Increasing customer retention and building brand loyalty are goals that businesses of all sizes strive to achieve, but for SMEs and start-ups, turning their first initial prospects into loyal repeat customers can be very difficult.
This is not only because you will be competing with established businesses already actively serving the same market as you, but because you’re unlikely to have the same funds and resources at your disposal as larger brands, or even other well-established SMEs.
Additionally, unless you already have a background in marketing or a lot of prior experience of successfully incentivising brand loyalty within another role or business, knowing how to catalyse loyalty and even why doing so is so important is not always obvious.
In this article, I will explain the value for SMEs of building brand loyalty and increasing customer retention, and share some tips and pointers on how to do just this.
What is brand loyalty?
Brand loyalty is a marked (whether conscious or unconscious) preference on the part of a consumer to make their purchase from a particular seller as opposed to any other, or to go directly to one particular seller without even shopping around or checking out alternatives first.
Brand loyalty isn’t only reflected in an individual shopper’s decision-making processes, but may also be demonstrated in other ways too; such as a willingness to recommend the brand or their products to others, or a propensity to trust the brand’s claims or statements at face value due to past experiences with the brand.
What makes any given customer loyal to any given brand can be hugely variable, and many shoppers who consistently choose a specific retail store or online shop over others would have to think hard to explain their reasons for doing so.
Some of the factors that can result in brand loyalty are obvious, such as consistently offering more competitive pricing than competitors, the use of incentives and promotions for repeat customers, and the integration of dedicated customer loyalty schemes.
However, sometimes brand loyalty can be rather harder to trace back to its origins, and even the smallest of things can incentivise or discourage a purchase or repeat sale. If your website is simply easier to use and faster to load than competitors, this might give you enough of an edge to take a customer, or a great but short one-off customer interaction with a helpful assistant in a retail store can potentially have the same effect.
Another way to promote brand loyalty is to ensure that your company ethos and mission is in line with your prospects’ preferences; if your interests, causes and the things that your brand supports and values gel with your prospects’ own personal ethics and causes, this can in itself create strong brand loyalty too.
A customer that has already developed a high degree of loyalty to one brand will be hard to sway from this position, even if something goes awry later on or the brand makes a minor mis-step; but brand loyalty is something that needs to be nurtured and grown on an ongoing basis, otherwise even the most dedicated of prospects will eventually seek pastures new.
Why is building brand loyalty particularly important for SMEs?
Building and maintaining the momentum of brand loyalty is important for businesses of all sizes. It is much easier to incentivise a sale to an existing customer than a new one, and also much cheaper; if you have to continually target new buyers and don’t achieve a reasonable level of repeat sales, you will essentially need to find, market to and target each new prospect from scratch each time, which is both costly and time consuming.
Targeting repeat customers simply makes sense as a business model, and ensures that you’re not wasting money on continually reaching new prospects, and aren’t leaving money on the table that is there for the taking. Customers that are loyal to a brand spend around 67% more than new customers too, so the value of brand loyalty is not only in the level of repeat custom that this results in, but the checkout values of their purchases as well.
Building strong brand loyalties from the get-go is particularly important for SMEs. If your business is new, small, or dedicated to serving a localised geographic area, brand loyalty (or a lack of it) can make or break your operation during its early days.
Even for established brands and bigger companies, a lack of brand loyalty or the loss of a significant number of previously loyal shoppers can make a significant dent in the brand’s bottom line, as well as threatening its future success and growth.
Most SMEs and local start-ups don’t have a huge marketing budget to get going with, so spending that budget wisely and making full use of all of the cheap and free (in financial terms) methods at your disposal of making sales and incentivising future ones is integral to your chances of survival and success.
Additionally, when you are just starting out and trying to secure your first few sales, those very first prospects and their experience with you is hugely important. If they go well, this may result in you starting out with a strong core of loyal shoppers who will not only keep returning to buy from you for years to come, but tell other people about your brand too.
Competing with established competitors and big brands financially is rarely viable for start-ups and SMEs, due to a simple lack of funding as well as generally a lack of the type of in-depth knowledge and marketing experience that is required to optimise ad spend and get the best return on your investment.
This means that SMEs need to innovate, look for new angles, and put the work in on the areas that they can control and direct in order to gain and retain their market share, and building brand loyalty is one of the most effective and profitable ways to do this for both the short and the long term.
The challenges of building brand loyalty when your operation is small or your brand newly launched
If your goal is to build brand loyalty to enhance your bottom line and drive growth, your first challenges are likely to be finding your initial prospects and ensuring that they complete that initial purchase (or commit to doing so) and have a good, hassle-free experience from beginning to end.
Anything else you can do at this stage (either online or in a real-world retail unit) to personalise the transaction, make a human connection, provide an excellent user experience, or make the transaction stick in the prospect’s mind for all of the right reasons reinforces this.
Achieving brand loyalty is an immersive process and one that is not necessarily linear; a customer might not automatically return to you to make their second purchase, but if they find themselves at your store or website once again because their second purchasing journey indicated that it is the best, easiest or most obvious choice, their chances of going straight to you the third time are much higher.
Research indicates that almost 80% of customers don’t consider themselves loyal to a brand until their third purchase, and 37% do not consider themselves loyal until their fifth purchase.
Additionally, you’re unlikely to have a huge amount of funds available to promote and incentivise sales and get the word out, which means that encouraging brand loyalty, demonstrating your USPs and highlighting to new and repeat customers why they should return to you next time are all things that require time and effort to counteract the shortfall.
Creating and actioning a cohesive brand image and portraying it to your target demographics
Most new start-ups face a few challenges during their first few weeks and months of trading and go through some teething troubles and difficulties along the way. However, problems like these can have a knock-on effect that is very much amplified when you are only starting out and every single sale and interaction is vital, and predicting and mitigating such issues as far as possible is a key part of building a strong foundation of brand loyalty.
There tends to be a reasonable amount of trial and error undertaken by businesses that are still finding their feet, and knowing how to build and maintain a cohesive brand image and portray it to your prospects despite this is something of a juggling act.
Brand loyalty begins with a strong brand image; one that is instantly recognisable, cohesive across every element of the operation, and reliable and trustworthy.
Whilst this may seem self-evident, protecting and maintaining the brand’s image and persona is quite an involved process, and one that needs to extend to every facet of the operation and its offerings and not be permitted to fall by the wayside when things get tough or everyone is busy.
This means not only integrating the brand’s logo and other forms of supporting marketing collateral across the entirety of the enterprise, but also enhancing the brand image and the customer experience that is associated with it too.
A lot of this comes down to the personal touches that you can incorporate into your brand ethos; such as connecting one to one with shoppers in a retail store, highlighting your USPs and advantages on your website, offering excellent customer support, and portraying a brand ethos and mission that your target demographics can get behind.
Dropping the ball just once in an interaction, customer journey or sales funnel (such as if a prospect finds an assistant unhelpful or dismissive, if a website page fails to load or if a customer complaint isn’t dealt with effectively) can quickly serve as a barrier to brand loyalty for an individual prospect and so, result in a significant level of lost revenue in the future.
To create a cohesive brand image to increase customer retention and build brand loyalty, everything has to work together to support your key message and the impression you wish to portray.
How SMEs can create a good impression to engage and support brand loyalty
To get a feel for what customers and prospects see and how they perceive your brand and business, you have to be able to emulate the customer journey effectively from the moment that they first find or show an interest in your offerings right through to the completed sale and after-sales support too.
This enables you to identify weak areas and elements of the customer journey that you can incentivise and improve more effectively, and allows you to spot problems, as well as helping you to see what is going right and how you can build upon this.
You can also compare the customer journey through your own store or online portal with that of competitors, to see where you have an edge and where there are elements you still need to work on to compete effectively.
Think about what elements of your own site or store, that of a competitor, or even other unrelated businesses that impress you and make you want to buy or return in future do right, and what puts you off. Don’t disregard anything as too small to be notable, or too situation-depended to count; think of the impression and feeling generated instead, and whether it incentivises or discourages.
For instance, if you find the colour scheme or even choice of text font on a website jarring or unappealing, this in itself probably won’t be enough to discourage a purchase, but it still needs to be taken into account in terms of the overall impression portrayed and the perception created.
Similarly, in a real-world retail store, if the store is busy and the assistants are unable to spend much time with each prospect and personalise each visit effectively, this might be a one-off situation that does not demonstrate the general customer service ethos of the brand. However, it is the takeaway that shoppers on that day and in that situation are left with, and again, it all contributes towards the general impression that prospects glean from their visit.
Begin with determining what impression you want your prospects to get about your brand or store, what would support this, and what would detract from it.
Examine every facet of your operation from your website’s design and operation to how staff communicate with prospects to the tone and style your offerings portray on their own, and fine-tune things until your customer experience is cohesive, seamless, and works in support of your brand and brand image.
The fine details: how to ensure that your operational processes and customer interactions support brand loyalty
Customers and prospects absorb information about your brand and products throughout the course of their shopper journey, even when this is unconscious. Together, these fleeting thoughts and feelings combine to produce a mental picture and emotional association with a brand; whether that is a positive one, a neutral or forgettable one, or a negative one.
Having a great-looking e-commerce store or beautifully organised retail unit and a slick, brand-appropriate image and supporting collateral will only take you so far. If your prospect starts running into difficulties or pain points when they try to shop or check out, or if your customer support and human involvement in the business contradicts or weakens your desired impression, you are unlikely to build loyalty in any meaningful way.
This means that you need to take a deeper dive into the fine details of your operational processes, customer interactions and personalisation in order to ensure that all of these things and more support the development of brand loyalty and enhance brand perception.
Anything that is incongruous, weak, ambiguous, or that does not gel with the impression you wish to portray needs to be examined and addressed, and this can be time-intensive and require a lot of creative thinking even if your brand is small and only just starting out.
One of the main areas to concentrate on is making sure everyone (or everything, if your operation is largely online and automated) is singing from the same hymn sheet in terms of the tone and style used for customer-facing interactions, that information is easy to find and digest, and that you have procedures in place for managing enquiries, complaints, and special requests.
Sometimes it is the human side of your operation that can be the hardest to shape in support of a brand image, but this is perhaps the most important element of building brand loyalty, as even a short personal interaction goes a long way towards being memorable and creating an impression compared to other forms of communications and collateral.
Brand loyalty and personalisation
Effective personalisation of the customer experience is one of the best ways to achieve and build brand loyalty, and this is something that can be undertaken in many different ways, for both online and real-world retail stores.
Using a customer’s name is a great way to personalise, such as by integrating this into promotional emails, product suggestions, pop-up offers and ads across other media too. In real-world stores, if you can request and use customer names within interactions and personalise interactions in other ways (like remembering regular customers on sight and taking the time to say hello to them) this creates a strong and memorable impression that can result in said customer coming straight to you again in the future.
Personalisation is about more than just names and identities, however; it also means delivering an individually personalised customer experience to every prospect possible, in the most appropriate ways to resonate with them.
For instance, showcasing products similar to or complementary to something the shopper has already bought or expressed an interest in not only helps to increase the chances of a sale but also enhances the user experience, which will be remembered next time the prospect wants to buy something.
Additionally, if you can personalise the customer experience in other ways with little thoughtful touches such as a hand-written note in packages or unexpected free gifts or offers tailored to each prospect, you will build up a strong and positive impression of your brand, and its ability to meet the prospect’s needs.
Loyalty schemes and incentives that are not overly intrusive in terms of data gathering and that offer valuable and achievable benefits to the prospects can help a lot too.
Enrol a customer in a loyalty scheme (even if this is as simple as giving out stamp-cards that give holders a free product or service when they have filled the card) and they will be exponentially more likely to return to you next time without shopping around, or to choose you over a competitor when all other things are equal.
Discount schemes and coupons are highly valuable here too; Expedia’s 2018 affiliate network survey on driving customer loyalty found that coupons and discounts are the best single method of driving brand loyalty, with 61% of survey respondents stating that they look for discounts and coupons prior to making a purchase.
Letting customers and prospects know that they are valued, respected, listened to and recognised by any means at your disposal can all enhance brand perception and incentivise repeat custom and positive word-of-mouth advertising.
Identifying weak areas and tackling problems
Keeping a close eye on how well you are retaining customers, incentivising repeat purchases and building brand loyalty will enable you to keep the momentum going because building and maintaining brand loyalty is an ongoing endeavour that will soon lose its efficacy if neglected.
Working proactively to stay abreast of what competitors are doing, improve on weaker areas, and identify and mitigate points at which your customers disconnect from you or that are failing to convert all form an important part of incentivising customer retention and long-term brand loyalty.
Talk to your customers and get their input at every stage of the process; their own insights, preferences and impressions are invaluable to your business, and no throwaway comment or minor complaint should ever be ignored or disregarded.
Not only does this help you to identify and address problems and allow you to strengthen the brand image you portray, but it also makes your prospects and customers feel listened to and valued, which in itself helps to personalise their experience and build that very loyalty that you are hoping to achieve.