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3 Strategies on How to Increase Customer Loyalty

Dan Rorke
September 7, 2021
0 minute read

From rewards programs to referral bonuses, there are countless ways to increase customer loyalty. But none are as effective as providing top-notch customer service experiences.

Ninety-five percent of consumers say customer service is important to their loyalty to and choice of a brand, according to Microsoft’s State of Global Customer Service Report. Further, more than half of consumers will cut ties with a business because of poor customer service.

The term “customer loyalty” has different meanings depending on who you ask, but it can be loosely defined as a customer’s positive, emotional connection to a brand (which ideally yields ongoing purchases).

The most straightforward path to increasing that positive connection is investing in dependable, helpful customer service experiences. In this article, we’ll cover a few specific strategies for customer experience (CX) teams. But first, let’s explore the connection between customer service and customer loyalty.

How Does Customer Service Influence Customer Loyalty?

Customer service and customer loyalty are intimately linked—and there’s evidence to prove it. Here are three ways CX teams influence brand loyalty, according to a study of 10,000 consumers by the XM Institute.

1. Customer Experiences Distinguish Brands from Commodities

With the advent of ecommerce, people can easily browse and compare dozens of brands that sell near-identical products and services. As a result, brand loyalty often hinges on intangible aspects of business like stellar customer experiences, which create a point of differentiation.

But don’t just take our word for it: 94% of consumers who rate a company’s customer experience as “very good” are more inclined to buy again in the future, according to the XM Institute.

2. Happy Customers Become Brand Advocates

Truly loyal customers go beyond repeat purchases—they give your brand free publicity.

Prioritizing customer service experiences is a surefire way to improve your Net Promoter Score (NPS), which measures the likelihood of a customer advocating on your behalf. Specifically, 95% of consumers will recommend a company if the brand’s customer experience is “very good.” However, just 15% of consumers will recommend a brand that delivers poor customer experiences.

3. Great Customer Experiences Minimize the Impact of Mistakes

Every company makes mistakes, but not every business is forgiven—and that’s often the result of bad customer service.

Seventy-five percent of people are “very likely” to forgive a company’s error, but only if that company’s customer experience is “very good.” Meanwhile, if a company delivers “very poor” customer experiences, the amount of people willing to forgive a mistake plummets to just 14%.

In short: your customer support agents are on the front lines in the battle for customer loyalty.

3 Ways Customer Service Teams Can Increase Customer Loyalty

In the digital age, customer service interactions are often the only human touchpoint customers have with businesses, so your team has to nail it (no pressure!). Let’s explore three ways your CX team can seize this opportunity to increase customer loyalty.

1. Minimize Customer Effort Levels

Customer Effort Score (CES) is the strongest indicator of customer loyalty. In fact, 94% of people who have low-effort interactions with customer support plan to purchase from a brand again, compared to just 4% of people who have high-effort interactions, according to Gartner.

The primary cause of excessive customer effort is having to contact customer support multiple times to resolve a problem, according to Harvard Business Review. CX teams can prevent this by coaching agents to improve their first call resolution (FCR) rates. That’s done by addressing the root causes of issues (not the symptoms) and pre-empting problems before they arise.

Consider ClassPass, the online fitness class subscription service. ClassPass noticed their agents were spending an exorbitant amount of time chatting with customers who wanted to cancel their plans.  

“In 2019 alone, we spent the equivalent of 6,250 days—that’s more than 17 years—chatting with 1.5 million contacts for cancellations,” said Sydney McDowell, CX enablement lead at ClassPass.

COVID-19 compounded this issue, so ClassPass decided to automate their cancellation process and let customers place their accounts on hold instead of waiting for them to cancel.

By reducing that friction, ClassPass achieved an 83% customer retention rate throughout COVID-19 compared to their expected retention of 61%. On top of that, they now have zero cancellation chats handled by agents—that’s 6,250 days of agent worked saved every year.

Keeping the human touch in customer service is great, but most people don’t crave sympathy; they crave results—and fast.

2. Empower Agents with Actionable Information

The most frustrating part of bad customer experiences is dealing with agents who don’t have the knowledge or ability to solve a problem, according to Microsoft’s State of Global Customer Service Report.

If you want to increase customer loyalty, you can’t let your agents fall behind the learning curve; you need a system that sets agents up for success from the get-go.

One company that’s mastered the art of agent education is Brooklinen, a luxury home essentials retailer. Brooklinen leveled up their agent learning experience by instituting a “CX University” comprised of three pillars to ensure agents are prepared for any encounter:

Learning Management System:Lessonly facilitates interactive video training modules that align with each agent’s learning style.

Internal Knowledge Base (IKB): A company wiki hosted on Guru lets agents quickly find and share information about policies, procedures, and best practices.

Quality Assurance (QA) Program: Grading customer support tickets through the lens of internal quality standards helps CX managers deliver personalized feedback and spot gaps in the previous two pillars.

“Giving specific and ongoing feedback has had a great impact on increasing our CSAT scores as well as our Average Handle Time,” said Casey Brewer, senior associate, CX Quality Assurance at Brooklinen.

3. Use a Win-Back Scorecard to Reduce Churn

Support agents are under constant pressure to reduce churn. Your team’s current tactics to win back customers might be offering discounts and incentives, but those have to come second to understanding the true reason a customer wants to call it quits.

Closely examining interactions where customers cancel ensures agents follow proper protocol. It also surfaces new insights that lead to better customer experiences. That’s where a win-back scorecard comes in.

A win-back scorecard is a type of QA scorecard that helps CX teams pinpoint the underlying reason for customer churn and determines whether agents follow the approved process to salvage the relationship.

Here are a few questions to include in your win-back scorecard:

  • Did the agent identify the customer’s reason for leaving?
  • Did the agent attempt to win back the customer by following our appeasement framework?
  • If the customer still decided to leave, did the agent provide a good exit experience?

The more data you collect, the easier it is to see which actions work to win back customers (and which don’t).

Customer Loyalty Isn’t Just a “Feel Good” Concept

Cultivating a community of super-fans is deeply rewarding for CX managers and key stakeholders. But loyalty is more than a concept; it’s the lifeblood of a brand.

Today, more than two-thirds of companies compete primarily on the basis of customer experience, according to Gartner. In other words, their support teams determine whether the business sinks or floats.

In a time where differentiation is challenging and consumers have more options than ever, exceptional customer service experiences are the ultimate competitive advantage.

Want to learn more about building customer loyalty through CX? Download our free ebook here.

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