5 Reasons Your Customer Loyalty is Declining & How You Can Fix Them
In 2023, customers have more choice than ever before.
From online shopping, to cross-checking every business in their area with just a few clicks, businesses are under more pressure than ever to adapt to changes and ensure that they are meeting and exceeding customer expectations in order to retain customers.
In this article, we’ll take a look at five common reasons why customer loyalty may be declining in your business, and what you can do to turn things around and get your business and customer loyalty trending in the right direction for 2023.
1. Missing Customer Expectations
When it comes to customer retention and creating a loyal, returning customer base – meeting and exceeding customer expectations is a must. At a time where customers are spoiled for choice, businesses need to step up to the plate to ensure that customer expectations are being met and that they take the time to understand exactly what those expectations are.
Customer loyalty will most likely fall when you’re not meeting your customer’s expectations. A recent study by HubSpot found that a whopping 91% of customers that had a poor experience with a business (online or face to face) would not do business with that company again. That statistic doesn’t just apply to first time customers, it also applies to customers that had already had one or more interaction with a business. We know that first impressions are essential, but that statistic also demonstrates the importance of consistent service – a single bad experience can turn a customer off for life.
2. Your Pricing Doesn’t Stack Up
Pricing plays a critical role in customer retention and loyalty. It’s simple, when prices don’t make sense or stack up within your market, customers are less likely to be loyal and more likely to seek out an alternative that offers better value. A recent study by Accenture found that 53% of customers would seek out a better value alternative when prices are changed frequently or without warning.
It’s important to note that pricing doesn’t mean a race to the bottom and an unrelenting pursuit of undercutting your competition. Instead, pricing must make sense within the context of your unique value proposition and your market. A study by McKinsey found that companies that raised prices at a steady rate that was in-line with inflation and customer expectations were far more likely to retain customers in the long term.
Customers have more choice than ever, which means that they can cross-shop the features, benefits, and experience of your business against multiple other competitors in a few clicks. It’s a good idea to keep an eye on your competition, conduct your own undercover secret shopping, and get a better sense of how your biggest rivals are doing things.
3. Poor Communication
Poor communication creates confusion, frustration, and dissatisfaction amongst customers – all factors that can lead customers to ditching your business and never looking back. A study by American Express found that 78% of consumers have ended their relationship with a business off the back of a poor communication with a business. Customer loyalty will likely fall when you’re not communicating effectively with your customers.
With more channels and more access to businesses than ever before, customers have a higher level of expectation when it comes to fast responses and transparent communication. Online booking platforms and fast turnaround on enquiries are all factors that ensure customers receive the level of communication that they have come to expect from businesses.
4. Lack of Innovation
The fastest way to fall behind is to stay in the same place. A recent study by Accenture found that companies that are perceived as “innovative” retain more customers and have a greater sense of “value” within their market. In fact, 83% of customers in that survey reported that they were more likely to stay loyal to a company that was innovative.
Similarly, a study from Forbes found that 82% of customers would switch to a competitor if they felt as though the company that they currently relied on were no longer being innovative.
Let’s be clear, innovative doesn’t always refer to integrating tech into your business. For a restaurant or cafe it could mean seasonal menus or experimenting with new ingredients, while for a hair or beauty salon it could mean integrating new trends and offering more options based on international style insights. Apply to your industry and think about ways that your business can be more innovative and win more loyal customers.
5. Not Incentivising Customer Loyalty
On average, the cost to acquire a new customer is around five times higher than retaining an existing one. In fact, a study from OutboundEngine found that increasing customer retention by as little as 5% can increase profits as much as 25-95% for a business.
With so much to gain, businesses need to implement a customer loyalty program that incentivises loyalty and lets customers know that they are a valued part of your business. Stamp Me offers customisable loyalty programs and a punch card app that means businesses of all shapes and sizes can quickly and easily integrate a customer loyalty program to gain better customer insights and reward and incentivise customers.
Maintaining customer loyalty is essential for the long-term, sustained success of any business. Whether you’re a small, local business or an international conglomerate, meeting customer expectations will have a significant impact on your success.
Remember, loyalty is a two-way street. Customer loyalty will likely fall when you’re not thinking about your customers. Offering more value to your customers and taking the time to understand and resolve pinpoints is essential to keep the relationship going. Whether it’s by improving your product offering, providing more value within your market, or simply creating a personal connection that incentivises loyalty, there are many ways that you can improve loyalty and keep your business thriving in 2023 and beyond.
Stamp Me provides loyalty solutions to businesses large and small, from our own Stamp Me Loyalty App to fully customised loyalty and rewards programs for enterprises and brands.
Contact us if you would like to discuss a loyalty or rewards solution for your business or brand.