Customer loyalty is a term that’s thrown around a lot these days, but what does it actually mean and how important is it to businesses? Well, customer loyalty is the act of choosing one company’s products and services consistently over its competitors. Simply put, when a customer is loyal to one company, they aren’t easily swayed by price or availability and they would rather pay more to ensure the same quality service from a brand they know and love.
Customer loyalty is the result of a company consistently meeting and exceeding customer expectations. After all, customers that trust the companies they do business with will be more likely to purchase again in the future.
So now that we know exactly what customer loyalty is, how important is it actually for your business? Below are some of the main reasons why customer loyalty is so valuable.
Loyal customers buy more
Your existing customers are much more likely to continue purchasing and to purchase other products from your business. In fact, the probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospect is 5-20%. By showing your customers you value them and following up after their first purchase, you’ll be able to increase the likelihood of them purchasing from you again and developing a sense of trust and loyalty towards your brand.
The opportunity to cross-sell or upsell other products is then much more likely with loyal customers. Existing customers are 50% more likely to try new products and spend 31% more when compared to new customers. When you are launching a new product, chances are you will be more successful when marketing to your existing customers over potential ones.
Loyal customers turn into brand advocates
Not only are your loyal customers valuable because they generally buy more, but they can also help to bring in more customers to your business. As brand advocates, your loyal customers will be able to reinforce your values to other consumers. Since they shop with you on a regular basis, they are more likely to share their positive experiences with their friends and family, helping to bring in more customers to your business. Not only is word of mouth marketing free, but it’s also one of the most credible forms of advertising. In fact, according to Nielsen, 92% of people trust recommendations from friends and family over any other type of advertising.
Loyal and engaged customers are more profitable
According to research, engaged customers deliver 23% more revenue and profitability over the average customer. When this is combined with the study by Bain and Company, that found increasing customer retention rates by 5% increased profits by 25-95%, it’s impossible to argue with the impact of customer retention and loyalty.
The importance of customer loyalty impacts almost every metric important to running a business. Without happy customers that keep coming back to buy from you, your business will miss out on many benefits.
PERX Rewards provides a suite of reward based marketing tools which are designed to increase your customer retention and loyalty by saving them money on the things they already buy day to day. If you’re interested in finding out more about how PERX can benefit your business, contact us at firstname.lastname@example.org or call 01254 878 956.