I was recently on a flight from Boston to Charlotte, NC. And on my way, I called ahead and made dinner reservations at a steakhouse we frequently visit.
When I arrived at my hotel room and called back to confirm the reservations, the hostess told me that since I was a regular and had called in advance, she was going to upgrade our reservation from the bar to their private dining room.
How nice of her to do that for us! This is a great example of customer loyalty.
So it’s extremely important that you show your customers you care. Show them your human side to which they can relate.
Because these are the same customers who keep you in the business. If you take care and understand their situations, they shall become your loyal customers.
What is Customer Loyalty?
Customer loyalty is the commitment that a customer has to a company or service.
This means that customers are more likely to shop with, refer friends to, and remain with a company.
Customer loyalty is a measure of the quality of a company’s relationships with its customers. Companies develop loyalty by offering products or services — maintaining customer satisfaction and expectations.
And by delivering on those promises consistently. The result is a customer who is likely to come back for more. And not just for this purchase, but for future purchases as well.
Loyalty between companies and customers is known as relationship marketing. Relationship marketing involves building trust between two entities and taking steps to maintain that trust over time.
Relationship marketing leads to long-term partnerships between companies and their customers. This relationship sometimes is even strong enough to survive when the prices become competitive.
Why is Customer Loyalty Important?
Did you know that your loyal customers spend 67% more on products and services than new customers? Even though your most loyal customers make up only 20% of your audience, they account for up to 80% of your revenue.
And this is why retaining customers is crucial. It’s 5% easier to make them buy your products again.
Therefore, customer loyalty is a must for every business. It ensures regular customers, who create a revenue flux for your business. And also create a positive effect on the brand itself — differentiating it from the competition. This is particularly important if you’re just starting out and don’t have an extensive list of clients yet.
Here are some more reasons why customer loyalty is important.
1. It Saves Money on Marketing Strategy
If your potential customers are already familiar with your brand, they are more likely to pay attention to your offers and promotions. This means that you don’t have to spend as much on advertising and other marketing activities to attract them to try your products or services.
2. It’s Good for Your Reputation
The more satisfied your clients are with the quality of your products and services, the better perception they have about your brand. Which in turn will help you get more clients in the future.
3. It Makes Repeat Business Easier and Boosts Sales
Once you’ve created loyal customers, they will be more likely to buy from you again and recommend their friends connect with you too.
According to research by Bain & Company, companies with 20-30% of their clientele as loyal enjoy a 2-3 times increase in revenues as compared to those who only have 5%.
Benefits of Customer Loyalty For a Business
In this competitive business world, it is very important to retain your customers and get new customers. This is the reason why you should offer them something extra so that they keep coming back to you and recommend your business to their family and friends.
If you have been running a business for some time, it becomes difficult for you to find new customers.
Moreover, getting new customers also means spending more on your marketing efforts which can burn a hole in your pocket. Keeping your existing customers is the best choice in such a case. Here are 5 benefits of customer loyalty for a business.
1. Decrease in Marketing Expenses
If you are able to keep your loyal customers, then there is no need to spend much on marketing. Your existing customers will provide you with more word-of-mouth marketing than any amount of investment in advertisements. This means that you’re only spending to get new clients — the rest of the marketing budget is saved.
2. Increased Sales
The best form of advertisement is word-of-mouth publicity that your loyal customer base gives about your product or service. It helps you get more sales as people who hear about it from others will surely come to know about the product or service they heard about through their trusted sources.
3. More Repeat Business
Though it may seem obvious, your current customers are most likely to continue purchasing from your company.
They may have a favorite product that they can’t live without, or they may be enticed to try your latest product or service because of previous positive experiences.
Whatever the reason is, loyal customers are more likely to drive repeat business, making customer retention rates critical.
4. You’re the First Preference
Sometimes the products or services might be exactly the same, but your competitors will still miss out.
As the loyal customers will spend with your brand. This is the power of a loyal customer base. Therefore, keep your regular clients pleased with excellent customer service (and a terrific loyalty program) so they will continue to buy from you rather than your competition.
5. Collect Customer Feedback
Your most loyal customers often respond to questionnaires distributed by your marketing team. Because they like your brand and want you to succeed, loyal customers are willing to take the time to share valuable feedback that you can use to make improvements.
Not only that, but the quality of feedback and customer surveys is also going to be high since these folks know your products in and out.
How to Maintain Customer Loyalty?
In a nutshell, customer loyalty is the probability of repeat business and how much you like your customers. Here are some suggestions to maintain customer loyalty.
1. Create Customer Loyalty Programs
Implementing a loyalty rewards program is a great way to encourage repeat business and bring in new customers. Your reward system doesn’t have to be complicated.
If you have an e-commerce site, you can offer free shipping on the customer’s next purchase or a percentage of the total order if they purchase more than one product. You can also give away freebies, like a free T-shirt with every purchase of $50 or more.
2. Create a Referral Program
A referral program is a great way to incentivize customers to refer their friends, family, and colleagues. You can use this to your advantage because referred users are more likely to convert than non-referred users.
How does a referral program work? A user shares his unique referral link with a new user, and if the new user signs up and completes the desired action, both the referring user and the new user get rewards.
This also shows that your loyal customers trust your products to share them with their loved ones.
3. Maintain Consistency in Your Product
The key to creating satisfied customers is to provide a consistent quality product or service. The tried and true method for doing this is to create a set of standards by which you build your product or deliver/service.
For example, if you’re running a copywriting agency, make sure you deliver the same quality every single time. Make sure the standards are set throughout. So if a client was impressed by the web copy you deliver, it becomes your responsibility to get the ad copies right as well.
The same is true for any business. If you want to build long-term relationships, make sure that every time a customer has a need and comes to you, they get exactly what they want.
You will find that people will become loyal to you because you consistently give them the best possible product or service.
5. Hire the Right Employees
Hiring employees who have a passion for customer service is crucial for creating a better customer experience.
It’s easy to see your company as an extension of yourself, and the people you hire are no exception. When you hire employees who prioritize customer service, you increase customer loyalty.
Don’t forget about your long-term customers as you market to new ones. A successful business strikes a balance between attracting new customers and providing excellent quality and customer service to existing customers.
Related: What Is Digital Transformation and the 4 Main Areas of It
Wrapping Up
Customer loyalty is important for any business because it results in repeat customers. Repeat customers create a steady flow of income that businesses can count on to help plan their finances. Loyalty helps build customer engagement and increase customer lifetime value over time.
In simple terms, happy customers with a positive experience will become your loyal customers. These valuable customers will bring in more business without you having to spend more on marketing. This is why customer retention rates are so valuable for every organization.
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