Blog Home

What is customer loyalty?


The Team at CallMiner

March 21, 2023

Customer loyalty
Customer loyalty

Customer loyalty is a metric many companies pay close attention to as a means of making major growth and development milestones a reality. Loyal customers keep growing companies in the black, providing the kind of income stability needed to weather periods of low growth and economic contraction. This leads companies to try all kinds of things in an attempt to improve customer satisfaction and provide an excellent customer experience to foster loyalty and keep repeat customers coming. However, not all tactics are equally effective.

The CMO's Guide to Driving Brand Loyalty and Value
The CMO's Guide to Driving Brand Loyalty and Value
Learn how marketing leaders can us conversation intelligence can driving brand loyalty and value.
Right Arrow

Gaining a deeper understanding of customer loyalty and the benefits it holds for companies that cultivate it is an important first step to take towards developing your customer base. This article will help you do that and more.

What is customer loyalty?

The concept of customer loyalty is a simple one — it is the degree to which a customer can be expected to repeatedly do business with a given company. This loyalty translates to a number of strong benefits for businesses, including:

  • Lower costs for acquiring new customers: Customers can be hard to come by, and the costs associated with acquiring new ones are significant. Small and medium-sized businesses of all types are especially susceptible to high customer acquisition costs, making it especially important that they retain the majority of the customers that give their products and services a try.
  • Far lower customer churn rates: When customers churn too heavily — doing business with a company only for a short time without returning — organizations can end up with insufficient revenue to power their processes. Low churn rates correlate closely with profitability as the exorbitant cost of acquiring new customers diminishes.
  • Easier revenue expansion: Loyal customers make growth a lot easier to achieve for businesses at any stage of development. These types of customers do not disappear as quickly and can thus serve as a dependable foundation for an organization's growth efforts, providing consistent income to fuel new initiatives. They are also much more open to upselling and cross-selling from the brands they trust which makes maximizing customer lifetime value a possibility as well.
  • Brand sentiment and advocacy: Your most loyal customers – those with a positive brand sentiment – are likely to recommend your business and your products to their friends and family members. They might even become an enthusiastic champion for your brand on social media and other channels. Brand advocates can have a tremendous impact on generating trust and driving loyalty.

Examples of great customer loyalty strategies

Customer loyalty strategies of all kinds have been tried by companies around the world, but only a few are worth implementing. Here are some great examples to consider:

Target's REDcard and Target Circle

In addition to offering both a credit card and a debit card for customers to use, Target's retail REDcard program offers a variety of enticing benefits that keep customers not only using the card, but also shopping at Target regularly. An excellent 5% discount both in person and online at is just one reason for customers to keep shopping with the major retailer once they have their own REDcard. Target’s REDcard holders are automatically signed up to the Target Circle rewards program for other perks and offers, although consumers can join Target Circle without having a REDcard. (In other words, customers don’t have to sign up for a debit or credit card to participate in the Target Circle loyalty program.)

Starbucks' Rewards Program

By offering customers special rewards for completing purchases and interacting with their brand, Starbucks were able to retain more customers for a much longer period of time than they otherwise would have. They leveraged an app to make this strategy more effective and offered cumulative rewards that kept customers interested in placing purchases. In fact, more than half (53%) of the company’s sales are generated by Starbucks Rewards members.

Amazon Prime

The team at Amazon have achieved amazing results with their Prime program, encouraging customers to not only follow through on purchasing full carts of items that might otherwise have been abandoned, but also getting customers to willingly double their spending on the platform. They accomplish this by providing an all-inclusive experience in which details such as shipping and access to exclusive deals are included by default. And, of course, the unlimited free two-day shipping for Prime items has long been one of Amazon Prime’s biggest appeals.

Best practices for improving customer loyalty

Here are a few best practices that you can adopt within your own organization to help improve customer loyalty across the board:

Communicate frequently

Communication is key when it comes to boosting customer loyalty. In fact, communication is often key to improving a great many different facets of your business's operations. Reaching out to your customers frequently enough to keep your company on their mind without being a nuisance is something of an art form in and of itself. However, it is worthwhile to optimize your outreach efforts to show customers that you value their attention and time.

Gain insights from customer conversations

Regular communication with customers, across a range of channels, not only reassures them that your company cares about them, but it also provides you with a plethora of valuable data that helps you better understand your customers, their wants, and their needs. Conversation intelligence software like CallMiner monitor every customer interaction to uncover patterns and AI-driven insights to increase customer satisfaction and drive profitable customer behavior.

Reward more than mere purchasing

Encouraging customers to transact with your company is a standard objective for a loyalty program to have. However, by rewarding other kinds of interactions between customers and your brand, you can foster a stronger connection that contributes more to customer loyalty overall. For instance, rewarding social media mentions and likes can help make customers feel more involved with your brand, while promoting more frequent engagement.

Connect with your customers

It is especially important for any company looking to build a more loyal user base to connect with their customers on an emotional level. By proving to your customers that you actually care about them, you give them a stronger reason to stick with your business over the long term. Championing causes that your customers care about is one great way to make an impact in this area.

Most businesses rely on customer loyalty to maintain a positive brand sentiment and drive profitability. While customer acquisition is often prioritized, improving customer loyalty is not only more cost-effective, but it can also bolster customer acquisition through brand advocacy and word-of-mouth marketing. Take some inspiration from these customer loyalty examples and best practices to drive your company’s success.

Speech & Conversation Analytics Executive Intelligence North America EMEA Customer Experience