PFL’s Strategy Guide: Customer Loyalty

Filed in Customer Loyalty Marketing on May 30, 2018 by

What comes to mind when you hear the word “loyalty?” For some of us, it’s our trusty labrador. For others, it’s a significant other. For those of us in marketing, it means acquiring and retaining customers who love our brand and keep coming back for more.

But why should customer loyalty make you feel as warm and fuzzy inside?

Because, money.

Nine out of ten customers are willing to spend more money with brands that give them great customer service over brands that may be cheaper but don’t provide that same experience.

And, existing customers spend 67% more than new customers.

Plus, it’s 20-40% more expensive for your business to gain new customers than to keep old ones.

Add up those stats along with the fact that loyal customers refer an average of SEVEN new customers to your brand by the time they are a 10-time customer, and you simply can’t afford NOT to invest in customer loyalty.

In fact, research shows that a 5% increase in customer retention can result in an increase in profits of anywhere from 25% to 95%.

Alright, hopefully those stats are compelling to you, and help you understand why customer loyalty is a crucial aspect of any business. But what exactly is customer loyalty? Let’s back up a step and take a look.


How Can I Gain Customer Loyalty?

Let’s start with the fundamentals. The most important way to retain valuable customers is to have two key ingredients:

  1. A stellar product
  2. Amazing customer service

Without these ingredients, your Customer Loyalty pizza is really just a sad pile of congealed cheese and red sauce. Eww.

No tips, tricks, or customer loyalty programs can replace a truly great product that does what it says it does (and more), is consistent, and delights your customers. Pair your great product with fast, reliable, friendly, and accountable customer service, and you’ve got a winner.

But don’t people want more than a great product and awesome customer service?

Yes. In today’s uber-competitive market, it’s unfortunately not enough to rely solely on your product and customer service. To truly keep those wandering customer eyes from straying, you need to offer an incentive. That’s where customer loyalty programs come in.

What is a Customer Loyalty Program?

Think about the last time you booked a flight. Before you made the purchase, you probably weighed all the options, considering total price, number of stops, and total trip time. Maybe you even thought about the kind of snacks each airline offers.

If you’re like many Americans, you also considered which airline you have a loyalty program with. Maybe you have the Delta American Express card, so you booked the Delta flight even though it had a short layover, whereas the Alaska Airlines flight was nonstop. Why on earth would you do that??


Okay, I know, airlines call them “miles,” but it’s the same concept.

People are willing to stay loyal to your brand when there are rewards on the line EVEN if it’s cheaper or more convenient at the time to go with a competitor. That’s the magic of customer loyalty programs.

What kind of loyalty program should I implement?

As with most marketing advice, it depends on your brand. There are several ways to structure customer loyalty programs, and which one you choose should be based on your customer profile, your goals, and your resources. Here are a few ideas we’ve seen work well:

Partner with another business

You don’t have to do it all. In fact, sometimes the best reward programs are a joint effort between two businesses who can both benefit from the customer loyalty program.

Integrate with a referral tool

A great way to utilize customer loyalty to gain new customers is by using a referral tool to grab the excitement from customers right when they experience it.

For example, at PFL, we integrate with Influitive, a tool that helps users both keep track of all their points, and — more importantly — asks for their feedback and advocacy right on our site without having to send them yet another email begging for their response.

Set up a simple points-based reward system for discounts on your product or service, and offer additional points when a customer refers someone else or provides a written review.

Send rewards for referrals or word of mouth actions

Personalized marketing always drives more effective responses. That’s why PFL uses customer data to personalize, trigger, and customize rewards, based on behavior.

Personalizing your marketing is key for getting customers or prospects to make a purchase. But personalizing your rewards? That’s a whole new level of marketing wizardry, and it pays off.

Imagine sending your loyal customers their favorite candy bar each time they hit 1,000 more points in your reward system via direct mail. Or what about a coupon to their favorite local restaurant? Or a bag of dog treats because you know how much they love their labrador?

This type of tactile marketing makes an impact that truly lasts because your customers really feel like you know them on a deeper level than your run-of-the-mill “here’s my credit card in exchange for services and endless marketing emails” transaction.

Next time those customers have to choose between your company and the other guy, how you prove your loyalty to them will certainly factor in.

And because we’re the marketing personalization experts, we already know what you’re thinking: “Personalizing direct mail sounds like a lot of work!”


Au contraire. With PFL’s Tactile Marketing Automation software, you can set up and trigger sends of your rewards based on customer actions automatically. Learn more about how TMA works here.

Thanks! I’m done now, right?

Not so fast. You wouldn’t put money into advertising on Google Adwords or Facebook and then never check on the performance of those ads, right? (Please tell us you said no!) Well, similarly, you need to follow up on the performance of your customer loyalty strategy.

Some of the key statistics to analyze when evaluating your customer loyalty strategy include:

Customer Retention Rate: How likely are your customers to STAY customers?

Are your customers coming back to you and only you? Or are they testing the waters a bit more than you’d like? Keep track of how often your customers return for your services. Also be sure to analyze those customers who are members of your customer loyalty program and compare them to those who are not members. Is there a difference? Do loyalty program members tend to be more, well, loyal? If so, give yourself a pat on the back — you’re doing it right.

Net Promoter Score: How many of your customers are likely to recommend you?

Calculate your Net Promoter Score (NPS) by subtracting those customers who would say they would NOT recommend your company from those who say they would. Take stock of your NPS regularly to see whether your customer service and loyalty program efforts are paying off.

Customer Effort Score: How much effort did your customers need to put forth to work with your team?


Customer service is hugely critical for customer loyalty. If you think word of mouth marketing is powerful for promoting your brand, it’s WAY MORE powerful when someone has a negative experience.

Keep tabs on how easy your customers find it to reach your customer support team, and how easy it is for them to solve any issues that arise. Then, fix the negative, and re-assess. Your profits will thank you!

For 4 more ideas for better customer loyalty marketing, check out this post.

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