Building customer loyalty is important for a number of reasons.
Whether you’re aware of it or not, most of us are loyal customers to at least one brand in some way.
It may come in the form of the five bucks you give your local café down the street every morning in exchange for your daily latte, the $50 you give your barber or hairstylist each month to trim your hair, or the hundreds of dollars many of us spend on Apple products and accessories from year to year.
While the term “marketing” gets associated with customer expansion and methods for acquiring new business, customer retention plays an essential part of keeping any business afloat, whether we’re talking about Qantas, Starbucks or your local florist.
Loyalty programs for businesses small and large can drastically improve customer retention, thus strengthening your existing customer base and ultimately expanding it too.
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Here are 5 reasons why customer loyalty is so important for your business...
1. Repeat Business
Perhaps the most obvious benefit of customer loyalty is repeat business; customers who keep coming back and spending more money on your latest or updated products and services because they trust your brand and are confident they are getting quality for their money, rather than gambling on a new brand.
2. Higher Spending
A less obvious reason why customer loyalty is important to your business is that not only are these customers coming back to purchase more products, but they’re actually far more likely to spend more money per transaction than new customers.
In fact, repeat customers actually spend 67% more money than first-time customers.
This figure proves that once a customer has developed trust in your brand and the quality of your product, they are likely to continually return to purchase from you.
3. More Referrals
Surely one of the best forms of advertising has to be the one you don’t pay for, and is consistently spreading awareness and endorsements of your brand through word-of-mouth, right?
One of the best ways to get new business is from existing customer referrals. Not only do loyal customers keep coming back, but they also bring you new customers!
Happy repeat customers are far more likely to tell their friends and family about your business and essentially do your marketing for you. What’s better than that?
4. Defence Against Competitors
This one is really quite simple – every dollar a loyal customer spends on your product is a dollar they’re not spending on your competitors’ products.
Keep your customers satisfied by encouraging them to come back through incentives like loyalty program rewards, and they will be contributing to your business’s success instead of your competitor across the street.
4. Higher Tolerance
Loyal customers who have been giving you their business for a while are much more likely to be forgiving in the face of mistakes, technical difficulties, and general slip-ups.
In fact, loyal customers tend to be more open to providing honest feedback, which in turn helps you improve your business from the customer’s perspective. Asking for your customer’s feedback also makes them feel valued and heard.
A repeat customer is also more approachable when you are offering new products and trialling new marketing strategies, essentially acting as a guinea pig for any marketing experiments or prototype trials you might be playing with.
In short, customer loyalty is essential to ensuring your business thrives. When a customer rewards you with their business, you should reward them for their loyalty.
This ultimately leads them to staying loyal to your brand for a long time.
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