Why it's important to get customer satisfaction and loyalty right


Today, customer satisfaction and loyalty can’t be overlooked. As new customers look for cost-effective choices amidst a cost-of-living crisis, retention’s never been more valuable. In fact, figures from Retention Science suggest it could actually increase profits from 25 to 95%.

On the flip side, research by Invesp shows that acquiring a new customer can cost five times more than retaining an existing one. The same research revealed that whilst the probability of converting an existing customer is as high as 70%, the likelihood of doing the same with a brand-new prospect is only 5%.

Essentially, existing customers are much easier to sell to - but only if they’re loyal.

But how loyal are today’s customers, really?

The UK Customer Satisfaction Index (UKCSI) takes data from 279 businesses and organisation types across 13 sectors to measure consumer loyalty. The latest report revealed that the national average for customer satisfaction is 78.4 (out of 100). To put that figure into context, that’s risen 1.6 points from last year. But dig a little deeper and this research shines a spotlight on some interesting customer behaviours. As much as 35% would actually pay more to guarantee excellent customer service; that’s compared to just 12% who’d be willing to sacrifice this for the lowest price.

There’s a difference between habit and loyalty

It’s essential to define the difference between buying out of habit and your customers being actual brand advocates. Because whilst research from Accenture suggests over half of customers would spend up to 57% more on a brand they’re loyal to, figures elsewhere tell a different story. According to the '2022 Digital Consumer Trends Index’, 70% of UK consumers who frequently buy from the same company say they're not necessarily loyal to that brand. In fact, 76% of UK consumers who define themselves as “loyal” to certain brands would still buy from competitors if it was cheaper or more convenient to do so.

So with all this in mind, what can today’s brands do to ensure their customers are buying out of loyalty instead of habit?

Reward customers for their repeat purchases

One of the most effective ways to incentivise customer loyalty is by offering rewards. These are far more effective for building loyal brand advocates than discounts; in fact, organisations that offer reward-based promotions have been found to generate a 6% greater average profit margin per customer than those that are offering sales and money-off. Interested in this concept? We’ve gone into more detail about the benefits of rewards over discounts here.

A worthwhile reward can look a little different from customer to customer - that’s a given. But there are a variety of ways to entice your customers to return, whatever their demographic or interests. Gift cards are not only a guilt-free alternative to cash, they give your customers the flexibility to pick something they actually want. They’ll be able to choose from household names such as Boots, H&M, John Lewis, M&S, Pizza Hut, Sainsbury's, Tesco and WHSmith. But for even more variety, you could offer them a multi-brand gift card which can be redeemed in-store and online with hundreds more retailers.

Whatever incentive you choose, the good news is that up to 68% of customers are likely to join your loyalty programme once it’s started. And even impressing a single customer can have a domino effect on others. That’s because shoppers who enjoy your rewards are likely to recommend you to friends and family; either in person or, better still, via social media. These advocates might even be able to motivate any lapsed customers into starting to shop with you again.

The value of customer satisfaction and loyalty

At the end of the day, getting customer loyalty and satisfaction right has too many upsides to overlook. Not only does it increase retention rates and the lifetime value of those customers, but it’s also a great look for your business online. Increase satisfaction and sentiment and you’ll find those customers will start selling your brand for you. And nothing says loyalty more than that.

Whether you’re just starting your rewards journey, or optimising your current program, Blackhawk Network is here to help. Just click here to get started or call 0203 948 7877.

UK - Global BHN - Start a conversation