Customer loyalty is one of the most important predictors of revenue growth. However, 70% of B2B brands aren’t linking their customer experience metrics to their financial data.
What’s more, too many business leaders—that’s 44%—don’t actually know their retention rates at all. As a result, they can’t have a full understanding of how their customer loyalty program is performing.
Customer loyalty management helps businesses get a better insight into their churn rates, their customer retention, and the way that loyal customers impact their bottom line. If you’re serious about growth, it’s an insight that’s simply indispensable.
Here, we’ll show you how you can use customer loyalty management to drive revenue growth. But first, let’s explore how customer loyalty management works and the benefits it can bring.
What is Customer Loyalty Management?
Customer loyalty management refers to the strategies, processes, and tools that businesses use to optimize retention and cut churn. Typically, these include surveys, closed-loop feedback strategies, and individual interventions with churning customers.
In short, customer loyalty management is the way you can ensure that your customers remain customers into the future—to retain revenue and drive growth.
But this doesn’t happen by accident. In fact, while there are those businesses that aren’t managing their loyalty rates at all, others are getting it wrong. Instead, to be a success, a customer loyalty management system needs four things:
4 Factors That Make a Great Customer Loyalty Management System
It needs to be led by data. You can think you know how you’re performing in terms of loyalty. But if you don’t have data, you’ll never know for sure. Concrete numbers and metrics—including on churn rates, Net Promoter Score, and monthly recurring revenue—ensure that you’re as clear as possible about your performance.
It should be supported by software. Particularly for B2B brands running a customer loyalty management program, monitoring the experience of every customer account can be a lot of work. But customer loyalty software such as CustomerGauge’s Account Experience can make this a lot easier, by automating processes, helping you close the loop, and visualizing data all in one place.
Customer loyalty management must tie customer experience to revenue. Too often, customer experience programs are undermined by a lack of data on their financial impacts—and this will affect business performance overall. To get clarity on your performance, your customer loyalty system must link CX data and revenue.
It should account for everyone in your business. Customer loyalty isn’t just the work of your sales and marketing departments. Rather, your experience management program should inform the behavior of every single person in your organization. That means your middle management and your C-suite, just as much as your frontline.
These are the hallmarks of a good customer loyalty management system. But why bother? Because the results can be huge:
Why Invest in Customer Loyalty Management?
By linking your customer experience program to revenue, you’ll get a better sense of the value of your customers, while boosting your bottom line.
Grow revenue through reduced churn. If there’s a single goal of customer loyalty management, it’s to cut churn. Churn is one of the biggest brakes on your business growth, but many companies just aren’t aware of its impact. When businesses are losing as much $136 billion to churn a year, it’s crucial to keep this as low as possible.
Improve customer experience through better relationships. Customer loyalty management isn’t just about identifying detractors and encouraging them to stay. It’s about adapting your customer experience to create better relationships with all of your customers. Remember, satisfied customers have been found to spend 140% more. As a result, it’s worth making sure that all of your customers are satisfied.
Identify opportunities for reselling and referrals. With a customer experience program in place that links customer sentiment with your bottom line, you’ll begin to unearth opportunities to deliver more value to customers. A 5% increase in retention can produce a 85% increase in profit—and that usually comes from upselling and referral programs.
Tackle the cost of doing nothing. It’s time to think differently about investments in your customer loyalty efforts. Because while improved customer experience obviously requires investment, doing nothing doesn’t come for free either. In fact, it might be costing you a lot, without you even knowing it.
Find out the cost of doing nothing for yourself, with our ROI calculator.
Account Experience: How to Build a Customer Loyalty Management System with CustomerGauge
With these benefits in mind, how do you build a customer loyalty management system that links customer experience data to revenue?
The answer is Account Experience, CustomerGauge’s customer retention management methodology designed specifically with B2B brands in mind. Using the power of the Net Promoter Score, Account Experience can help you understand your customers, close the loop effectively, and find the right strategies to drive revenue growth.
How does it work? You need to follow three steps: Measure, Act, and Grow.
The first stage of Account Experience involves measuring your customer experience. This is done primarily using Net Promoter Score, the most effective metric for tracking customer sentiment.
NPS works by gauging the likelihood of a customer to recommend your product, service, or brand, on a scale of 0-10. Given their response, customers are then categorized as:
Detractors—those who are least loyal and most at risk of churn.
Passives—those who are not at high risk of churn, but may still choose to move to a competitor
Promoters—customers who are exceptionally loyal, and will recommend your product to others.
Dividing customers into these three categories gives you an immediate sense of the state of your customer loyalty. But it also shows the factors or drivers that are having an impact on that loyalty—as well as the financial impact of those factors too.
In fact, at CustomerGauge, we upgraded the heritage NPS system into our own proprietary Monetized Net Promoter system, in order to enable companies to better focus on these financial impacts. With monetized NPS, you can see:
The value of customer sentiments. NPS shows you whether customers are at risk of churn. But Monetized NPS shows you how much value is at risk for your business as a result. If larger accounts are churn risks, you need to know why and urgently.
The cost of drivers. Similarly, there may be specific drivers that are driving away your customers. Heritage NPS reveals them. However, Monetized NPS shows you which drivers are having the biggest financial impact—whether that’s customer service or your product.
Account Experience collects this customer experience and financial information to create a picture of your account health. This way, it enables customers to tell you exactly what you’re doing right and where you can improve. And this leads us onto the next stage.
Once you’ve measured, it’s time to act. This is the stage of Account Experience at which you will build on customer feedback and reach out to customers to tell them how you’ve changed. It involves two stages: closing the loop and optimization.
Closing the loop is one of the most important interactions you can have with your customers. In response to their survey, you reach out, tell them you’ve heard their feedback, and put steps in place to change. This builds trust, improves customer engagement, and has a direct impact on your retention rates.
But it’s not a simple activity that’s done once and then forgotten. Rather, it should be built into your business and practiced at every level—and as fast as possible. To have the biggest impact on retention, you should be aiming to close the loop with every customer within 48 hours.
Then, optimization requires you to set customer experience goals. These aren’t goals based solely on your NPS score, but on revenue too. In fact, we found that companies that set goals grow twice as fast as those that don’t.
Most customer loyalty management programs stop there. But Account Experience is different. We emphasize the final stage in our customer experience program to ensure that your NPS efforts have a direct impact on your bottom line.
How? There are three main ways you can make your customer loyalty have an impact on your growth:
Calculate at-risk value. Identifying those customers who are most likely to churn—and closing the loop with them fast—is the first task in your growth strategy.
Turn NPS detractors into promoters. By improving your customer experience generally, you’ll transform the way that customers feel about your brand. But the goal is not just to get customers to stay. Rather, you want to create happy, satisfied, loyal, and enthusiastic customers who will recommend your brand. This is where revenue growth comes.
Identify opportunities for upsales and referrals. Finally, loyal customers are prime targets for your upselling efforts. As studies have shown, it’s 5 to 25 times cheaper to sell to existing customers than to find new ones.
Of course, there are other customer loyalty management systems out there. But Account Experience is proud to lead the way in linking customer experience to revenue. And if you’re serious about growth, nothing else will do.
Customer Loyalty Management Best Practices for B2B
Now, you’re ready to get started with your customer loyalty management efforts. But when you kick off, keep these 5 rules in mind.
Survey regularly. Measuring customer sentiment regularly allows you to keep on top of your loyalty metrics. But it actually achieves more than that for your business too. Our research for our The State of B2B Account Experience guide found that by engaging every quarter with your customers, you can boost retention by 51%.
Maximize contacts within accounts. For B2B brands, knowing the sentiment of a single contact within your customer account is not usually enough—particularly as many different individuals are likely to use your product. Instead, aim to optimize the number of touchpoints, so you get the fullest sense of customer loyalty possible.
Close the loop fast. We shared above that closing the loop within 48 hours has a substantial impact on retention rates. We can’t emphasize that enough.
Let analysis inform action. Knowing the state of your customer loyalty is half the battle. But now you need to improve it. Try not to over analyze if it is leading to paralysis. Instead, make closing the loop your priority.
Tie loyalty to financial metrics. Finally, without insight into your financial data, your customer loyalty metrics are severely limited. If you’re serious about growth, you need to know the financial impact of every single NPS increase.
Learn more experience program best practices here.
Use Account Experience to Tie Customer Loyalty to Revenue
At CustomerGauge, we’re consistently ranked by Gartner as the number one customer experience platform for B2B brands. Book a meeting with our team to find out why.