It’s no secret that loyal customers spend more money. In the case of many a small business, they are the ones that help keep the revenue flowing.
Every business strategy involves creating a customer base. While customer acquisition can be hard, customer retention is even more difficult. In marketing, there’s a popular saying that goes, “People come to you for your product. They leave because of your service.” It goes without saying that customer service only comes second to how good your business offering is—be it a product or a service. So, assuming that your business offering is indeed outstanding, how do you transform a one-time buyer into a loyal patron of your brand? Through exceptional customer service, of course! But then again, why should you focus on retaining old customers when you can acquire new ones and broaden your customer base? Here’s why:
1. Stats are in favor of customer retention: Studies have shown that a mere 5% increase in customer retention can boost your company’s productivity by up to 95%. This is because the probability of making a sale to an existing client is as high as 60-70% while the probability of selling to a prospective client is only 5-20%. Loyal customers trust you and have an established relationship with your brand as opposed to a new customer who could be skeptical or even distrustful.
2. They bring in a steady cash flow: Let’s say that you are a florist and you have a small brick and mortar shop you operate out of. Your loyal customers would always turn to you for flowers, no matter the occasion. In fact, they might even go a little out of their way to support your business. That is the level of customer loyalty every business should strive for.
3. Loyal customers are less price sensitive: Most new customers tend to be on the lookout for a great bargain. They are more deal prone and hence more price sensitive. Loyal customers, on the other hand, tend to be less arrangement-inclined and more value-inclined—a value that they are sure your brand offers. As a business owner, you can use this to your advantage by cross-selling or up-selling your products or services to your loyal customers!
4. They give valuable feedback:It is critical for a business to do market research and get insights that will help them plan ahead. It doesn’t make sense for a small business to do extensive market research, especially when they have a relatively smaller target audience. At this point, it makes more sense to get feedback from your loyal customers in order to make improvements and develop accurate forecasts.
5. They are likely to become brand advocates: A customer’s positive attitude towards your business is likely to result in them giving positive feedback about your brand. It is highly likely that they would recommend your business to their friends and family, bringing in new customers seamlessly through just word-of-mouth. Wouldn’t you rather trust your friend’s feedback more than a television ad? Moreover, loyal customers would take pride in being associated with the brands they love. So much so that some even take to social media to say wonderful things about their favorite brands without expecting anything in return!
6. Customer loyalty helps your business grow: Another scenario where customer loyalty proves to be advantageous is when a competitor starts offering the same product or service that you are offering. The brand with the better customer loyalty would thrive, as has been noted in the case of Apple when compared to other smartphone and tablet makers.
Various studies conducted over the years also show that businesses have better employee retention when their customer retention is admirable. Employees tend to feel more satisfied with their work when they know that the business they are working for has loyal patrons. In the case of a small business, a loyal customer could even be on a first-name basis with the employees. All this would contribute towards uplifting your employees’ spirits and creating goodwill towards their employer, leading to company-employee relationships that are fulfilling and long-lasting.
To sum it up, loyal customers are an asset to any business and business owners should make it a priority to convert existing customers into loyal patrons. Customer retention should become an integral part of your company’s business plan in order to grow and prosper.