The Value of Customer Loyalty & Retention
Oftentimes a lot of effort can be placed into gaining new customers, but the real value is in retaining your existing customers and increasing their lifetime value with your brand. It is far more expensive to obtain a new customer than it is to keep your repeat customers coming back (5x to be exact). Below we will discuss some key points that emphasise the value of customer retention and the importance of investing in your loyalty programme.
Happy customers will refer their friends and family to your business, they will post about you on social media, and they will advocate for you often in other areas too. Word-of-mouth marketing is a less expensive and more successful method to customer acquisition, and the lifetime value of a customer obtained via referral is 16% higher than a non-referral customer. People trust referrals from those they know, and increasingly from those they don’t know, with more and more consumers (particularly millennials) looking to online referrals and reviews to guide their purchases. You can read more about the benefits of consumer-generated content here.
The most engaged and loyal customers spend more and more often than the average customer, bringing more revenue and profitability. They spend 90% more frequently and 60% more per transaction. Because of this, you would be smart to have a rewards program as part of your sales and marketing strategy targeted to them to thank them for their brand loyalty. They are interested in learning about your new products or services and they make repeat purchases of the things they love. These are the customers who love being marketed to, so adopting a successful customer loyalty program, which isn’t an expensive task, can increase customer lifetime value exponentially. It costs less to retain a customer than to acquire a new one, so businesses with a disloyal customer base need to spend much more to make their business grow.
Bad service is expensive
Your loyal customers are returning because they’ve received good service from your business time and time again, and there is a lot to be learned from them to see where you’re succeeding and what you’re doing right. Often we look to our unhappy customers to see what we are doing wrong in the hopes that we won’t lose any more customers for the same error, but for every customer who complains, 26 don’t. Look to your loyal and engaged customers to find out why they return and what drives their loyalty and extend those learnings to the customer experience at the other end of the spectrum to prevent losing more.