What Loyal Consumers Bring and What They Cost
There are many benefits that come with having loyal consumers for your brand. The top 20% of customers generate 30% to 50% of a company’s revenue and over 80% of advocacy on social media, as stated by Quentin Lebeau, CEO of TokyWoky.
Not only are these consumers generating revenue because they continue to buy from one brand, but they are building the reputation through word of mouth. In the beauty industry today, most sales come from word of mouth. Personally, I always turn to people I know or even video reviews on products before I make a purchase.
How to Build Loyalty
With the beauty industry being such a competitive market, it can be hard to find ways to build loyalty. A few notable methods that have stood out to me include:
Rewards Programs - These programs keep consumers coming back for more. Knowing your purchases are going towards a reward, whether it’s a discount or a freebie, makes you feel more content with making that purchase. One notable program is the Ulta Beauty Rewards program, whose members make up more than 95% of its sales, according to Stephanie Crets, Content Manager/Editor at PwC.
Communication - This is a way for brands to really build a community for consumers to join. It becomes a space where they feel comfortable in and in which they belong to. With so many social media platforms, there is a lot of opportunity to communicate with consumers.
Listening - This may go with communication, but it’s important to note that a brand should really be listening to the consumers. Take the time to read what users are saying in the comments of a social media post or through direct messages. Another option is to seek feedback via surveys and implement what consumers are asking for. A step further can be taken by incentivizing those who provide feedback the way Sephora has done.
It is clear that loyalty is extremely beneficial to any brand and you should always aim to reach that level with your consumers. However, this level of devotion from a consumer is not always a positive relationship.
Backlash From Loyal Consumers
We know loyal consumers are frequently shopping with a particular brand. Due to the frequency, they develop a standard. Unfortunately, with every order and/or purchase there is the chance an error may occur. When these instances occur, loyal consumers become extremely frustrated, solely because they hold their favorite brands to a higher standard, according to the Harvard Business Review.
I mentioned the Ulta Beauty Rewards Program earlier, as I am a Platinum member. I frequently place orders online and typically love the service. In the past I have received my orders within 3 days (almost as fast as Amazon Prime)! However, recently, my packages have been delayed and I became disappointed.
If I would have never placed multiple orders online before, I wouldn’t have cared as much only because I wouldn’t have known what to expect. Since I developed the standard with Ulta’s online ordering process, I was upset.
As I mentioned before, word of mouth is big in the beauty industry and especially among top consumers. These instances could negatively affect a brand’s reputation because these loyal consumers are more likely to speak on it.
While it’s important to achieve brand loyalty among consumers, it is equally important to ensure these loyal consumers stay satisfied. Thus, efforts to continuously check-in should be in place to avoid losing the consumers who generate the most profit to your brand.
