Referral Marketing

3 Ways to Build Brand Loyalty -- Before They Buy!

In this post, we define three tactics that will help you achieve an increase in brand loyalty and a lower customer acquisition cost.

All too often, marketers view brand loyalty as something that occurs after customer acquisition. However, as Howard Schultz, CEO of Starbucks astutely points out, "If people believe they share values with a company, they will stay loyal to the brand." And referral marketing programs have been shown to foster brand loyalty long before prospects convert into paying customers. Encouraging brand loyalty through word-of-mouth marketing, before prospects convert, can result in a lower customer acquisition cost. Curious? Here’s how:

Three Tactics For Building Brand Loyalty

According to billionaire, Richard Branson, "Too many companies want their brands to reflect some idealized, perfected image of themselves. As a consequence, their brands acquire no texture, no character, and no public trust." Instead of fostering this environment of bland brands, companies should work hard to foster brand loyalty before a prospect becomes a customer. The following three tactics will help you to achieve improved brand loyalty and lower customer acquisition costs.

#1: Word­-of-­Mouth Marketing Transfers Brand Loyalty

A 2012 Nielsen Research Study found that 92 percent of customers around the world trusted word-of-mouth recommendations from friends, family, and colleagues above all other forms of advertising. Brands can capitalize on this mentality by using a referral marketing program that rewards current customers for referring new customers to the brand's products or services. A brand referral program is a great way to generate brand loyalty in current and prospect customers. It can also create a cyclical environment of brand loyalty and brand promotion, which will inherently reduce customer acquisition costs.

#2: Engage and Create Experiences With Prospects

At the start of this post, we mentioned a famous quote by Starbucks CEO, Howard Schultz. This mentality needs to start while customers are still in the "prospect stage." Keep in mind that good customer service starts before a customer even hits the purchase button. In fact, in a recent consumer study, 78 percent of consumers stated that they have bailed on a transaction or not made an intended purchase due to a poor customer service experience.

But customer experience goes hand in hand with customer engagement. Companies can use social media, community engagement, and traditional marketing tactics to engage with prospects who have yet to purchase. By making customers feel connected with your company, you can encourage pre-purchase brand loyalty, which will reduce customer acquisition costs and generate an active new customer base. According to the White House Office of Consumer Affairs, on average, loyal customers are worth up to 10 times as much as their first purchase.

#3: Incentivize. And Then Incentivize Some More.

Incentivizing prospect customers is not just about the money your company can make. It’s about a company's unique ability to court, woo (or whatever pre 1900's phrase you would like to use) someone who is valuable. If a prospect feels that your company has the best incentive to buy (for example "freebies," reward programs, customer referral rewards, etc.), then they will view you as having their best interests at heart — your brand shows that you value your customers, and that makes people want to become your customers.

Keep the following tips in mind as you begin your customer incentive process:

  1. Keep quality high — Don't cheapen your brand with cheap offers. Instead show the value of your brand, with incentive programs that direct a prospect customer's attention towards the high quality that your brand (and only your brand) can provide.

  2. Stay relevant. — "Keep friends close and enemies closer." Know what your competition is doing, so that you can always offer your customers the better alternative.

  3. Show your appreciation. — Customers like to know that they matter. Whether it’s a simple birthday card or a customized email subject line on a special promotion, let your prospect customers know that they matter. When a customer feels appreciated before the point of purchase, they are more likely to develop a stronger sense of brand loyalty, which will in-turn translate to a repeat customer base.

The Strongest Brand Loyalty Starts Early

Brand loyalty efforts should be dedicated to prospect customers, as well as your current and previous customer base. By broadening your brand loyalty strategy and word-of-mouth marketing efforts, you can lower customer acquisition costs, while fostering an environment of loyal, engaged, and active customers who will purchase from you when the time is right. In the meantime, the latter individuals will promote your brand before, during, and after purchases.

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