No doubt many of you have heard the truism that acquiring new customers is 5 times more expensive than keeping existing customers. And though this particular comparison has lost most of its luster, a loyal customer base is one one of the foundations of a success business.
In replacement of the 5x statement, consider the results of a study by Bain & Company that's actually supported by data: increasing customer retention rates by 5 percent can increase profits by 25 to 95 percent. While it's a large range, researchers found significant correlations between the two metrics across industries.
But for businesses, what does this have to do with social media?
In short, everything.
It'll come as no surprise that social media provides a direct link between you and your customers, so it goes without saying that you've already deployed and tested a loyalty strategy across your social channels right? Good for you. Your colleagues aren't having quite as much success.
According to the results of a 2013 survey of the Loyalty World Customer Festival in the UK, 88 percent of respondents agreed that social media played an important role in enhancing customer relationships (that means building loyalty), yet 44 percent reported being unable to effectively connect with their customers through social channels. An additional 27 percent reported only intermittent success.
Social media provides the premium connection between you and your customers. Failing to make a meaningful connection on it means missing out on the most fertile ground for encouraging customer loyalty.
Here are 3 key strategies to make sure your business uses social media as a loyalty engine:
Think of Loyalty as Earned Media
In terms of reaching your customers online, you have two media options: owned and paid. Paid media encompasses Facebook ads placed in your target audience's news feed, a strategy subject to underperformance and the law of diminishing returns. Owned media refers to communications that you create, such as content or social updates.
When done well, owned media translates into earned media, which is what you want. Earned media can't be bought, because someone, either a publishing entity or a consumer, must choose to promote your brand purely of their own volition. Contests don't count.
Earned media results from consuming an outstandingly useful or entertaining piece of content, or from an excellent customer experience. So in order to engender loyalty on social media, you must first earn it by providing a fantastic brand experience.
And then you must let it grow.
Loyalty doesn't happen overnight. You need to consistently prove your greatness before people will boast about you to their friends. But once those positive statuses start appearing, it's up to you to harness them by engaging with your customers.
Earned media takes longer than paid media, but it's sustainable, and more profitable. Remember, those great social media interactions will be seen by your customers' connections, expanding your reach.
And speaking of engaging your customers...
Bow to the Power of Brand Advocacy
Though the term may be a slight misnomer in a digital context, word-of-mouth advertising is still the most powerful form of marketing. A study by Zendesk found that 90 percent of respondents claimed reading positive reviews online affected their purchasing decisions. 86 percent reporting that negative reviews also played a significant role in buying behavior.
But reviews aren't limited to a company's website. Every positive or negative social media status that include your company's name is a type of review. Unsurprisingly, your customers on social media value the opinions of their connections. A 2010 Harris poll reported that 45 percent of Americans are influenced by their social connections in regards to how to feel about a brand. What is surprising is the intent of social media users, especially younger users. The same poll found that 45 percent of 18-34 years olds want to influence others with their social statuses.
So your customers are influenced by their friends' opinions about brands, and your younger customers also want to influence others. Word-of-mouth is alive and well.
This means businesses must take extreme care to cultivate brand advocates on social media channels. Harnessing the influence of your customers online is critical to expanding your loyal audience. Brand advocates not only act as an example of why others should begin a relationship with your brand, but actively influence others to do so. They are invaluable, and if you think of loyalty as earned media and put in the work, brand advocates will start appearing online.
Use Loyalty Software
To unify your loyalty program, it's important to utilize the right software. A newer industry vertical, loyalty software helps organizations reward their loyal customers and drive engagement with prospects who are near the top of the loyalty funnel. Certain loyalty software vendors will even help you create a program from the ground up, and show you the most effective methods for keeping customers coming back.
Despite the harbingers forecasting the death of customer loyalty, it's still possible to develop a sustained relationship with your audience, even the ostensibly incomprehensible millennial market. If you're considering how to inspire greater devotion in your customers, strategic use of social media is the logical starting point.