Customer loyalty is a nebulous concept, but crafting experiences optimized for loyalty reaps many short-term and long-term rewards.
It’s not easy feat, but this article is designed to arm you with the knowledge and tools to start optimizing beyond the initial purchase conversion, and hopefully, to rack up some repeat purchases and referrals in the process.
If you’re the purveyor of a meditation app that costs $5 per month, the cost of switching is incredibly low and the competition is plenty. You should worry about optimizing for customer loyalty.
If you’re an optimizer for a required service in an environment of limited or zero competition, let’s say the DMV, then customer loyalty is not very relevant.
The ROI of your investment in customer loyalty, therefore, depends on your ability to influence it in the first place, as well as the potential effects of a hypothetical increase.
If you create a loyal customer for your detergent brand, for instance, you have a lifetime customer.
But if you create a loyal customer for your social media management tool or your brand of shoes, you have a lifetime customer as well as the high probability of word-of-mouth referrals.
Optimizing for customer loyalty is one of the most important things you can do, yet it’s also one of the most challenging.
For one, it’s tough to make the business case for customer loyalty initiatives because of the long term nature of the ROI. This is certainly true of experiments where the main goal is optimizing for retention: it takes a long time to determine the results.
Second, while there is a ton of research regarding loyalty, there’s a lot of wiggle room on how exactly you execute the strategies. So yes, reduce cognitive load and make your messaging and product simple. Invest heavily in customer support and experience. Stand for something. Reward loyal customers.