The Importance of Building Customer Trust and Loyalty in Business

18/06/18

Customer loyalty and trust are incredibly important for any type of business, from the smallest technology startup to the largest global bank. No company can achieve true success without building up a strong sense of trust in their products and services for consumers and maintaining high levels of loyalty.

Whether you’ve just set up a new business and want to see it grow quickly or are running an SME or bigger company that is looking for ways to improve customer loyalty, our guide explains what this is, why it’s important and how to promote customer loyalty.

What is Customer Loyalty?

The best customer loyalty definition is when a consumer continues to use the same business to purchase products or use their services in an ongoing capacity. For businesses this is the most important form of customer loyalty, as it guarantees constant income if the same consumers are making regular purchases or tied in to contracts.

However, it can be argued that there is more than one customer loyalty definition. Some claim that customer loyalty is when consumers only invest in products and services from specific companies (not using one of your rivals as well, for example). Loyalty doesn’t always have to be in terms of sales though, as social advocacy and promoting one business, especially over another, demonstrates some level of loyalty.

Either way, the basic principle of customer trust and loyalty is that consumers have great levels of respect for the business and are willing to speak highly of it and consistently invest in its products or services.

Why Customer Trust and Loyalty is Important for Businesses

High levels of customer trust and loyalty are essential for businesses to retain and improve their sales to existing customers and attract new clients. Due to technology and the increasing amount of personal data businesses hold about their customers, it is now more important than ever that customers have a lot of trust in the businesses they are willing to share such information with.

Plus, with review sites for all sorts of businesses such as TrustPilot, online forums and the power of social media, if consumers don’t trust a business they can share such opinions online. This can create a real headache for reputation management which will likely have a negative effect on your business performance. Improving customer trust should help avoid such issues and can lead to many benefits.

Benefits of Customer Loyalty

According to one study, when customers say they trust a brand 82% will continue to use it and 83% recommend it to other consumers. This shows the power of building up strong levels of trust and customer loyalty and there are many more benefits of customer loyalty:

  • Retention: In many ways holding on to customers is more important than acquiring new ones, to avoid falling revenue.
  • Brand Image: Good customer trust usually results in positive feedback from clients, which can boost your brand image and improve your reputation.
  • Price Insensitivity: After a while, customers may place so much trust in your products and services that they will still make purchases even though you increase prices. Customer loyalty programs usually help achieve this.
  • Forecasting: When you have regular customers, it can make forecasting for future budgets and performance a lot more accurate.
  • Direct Referrals: Greater customer trust may lead to brand advocacy and direct referrals, where new clients are advised by existing customers to use your business, providing easy sales.

Ways to Improve Trust in Your Business

The easiest way to increase customer loyalty and trust is by simply delivering on your promises. If you’ve promised delivery of a product or service by a certain date, ensure it is done (earlier if possible, to show you’ll go the extra mile). When things do go wrong, whether it’s your company’s fault or that of a supplier or partner, be quick to apologise. Depending on the exact circumstances, offering a discount or something in return is likely to improve customer retention.

Being consistent in what you offer and providing top level customer service are essential as well. It’s amazing how many consumers will return to certain businesses due to the excellent service they receive, so train staff to make sure they are providing this every time.

Honesty and transparency are key, so provide an easy way for customers to leave reviews and make complaints. In the early days there may be more negatives but if you analyse and address these then hopefully the positives will begin to outweigh them.

How to Promote Customer Loyalty

One of the best ways to increase customer loyalty is through customer loyalty programs. These are simply a type of rewards scheme that give consistent customers anything from a discount to free merchandise, depending on how frequently and sometimes how much they spend when using a business’ products or services.

Most supermarkets offer a loyalty card and the main advantages of customer loyalty schemes is that they help to drive high retention rates. From B2B where the customer can benefit from discounts when they place a certain number of orders each month, to a free t-shirt from an online retailer when spending over a set amount, such an incentive can be one of the most effective ways to improve customer loyalty.

With a good understanding of the importance of customer trust and how to promote customer loyalty, your business can begin improving those retention rates and sales in the near future.

Image courtesy of iStock.

Whilst care has been taken in the production of this article and the information contained within it has been obtained from sources that Aon UK Limited believes to be reliable, Aon UK Limited does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the article or any part of it and can accept no liability for any loss incurred in any way whatsoever by any person who may rely on it. In any case any recipient shall be entirely responsible for the use to which it puts this article.

This article has been compiled using information available to us up to 20/08/21.

Share this post