By Zsuzsa Kecsmar, Chief Strategy Officer at Antavo

As economic uncertainty shows no sign of abating and the shift in buying habits increases in response, businesses are facing multiple challenges to survive and remain profitable. 

While new customer acquisition is one of the most common business goals, what should be looked at more fully, particularly in this climate, is increasing the Customer Lifetime Value (CLV) and customer retention. 

Antavo’s 2023 Global Customer Loyalty Report showed that 68% of companies have plans to increase their investments in customer retention, and that 89% trust loyalty programs to help them overcome the inflation crisis. 

Keeping customers interested in your business and product, even when their budget is limited, helps increase the chances they’ll spend with you again and boosts their CLV. Let’s examine a few ways you can retain customers and instill loyalty. 

Create a genuine customer connection

Competition is rife and more people are on the lookout for the latest product and service, however what resonates more deeply is a genuine connection with a brand. Emotional loyalty comes when customers feel they are cared for and listened to, not just when their business is wanted but on an ongoing basis. 

As a study from Motista shows, customers with an emotional connection to brands have 306% higher lifetime value.

Creating a deep relationship with your customer requires you to understand what motivates them and to personalise your interactions with them from the start. For example, including their name and any related products in a welcome email has a higher open rate than a generic one. Another example is rewarding customers on their birthday with a discount code or a small free gift, a nice surprise at a time when they least expect a business to give something away and a small gesture that makes them feel seen and recognised. 

Staying relevant and showing that an effort has been made helps to keep their attention, interest and a portion of their hard-earned money. 

Retention tools

Loyalty programs are seeing a rise, shown by nearly a third of the total marketing budget within an organisation being allocated to a loyalty management program, a 5.4% year-on-year increase – as Antavo’s report shows. 

Retention tools are typically small, frequent actions made by a customer that produces a cumulative build up of emotional loyalty as well as rewards that can be used against a purchase. 

For example, a customer can be rewarded for signing up to open an account, and further points can be gained through following the brand on social media, inputting their birthday and recommending a friend. These points then equate to a discount or money off their next purchase. 

With a gradual build of points, a tiering system can be useful in motivating the customer to stay engaged as new benefits and rewards are revealed at each stage. Typically, programs have three tiers but for a long-term retention strategy, more tiers are recommended to keep engagement and motivation high. 

Another great tool is incorporating challenges and gamification into a loyalty program where points are rewarded for behaviors performed regularly. This works particularly well for lifestyle and health brands where frequent engagement, like exercising or journaling, can be documented within an app. Customers feel a sense of accomplishment and are rewarded for the actions that align with their personal goals and outside of the buying cycle. 

Sustainability and values

While many have started to reconsider where and how they spend their money because of the inflation crisis, another factor is whether the brand fits into their values. Increasingly today, more people are wanting to make positive lifestyle choices and wish to connect with businesses that share and support these.

For example, climate change and environment awareness has become front of mind for many and so brands that limit single-use plastic and opt for recyclable packaging increasingly win loyalty points and can often enjoy word of mouth recommendations. Antavo found that 68% of businesses predict that more loyalty programs will support ESG causes making it one of the biggest trends to come. 

Other values include achieving a better work-life balance, regular exercise and movement and greater community involvement. Businesses can create and show their own internal initiatives for these, however, they can also reward customers who do this too via participating in online or in-person group events and tracking movements and workouts. 

Final word

Customer retention and loyalty has always been key to successful business, but as purses are tightening and the market is getting more competitive, it’s becoming more of a lifeline today. In addition, the path to ‘locking in’ a customer has changed to become less transactional and more emotional, where both parties are consciously investing in one another for long-term gain. 

The foundation to retention today is building a genuine connection and emotional loyalty that speaks directly and easily to the customer. 

The increase in digital access and innovation has resulted in customers wanting and expecting to see greater effort from their brands on multiple fronts; personalisation, interactive reward programs and brands that reflect lifestyle and personal values.