Dan Bognar
Dec 14, 2023

What drives customer loyalty in challenging economic times?

In spite of the economic slowdown, HubSpot's Dan Bognar says companies of all shapes and sizes will need to answer this key question: What keeps customers loyal to a brand?

What drives customer loyalty in challenging economic times?

An economic downturn is demanding on both consumers and businesses, as brakes are slammed on spending to combat increased living costs. For companies in Singapore, maintaining customer relationships and retention becomes even more critical during these times, particularly as companies scrutinise budgets more closely than before.

But, the simple reality is that despite our hyperconnected world, reaching customers and aligning teams has never been more challenging.

According to a recent YouGov survey of 1,300 Singaporean consumers and business leaders, 96% of business leaders in Singapore agreed that reaching prospective and existing customers is harder today than it was a year ago.  

This leaves businesses facing the predicament of where to focus their efforts—whether protecting cash flow or further investing in customers—not only to survive, but also to maintain profitability.   

When considering customer relationships, "out with the old and in with the new" isn't always the best strategy to propel or sustain business growth. Challenging macroeconomic factors provide even more reasons for companies in Singapore to focus on generating value through customer loyalty strategies.  

While acquiring new business is critical to growth, the true crux is that retaining customers and keeping them coming back can be a more prosperous and cost-effective long-term strategy. As we have seen through the recent economic slowdown, forward-thinking brands are staying ahead of the curve by prioritising the lifetime value of a customer versus the cost of new customer acquisition.   

Building on customer momentum 

Customer loyalty is a customer's willingness to repeatedly transact or interact with a brand. When customers are loyal to a brand, it's because of the delightful and differentiated experiences they receive during their interactions. 

This ensures they are less likely to be swayed by lower pricing from competitors, more willing to provide feedback for service improvements, and are likely to become advocates for that particular brand.  

Across Southeast Asia, loyalty programs have grown significantly for B2C brands, aided by increasing social media usage and a substantial rise in eCommerce. A recent survey found that 86% and 92% of respondents were more enticed to shop where a loyalty program is bundled into a deal.  

B2B customer loyalty, however, requires a somewhat different approach that goes beyond transactional incentives due to the very nature of the target audience. While loyalty programs can be valuable, they are only one factor in cultivating relationships, long-term trust, and repeat business. 

An established way of enriching the B2B customer experience is to make customer journeys—both pre-sale and post-sale—as seamless and enriching as possible. B2B purchasing journeys are often long and complex. However, the customer relationship should continue long after the transaction.

Brands must continue nurturing and connecting with their customers, whether that's through satisfaction surveys, interactions with customer success teams, or brand events to build knowledge and address each customer's specific needs. A sense of engagement and community is often also important to the B2B customer; placing the customer at the centre of a brand's innovation or product development can help develop loyalty and advocacy.  

However, today's customers are more sceptical and have far higher expectations than ever before, expecting deeper connections with their chosen brands than mere transactional relationships. Recognising this trend, progressive companies are transforming their business strategies and updating marketing and sales efforts to adopt a 'flywheel model'.  

This new business model is based on achieving small wins by building on the momentum gained from happy customers. Reducing friction (such as poor internal processes or misalignment between your customers and employees) allows you to deliver remarkable customer experiences every time. As a result, your customers are more likely to remain loyal and drive repeat business and referrals, thereby driving sustainable growth. 

Keeping the wheels of success spinning 

For years, companies structured their business strategies around the traditional marketing funnel—and it worked. However, this model's limitation is that the big focus is on conversions, and customers are treated as an output. Conversely, the flywheel model puts the customer at the core of a brand's success rather than viewing customers as an afterthought. It turns the traditional funnel on its head by factoring customers as brand champions and a driving force for business growth.  

Faced with economic headwinds and increased acquisition costs, businesses in Singapore need to take a proactive approach to building customer loyalty and turning customers into brand advocates. Customer connections shouldn't end just because they've made a purchase; instead, by continuing to deliver content, support, and relevant services, you keep your flywheel spinning and your customers delighted.  

When the macroeconomic environment is challenging, businesses should not sacrifice long-term relationships for short-term transactions. Today's most disruptive companies align their success with their customers rather than remaining fixed on inward-facing KPIs, not only to drive scale but to continuously drive delight and loyalty from the people who matter the most.  

Success for the long haul

Modern consumers expect their brand experiences to be highly personalised, relevant, and contextual in every interaction. Accordingly, the most successful businesses will be those capable of leveraging data-backed insights and artificial intelligence across the entire customer journey. 

Besides enhancing customer experiences, these insights will be essential for organisations to establish connected customer strategies for sustained growth.  

Connected experiences are the future of customer loyalty. Like every other societal shift that came before, businesses must be ready to adapt and, most importantly, respond appropriately. 


Dan Bognar is the managing director & vice president, Japan & Asia Pacific for HubSpot.

Source:
Campaign Asia

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