QUICK READ: You can’t just assume happy customers will buy from you again. Instead, you need to have consistent systems in place which will cultivate long-term customer loyalty and repeat business. Customer loyalty is lucrative. If you can increase your customer retention, long-term customers will refer additional business to you, buy more of your products, and cost less than new customers. Loyalty boosts your competitive advantages and generates superior financial returns. Remember about 20 percent of your current customers generate 80 percent of your business’s profits.
The Harvard Business Review found it’s twenty-times more expensive to keep generating new customers than it costs to retain the customers you already have. Customer loyalty is lucrative, yet very few companies do it well or even systematically.
Business consultants Bain & Company did research which shows when companies increase their customer retention rate by 5 percent, they see an increase in profits in the range of 25- to 95-percent. If you don’t have a systematic customer loyalty program in place, you’re leaving money on the table.
Your plan for keeping customers loyal should start with digging into the subset of your current customers who have the greatest potential for loyalty. Discover who your most loyal customers currently are, and where to find them, and how to engage them. These are your first steps to building more loyalty.
Consumer Loyalty Statistics
- 82% of companies agree that retention is cheaper than acquisition.
- 75% of consumers say they favor companies that offer rewards.
- 56% of customers stay loyal to brands which “get them.”
- 65% of a company’s business comes from existing customers.
- Increasing customer retention by just 5% boosts profits by 25% to 95%.
- 58% of companies pursue personalization strategies for customer retention.
So why are so many brands focused on new customers? Ignorance would be one reason followed by the demands of C-suite executives who answer to Wall Street. If the pandemic has taught us anything, brands need to reevaluate their supply chains and find ways to reduce the costs of getting products to customers.
Consumers buy what they are comfortable with, and your brand may not be as important to them as you think. It’s about being comfortable about their purchase and the consistency of a brand experience. Too many brands don’t focus on current customers, and it costs them profits. If your product disappoints them, they will make happy to move to a competitor.
Great brands focus on current customers and do anything they can to keep them happy. One disgruntled customer can attack your brand on social media, causing a loss in potential new customers. Focus on downstream customers and continue to make them brand advocates by keeping them happy.