Trust is a vital factor in building and maintaining customer loyalty in today’s competitive and dynamic market. Customers who trust a brand are more likely to buy its products or services, recommend it to others, and stay loyal for a long time. We will explore how trust drives customer loyalty and what the commercial effect of that increased trust is.
Trust drives customer loyalty by creating a positive and lasting impression of the brand in the customer’s mind.
The loyalty effect:
Customers who trust a brand are more likely to:
Repeat purchase and increase their spending with the brand.
Provide positive feedback and referrals to their friends and family.
Resist switching to competitors and remain loyal to the brand.
Advocate for the brand and defend it from negative reviews or criticism.
Co-create value with the brand and participate in its innovation and improvement.
The commercial effect of increased trust and loyalty is significant and measurable. According to a study by Bain & Company, increasing customer retention by 5% can increase profits by 25% to 95%. Moreover, loyal customers are more likely to buy across product lines, spend more per transaction, and be less price sensitive. Additionally, loyal customers can reduce marketing costs by providing free word-of-mouth advertising and referrals. Furthermore, loyal customers can enhance the brand’s reputation and credibility by providing positive reviews and testimonials (Reichheld, F. 2001).
Trust is the key to more customer loyalty.
Our own and other studies show that every point of more trust results in a customer being twice as loyal. Importantly, that most valuable increase happens from a level of trust 9 out of 10 to 10 out of 10. As one client said: ‘That’s hard to achieve, but very much worth it.’
Another important aspect that is that trust is the root cause for customer loyalty. ‘The more I trust you, the more loyal I am.’ In fact, trust determines 75% of your customer’s loyalty.
However, this is often overlooked when organisations aim to increase customer loyalty via customer experience programs and driver analysis. It’s quite simple. Without knowing what drives your trust, you’ll find it hard to get to your 9 or 10/10 and reap the rewards.
Reichheld, F. (2001). Prescription for cutting costs. Bain & Company. Harvard Business School Publishing.
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