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Retaining customers who love and buy your products time and time again should be a top priority for your business.
Over the past few years, brands and retailers have started capitalizing on the idea of ‘brand love’ as a part of their customer retention strategies.
Reason? Loyal customers who love their brand have a higher purchase frequency and more lifetime value. In other words, returning customers are the life & blood of brands.
Here are some stats that prove why retaining loyal customers is crucial for any business:
⇒ The process of acquiring new customers is 6-7 times more expensive than retaining loyal ones
⇒ A 5% increase in customer retention can increase your profitability by 25% to 95%
⇒ Repeat customers have a 60-70% chance of making another purchase
These numbers are why it is crucial for businesses to place importance on boosting customer loyalty and increasing customer lifetime value.
Let’s first understand what is Customer Lifetime Value (CLV)?
Customer lifetime value (CLV) is a measure of the net profit that results from a loyal customer’s relationship with the brand. Calculating CLV is an ideal way to determine which customers to invest in and who to churn.
It is important because customers with an emotional connection to a brand have a 306% higher lifetime value. What’s more? Loyal customers stick around for an average of 5.1 years, and 71% of them would recommend the brand to friends and family members.
In other words, building a strong emotional connection with your customers can help you improve CLV to a greater extent. But, how do you do that?
Simple- by engaging your customers on all channels, gathering their data, analyzing their responses & feedback, and personalizing recommendations by creating unique customer profiles.
It may seem a lot overwhelming, but AI can help you do this with the least amount of effort. Let’s delve more into how AI can improve customer loyalty in the next section.
AI allows businesses to make sense of humongous amounts of data in real-time and generate real-time insights so brands can enable loyalty marketing and increase customer lifetime value.
Here are a few ways in which AI can improve customer loyalty:
Your customers leave data on social media, emails, and websites. But, storing customer data in multiple places can make it difficult to get the full picture of your customers.
But, if you integrate all the data sources and combine all the data from online, offline, and mobile interactions in one place, it is easier to get a single view of your customers.
With a unified customer profile integrated into your marketing strategy, you’ll always be equipped with your customer’s information. You can learn what they like, prefer, or despise and use this information to personalize recommendations and offers.
Predictive analytics help companies harness customer data such as their transactions, browsing history, feedback, survey responses, reviews, etc., and analyze it to predict their future behavior. Companies using it have reported a 21% YoY growth in their organic revenue compared to an average of 12% for companies that didn’t.
For instance, Starbucks recorded a 12% revenue hike by implementing data-driven loyalty strategies.
Read the full case study here.
Almost 56% of consumers claim they would return to shop with a business only if it offered a personalized experience.
And here’s what AI does- it helps you create a personalized customer profile by gathering customer data from all the data sources and predicting their needs & wants so you can personalize recommendations & offers.
For example, UK-based fashion company Thread used customer data derived from quizzes to offer customized recommendations and styling tips to their customers, which resulted in a 79% growth.
We have the best customer loyalty software
Using AI to digitize traditional loyalty programs can potentially help big brands to make strategic decisions when a customer takes action. Apart from other AI applications, through custom AI triggers, they can tailor their model to meet each of the specified requirements.
As AI develops and uncovers more exciting opportunities, businesses are going to take a more intelligent turn as marketers will be able to identify trends and implement smarter measures to improve customer experience.