Improve customer loyalty and retention by focusing on relationships

Lasting loyalty can't be bought—it has to be earned. Find out how it's done.

By Sarah Olson, Senior Associate, Content Marketing, @seolson5

Published March 31, 2020
Last updated November 20, 2020

In an economy that’s both competitive and ever-changing, retaining customers and inspiring loyalty is crucial. You need a loyal customer base to fuel your organization through the ups and downs. It's also more difficult than ever to achieve, so how do you make it happen?

Read on to find out how your can forge meaningful relationships with customers that make them want to stick around.

Customer loyalty vs. customer retention: What’s the difference?

  • Customer retention means that a customer buys from you, but they don’t necessarily have a strong affinity for your brand and could switch to another.
  • Customer loyalty means that a customer prefers your company, and if given the choice, they would enthusiastically choose your brand over another.

In other words, all loyal customers are retained, but not all retained customers are loyal.

Customers can be retained simply by the fact that your product is the one they purchased last time, or your product is the only available option (such as a retailer that carries limited selection). Loyalty, on the other hand, requires a bit more effort. But if you're successful, your customers will show their appreciation through word-of-mouth marketing and repeat purchases.


86% say authenticity is important when deciding what brands they like and support


Tactics such as loyalty programs can help, but it takes more than just perks build brand loyalty that lasts (although they certainly help). You need to make a real connection with the customer and earn their trust. The question is: How?

How do you increase customer loyalty and retention?

Our ebook with economist Tony Hockley of the London School of Economics and Political Science showed that consumers see their ties with businesses as similar to their ties with friends. They reward businesses with their “friendship” when those businesses treat them with honesty, respect and empathy—and hopefully have a little fun in the process.

So, how can you show up for your customers and earn their loyalty? Read on.

  1. Be honest and real

    We expect honesty from our friends, and customers expect it from companies too. A 2017 survey showed that 86 percent of people say authenticity is important when deciding what brands they like and support. This means providing customers the information they need, portraying your product accurately, and admitting mistakes even when they are big or uncomfortable.

  2. Respect their time

    More than 60 percent of customers said a speedy response was an important aspect of good customer service, according to our Customer Experience Trends Report 2020. Make sure you have the tools in place to respond quickly on the channels your customers prefer. Being able to respond on WhatsApp, for example, could set you apart from competitors.

  3. Show empathy

    Customers aren't likely to stick around if they don't feel heard. Listen to your customers when they provide feedback, show empathy for their experience, and then take steps to improve. Use tools like satisfaction surveys and focus groups to gain deeper insight, so you can really understand what your customers need and how you can deliver for them.

  4. Have fun

    You could provide free stickers with every package, share quick quips on social media, or create customer communities. For example, Starbucks created a Facebook group for Pumpkin Spice Latte fans to give them a space to share their love unapologetically. Customers will come for your product or service, but they'll stay because they enjoy the community you've created.

Once you've earned their trust, you can continue to win them over by delivering an exceptional experience. See here for more tips to help build customer loyalty.

How do you measure customer loyalty and retention?

Here are a few widely accepted metrics that can help you understand where your brand might fall in terms of loyalty and retention:

  • Customer retention rate

    Your customer retention rate is a reflection of customers who were retained over a period of time. Having a high retention rate means you’re doing something right and can instead focus on how to foster greater loyalty.

  • Customer churn rate

    Related, your customer churn rate is the percentage of customers lost during a period of time. Churn is inevitable, but it's important to track as an indicator of brand health or a warning of potential problems.

  • Customer satisfaction score (CSAT)

    Your customer satisfaction score is measured by asking your customers one simple question: How satisfied were you with your experience today? Your CSAT, then, is the percentage of customers who said they were satisfied.

  • Net Promoter Score℠ (NPS)

    Net Promoter Score is measured by asking customers how likely they are to recommend your product to friends or family, measured on a scale of one to 10. Based on their rating, customers can be broken down into three categories: promoters, passives, and detractors.

Customer loyalty starts and ends with CX

Customer loyalty isn’t just about a great deal or value proposition. Every aspect of your customer experience—marketing, sales, customer support—plays a role in fostering that relationship. You can have the best product in the world, but if your sales process is impersonal or your customer support is inconsistent, you risk losing your customers’ trust and jeopardizing the relationships that you worked so hard to establish.

Turn customers into loyalists by going above and beyond. Get started with a free trial of the Support Suite today.

Net Promoter and NPS are registered U.S. trademarks, and Net Promoter Score and Net Promoter System are service marks, of Bain & Company, Inc., Satmetrix Systems, Inc. and Fred Reichheld.