The 5 Stages of Customer Loyalty and Retention: What You Need to Know

What is customer loyalty? It is a process of increasing familiarization and engagement between your customer and your brand. Much more than just a one-off purchase, loyalty is about fostering long-term connections with customers and reaping the rewards in terms of increased revenue and growth opportunities.

There are many different ways to approach a customer loyalty program, but perhaps the most effective is to consider the five stages of customer loyalty. Let's look at these stages in more detail.

Developing Customer Awareness

The first stage of customer loyalty is awareness. Without this solid foundation of brand awareness, customer loyalty programs will struggle to gain a foothold among the consumer base. To put it simply, customers cannot engage with you and your business if they do not know what you are offering and what you are all about.

You are already promoting your brand, whether via advertising or social media engagement, so what can you do to enhance this promotion and push the boundaries of customer awareness?

There are several different techniques you can utilize. One is to provide a more visual aspect to your marketing, facilitating engagement through images and video. Most of us process images around 60,000 times faster than we do text-based information. While text is still important in the delivery of your message, multimedia elements such as images and video are critical as you get noticed and grow awareness.

A storytelling approach is also essential here. With so many different voices in the market, customers need something truly compelling if they are to engage. Crafting a narrative with a problem and solution focus and then placing your customer and your business at the heart of this narrative will help people sit up and take notice.

Providing Easy Exploration

With the seeds of awareness now well and truly sown, attentions turn to the second of the five stages of customer loyalty. When considering how to increase customer loyalty, you need to think about how easily your consumers can access and explore what you have to offer.

User experience is a critical aspect here. Imagine a situation where your audience gets to know about your brand and then goes to check out your website, only to be met with confusing menus, slow-loading pages, and a quagmire of irrelevant content. So, approach the design of your website from your customer's point of view and build your web pages with easy navigation in mind.

How to measure this stage of customer loyalty? Take a look at your analytics. Find out if users are engaging with your page by measuring bounce rates and page views per session — if the ratio is good, this means that leads and prospects are navigating your website properly and are learning more about your brand. You may also decide to reach out to users directly, with forms and surveys, to find out how you can improve the experience you offer to them.

Demonstrating Unique Advantages

All businesses need a USP or unique selling point — something that differentiates them from the competition. This is because of overcrowding in the market. The online landscape has put the power into the hands of businesses of all types and all sizes. Organizations that once struggled to reach a wider audience can now connect with a vast array of different customers, thanks to the power of the internet.

This is great, of course, but it's also a burden. An active approach to customer loyalty marketing means cutting through this noise and positioning yourself at the forefront of the market. But how is this done?

The best way is to examine what your competitors are doing in the market and think about how consumers are responding to these efforts. Remember, the idea is not to copy your competitors, but instead to identify gaps in the market and to see what you could do better. Are there areas of the consumer experience that are not yet optimized? Are there products, services, or general advantages not yet offered to customers? Answer these questions, provide a solution, and then publicize this to demonstrate what makes you different.

Building a Relationship

This is where loyalty really begins — when the customer starts to feel more familiar and more comfortable with your brand. However, this cannot be considered the final stage of the process, simply because there are still so many different factors at play.

Experts break this stage down into more precise sub-stages. We may think of the relationship stage as fostering different levels of customer loyalty, starting with cognitive loyalty and then moving through affective loyalty, right up to conative loyalty.

Cognitive loyalty refers to a relationship that is based on price, or, more specifically, the cost-to-benefit ratio. You should already have begun to build this level of loyalty in stage three by demonstrating the unique advantages you offer compared to your competitors.

Affective loyalty comes next. This is when brand awareness starts to take hold. Brands achieve this when they get to know their customers more, drawing upon consumer data from customer loyalty software like engage™ and then matching products, services, and brand attributes to the expectations of the customer.

Conative loyalty is the final sub-stage of relationship building. This is where customer retention begins, as the customer decides to keep on coming back to make repeat purchases. They are also willing to recommend the brand to friends and family, although they may still have their heads turned by your competitors in the market.

Fostering More Profound Ties

There is a fourth sub-stage building on the sub-stages mentioned above in stage four of the customer loyalty process. This is action loyalty, which occurs when the customer begins to identify with your brand.

By this stage, loyalty has transcended the immediate buying intention. It is now something more profound — a recognition that your brand is a go-to for a certain type of product or service. When customers look to your brand, they see their individual needs reflected in this brand, as well as the social and financial aspects of their identity.

To reach this stage, you need to expand on the customer knowledge you have already gained in stage four. You need to examine the clients that have already reached the stage of conative loyalty, learning more about what they want to see from your business. Measure key metrics from these customers, hone your buyer profiles, and then craft your brand identity to match these profiles.

Increase and Measure Customer Loyalty with engage™

The engage™ platform helps you connect with the data you need to build customer loyalty in the right way. Reach out to our team and schedule a demo of the platform to discover more about how this solution will work for you and your business.