Understanding the Loyalty Loop and How Businesses can Benefit from it

The Loyalty Loop is a way of optimizing a Marketing Funnel to work specifically with already converted customers. Learn more about it in this blog post!

Understanding the Loyalty Loop and How Businesses can Benefit from it

Acquiring new customers is the main challenge businesses face every day. 

Combining the salesforce with Digital Marketing strategies, professionals are constantly looking to grow their base.

But what do you do today to ensure that each new conversion can be turned into a loyal customer? 

The Loyalty Loop is a concept that can help CMOs optimize their plans to not only sell more, but to keep the audience engaged with the brand for longer.

To know more about this model and how you can put it to practice, we prepared this post with the following topics:

    What is the Loyalty Loop?

    The Loyalty Loop is an adaptation of the Marketing Funnel, cutting steps that are designed for new leads to optimize and accelerate the journey of already converted customers — so they can be encouraged to keep buying from you, to be loyal to your brand.

    It is not a new concept, but one that is becoming more and more important with the competition going digital. 

    As brands get closer to their audiences, customers start to expect more from their purchasing experiences. 

    They seek long-term relationships and emotional connections to the brands they like.

    What does that mean? 

    That aiming part of your marketing strategies to already converted prospects is a way to ensure a healthy client base. 

    Just good pricing and a good product might not be enough to make your buyer persona try another option. And focusing only on new leads can be expensive and tiring if you can’t retain them.

    Investing in customer loyalty, you can improve some major KPIs to add constant growth and predictability to the business. 

    The three main areas affected by a good Loyalty Loop strategy are:

    Customer Acquisition Cost (CAC)

    To re-attract a converted customer is always cheaper than finding new ones, which can reduce your marketing costs.

    Average Ticket

    With loyalty programs and a closer relationship with your audience, you can convince them to buy more and with greater frequency, increasing how much each customer spent on a purchase.

    Lifetime Value (LTV)

    More time being loyal to your brand means more purchases over a longer period, so each new converted customer can have greater value.

    Combining the improvement of all those metrics with an honest effort to get closer to your existing audience, the Loyalty Loop can become an objective growth strategy while simultaneously becoming a way of reaching deeper towards emotional connections with recurring customers.

    How Does the Loyalty Loop Model Work?

    To understand the Loyalty Loop, first we have to take a look at how a Marketing Funnel works. 

    It is a concept created to reflect the journey that customers take from wanting something to making a purchase.

    A Marketing Funnel has six stages: awareness, interest, consideration, intent, evaluation, and purchase. 

    This path usually follows the process of choosing a brand, from discovering it to deciding it is the best option for them.

    In the Loyalty Loop, however, the customers already know and have already chosen you. 

    Using the same framework would be redundant. 

    That is why this concept cuts the first stages and focuses not on a straight path to conversion, but a loop that reinforces this relationship and encourages recurrent purchases.

    Loyalty Loop example.
    Source: SlideShare

    As with any purchase, the stages of consideration and evaluation are still present. But the loop gains three new steps: Enjoyment, Advocacy, and Bond.

    Enjoyment

    The Enjoyment stage is all about experiences. 

    It is the moment the customer consolidates their expectations. The more you meet them, or even surpass them, the more positive the impact on loyalty building is.

    Advocacy

    If that first impression is successful, customers go to phase two, the Advocacy stage. 

    They are so satisfied with the purchase that they talk about it, recommend it, show it to family, friends, and followers.

    Bond

    Then there is the Bond stage. The client is happy with the purchase and talking about it. 

    At this moment, you’ve identified it and acknowledged it in meaningful interactions. An emotional link is formed and loyalty is built.

    If you did everything right in these three steps, it is not a matter of straightforward consideration anymore. 

    The customer doesn’t want just a new product, they want to repeat that experience with your brand. And after the next purchase, the loop resets to reinforce that connection even more.

    Is the Loyalty Loop Better than the Marketing Funnel?

    When we say that the Loyalty Loop can replace the Marketing Funnel, we’re specifically talking about brand loyalty building. 

    In that case, yes, the Loyalty Loop is faster, more effective and goes deeper into what you need at that stage: getting closer to your converted audience and retaining them as long as possible as clients.

    So, it’s important to keep that in mind: each strategy has its place and its purpose. 

    The loop is great to reduce costs because you start ahead on the buyer’s journey, but it won’t work for new leads that have yet to discover you and understand what you have to offer.

    The best approach then is to make both concepts work together — designing a great Marketing Funnel that attracts and converts, then leading these new customers to the Loyalty Loop, so they can be with the business for a long time.

    Like any relationship, Digital Marketing is about the excitement of discovery then the long-term cultivation of a deeper bond. 

    Adjusting your strategy to work on both moments is the perfect way to sell more. 

    Building your Own Loyalty Loop

    If you already have a Marketing Funnel up and running, it is easier to adapt it to create a Loyalty Loop that will go along with it. 

    The principles are the same but there as some aspects of it that you should be aware of when making this transition. 

    Look at the steps you have to take to make it work:

    1. Find out more about your customer’s expectations

    There is no way to build loyalty if you don’t know what your customer wants from that relationship. 

    It is, after all, a two-way street. So take time to do some research.

    What you will be looking for is what your buyer persona expects from a purchase, not only the product/service in itself but also what it means to them. 

    Knowing the key motivators for a purchase will tell you what you need to make the next one.

    2. Design the loop

    After you better understand what drives your customer’s purchasing decision, you can go ahead and design the loop. 

    A good tip here is to use Content Marketing to create some interactions specifically tailored to this group.

    We mean content that acknowledges that the persona is already a buyer and builds up on that. 

    You can give more information about the use of that product, suggest ways of using it, or other practices and items that go well with it, etc. 

    It is a way of keeping your brand in the front of their minds and also leading them again towards a new conversion.

    3. Invest in post-purchase experience

    The most critical moment for brand loyalty is what is called the honeymoon phase — the period directly after the purchase, when all is new and exciting.

    Giving your buyers an unforgettable post-purchase experience is the quickest way to put them back into the loop.

    It starts with the anticipation of getting it delivered or having digital access to what they bought. 

    Then there is the unboxing, be it physical or virtual. At last, the experience of using your solution for the first time.

    This is an effort that asks for all hands: Marketing, Sales, Product Development, even Logistics. But the main driver when talking about an experience and a relationship is the CMO.

    4. Ask customers to speak up

    A lot of times buyers like the product, love the brand, but never share it.

    It’s not only a wasted opportunity for a new advocate but this lack of interaction can make the loyalty fade with time.

    So don’t forget about your customers after they were converted. Participate in their lives via social media and automated email marketing

    Ask them to give opinions, to share their experiences. Every little prod is a chance to pull them back into your loop.

    5. Create incentives for loyalty

    You don’t have to rely just on talks to build a relationship with your customers.

    In that case, some gifts now and then can do a lot of good for you.

    You can build loyalty programs and special discounts, tied to automatic triggers when that converted lead takes some specific actions and moves forward in the loop. 

    Make them feel special, like they are in an exclusive group getting extra attention that the rest of the leads aren’t.

    6. Measure customer’s satisfaction

    Indicators like NPS are vital for adjusting and improving your Loyalty Loop with time. 

    To find out how satisfied customers are and how they feel about your product/service is to understand what points to address to bring them even closer to a second, or third purchase.

    Other KPIs are also important to that growth strategy. Mainly the three we mentioned before: CAC, Average Ticket, and LTV. 

    These numbers will show evolution, if your plan is really working and if loyalty is becoming more prevalent among your customers.

    And that is the goal you will want to achieve. 

    Using the Loyalty Loop is taking shortcuts to new purchases while building stronger bonds, creating new brand advocates, and making the whole acquisition process cheaper.

    So, how about starting by understanding how to get those new clients so you can make them loyal? 

    Start by downloading this free ebook about lead generation!

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