The Importance of Customer Loyalty
According to Forrester Research, acquiring a new customer can be five times costlier than retaining an existing customer.
According to Harvard Business Review loyal customers are typically much more profitable than other customers.
The reasons behind why they are so profitable aren’t so well known or understood. Let’s take a closer look.
According to Gartner, 80% of your company’s revenue comes from just 20% of your existing customers.
The above statistics imply that an organization must work on customer satisfaction and customer loyalty to keep existing customers happy and increase sales.
What exactly is customer loyalty?
Customer loyalty is a process to build an emotional bonding between customers and organization. It helps business to retain existing customers, get them to buy often and acquire new customers.
- Customer Acquisition And Retention
A 5% increase in customer loyalty would increase the average profit per customer by 25% – 100%.
- Repeat Business
61% of the SMBs surveyed report that more than half of their revenue comes from repeat customers, rather than new business.
- Improve Customer Relationship
Customer loyalty helps to build closer relationship between customer and organization.
- Cross/Up Selling Opportunities
The probability of selling something to a prospect is only about 5-20%, while the probability of selling something to an existing customer is 60% -70%.
- Reduce Marketing Cost
Word of Mouth is the most effective and economical advertising tool in today’s digital age.
Your potential costumers trust their friends’ feedback more than fancy television advertisement.
- Improve Brand Image
The more loyal customers you have, better brand image you create.
- Loyal customers stay longer
People like to buy from a familiar and trusted vendor. They don’t change vendors until given a reason to do so.
- Loyal customers buy more and more often
Loyal customers concentrate their shopping on select vendors. They even buy items from you that other customers buy elsewhere.
- Loyal customers cost less to serve
Loyal customers are more familiar with your service, so they need less support.
Rather than calling customer support when an issue arises, they are more willing and able than other customers to find a solution to their problem from your self-service portal.
- Loyal customers insulate your company from price competition
For one reason or another, loyal customers aren’t checking your prices against the competition as diligently as other customers.
- Loyal customers act as brand ambassadors
Customers don’t tell their friends only about bad experiences. Good experiences–especially exceptional ones–make great stories, and they will share these stories with their friends.
- Loyal customers provide honest, high-quality feedback
Loyal customers want to help you improve your company’s services.
Solicit feedback, and they will give it to you.
If you want to test a new product or services.
If your customers are not as loyal as you think they should be,
then we need to talk.