The majority of business I have worked for have been obsessed with customer acquisition. So what’s wrong with that? It's obvious that you have to acquire new customers to achieve growth but if we are to believe the old saying that it costs six times more to recruit a new customer than to retain an existing one then time and money should be spent on retaining customers too.
Customers should be at the heart of a business and it’s vital to remember that keeping existing customers is just as important as getting new customers. Loyal Customers are extremely valuable to any brand, and in very simple terms, if you don’t invest in customer loyalty, you’ll end up losing more customers than you gain.
“The single most important thing you can do for your business is to get to work building true customer loyalty, one customer at a time.” Forbes.
Apple is fantastic example of customer loyalty; it is what drives the brands success, recording a huge 87% loyalty amongst their customers. Within this there are the true brand advocates who are always pre-ordering new Apple products and as there are so many people who are loyal, it inspires confidence in others, with the attitude ‘If they love it so much, so will I’. In turn this leads to sales and business success.
So, why should you readdress the balance between attracting new customers and retaining existing ones?
Customer loyalty can generally equate to customer engagement, if your consumers are willing to spend time engaging with your brand they are becoming loyal. Always give them the same courtesy back and constantly engage. Engagement breed’s positive connections and the more you interact in a positive way, the more loyal your customers become.
These engagements and interactions then create relationships. Engaging is so important and when you focus on the consumer you turn into more than a company and create a bond with them. Customers in a ‘relationship’ will be more loyal – but remember, it is your business that is lucky to have them, not the other way round. With this is mind they need to be treated well in the relationship, they are making decisions about your business, deciding whether to recommend you or return to you. Build up a good relationship in your interactions and turn them into a completely loyal customer.
Loyal customers are instrumental in helping you spread the word and become brand ambassadors.
Word-of-mouth is seriously powerful when it comes to marketing;
The Soho Grand hotel uses word-of-mouth to spread positive brand awareness and gives guests a goldfish to “make your stay more enjoyable, one of our goldfish team members can accompany you for the duration of your stay”. You may think this is a bit silly but this unique offering means that people are more likely to talk about it as it’s different, loyal customers with a goldfish pal will share the unexpected gift and use word-of-mouth to spread a positive experience.
“It makes sense: A person you can count on to buy from you again and again is more valuable than one who disappears after the first transaction.” Fast Company.
Building customer loyalty is important as it often leads to more business because;
If loyal customers feel that they are getting good value, quality and service from you they are less likely to go elsewhere. Loyal customers are less likely to stray towards the competition, as if they are completely happy with you a competitor simply won’t appeal. This means that the stronger your loyal customer base is the less threat your competitors pose – it acts as a defence against your rival brands.
When a customer becomes truly loyal you are the only brand in your field they’ll consider – other brands disappear in their minds and their market becomes completely closed in on you.
As I mentioned in the introduction it costs less to retain an existing customer. “From an economic perspective studies suggest that the costs of retaining an existing customer are 10% of the cost of acquiring a new one.”
Building and retaining a loyal customer base makes sense economically, it can help your business save money – as well as making money;
A loyal customer base is so important to a business and shouldn’t be ignored in favour of new customers. In the next blog we’ll discuss best practice for building a solid loyal customer base. In the meantime if we can help you plan a customer loyalty programme get in touch firstname.lastname@example.org or keep informed by subscribing to our Newsletter.