle for winning the hearts and minds of your customers. You can use the data to deliver personalized messaging and proactively resolve potential issues.

Benefits of personalized marketing

Personalized marketing has several benefits that help you build customer loyalty.

Increased engagement

Research shows that increasing levels of engagement can help with building customer loyalty.

Higher conversion rates

Personalized marketing will help you net new customers because your messaging is dynamic and relevant. Instead of sending out a generic copy, you can target future customers with ads, content, recommendations, and offers that resonate with them, bumping up your conversion rates.

Improved retention

Personalized marketing helps you retain customers because they get more relevant messaging and offers.


You need a mix of solid strategies to build customer loyalty in the modern marketplace. Customer expectations are sky-high these days. Rising to these needs requires adapting and adjusting your business practices to meet evolving demands.

From a marketing perspective, acquiring new customers should prioritize a focus on the personas with the potential to become loyal and happy customers. That all starts with collecting and leveraging data on your current customers. Analytics are an essential part of understanding and improving the customer experience, so use whatever tools you have at your disposal to map out a journey toward satisfaction, including regular pulse surveys.

Of course, first-class customer service is another instrumental element of loyalty. Showing customers you care by dealing with their issues in an understanding and empathetic way can turn disgruntled users into brand advocates. Additionally, initiatives like loyalty programs encourage customers to keep coming back.

Customer loyalty is not a destination. It's a constant process that needs to be refined and updated with feedback and adjustments.

During these times of economic uncertainty, winning new customers is not easy. While you might not have a huge marketing budget, you can still drive growth and revenue through excellent customer care and valuable products and services.

So get out there and employ these proven strategies that build loyalty.


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    Article written by Akseli L.

    A marketer who gets excited about all things e-commerce. Outside of office hours, you'll most likely find Akseli from the countryside, hiking and shooting landscapes.