Why is Customer Loyalty Important to Your Business?
Whether you own a mom and pop corner shop or a worldwide software consultancy, customer loyalty is very valuable to you. Customer loyalty can be loosely defined as the predisposition of any given customer to purchase your goods or services over comparable ones available in the marketplace. When speaking of products (rather than services or the broader classification which includes both) it is often referred to as "brand loyalty." Investing time and energy in promoting customer loyalty should be an integral component of any business' marketing strategy. When business people think of "marketing" in general, they tend to focus on activities targeted at attracting new customers. While expanding your business' customer base is a critical undertaking which you must work towards with clearly defined goals, the importance of retaining existing customers must not be overlooked. Working toward promoting customer loyalty (or brand loyalty) is critical to your goal for many reasons. A few of the most important reasons why customer loyalty is important to your business are outlined below.
Repeat Business
Loyal customers, almost by definition, will purchase your goods or services again and again over time. Depending on what type of business you have and what the sales cycle is like, you may end up selling more to one loyal customer in a year than you might to even 10 first time customers.
Greater Volume
As you build relationships with your loyal customers, it will become increasingly easy to sell to them in higher volumes. This may happen naturally, or you may choose to incentivize the process for your customers. In any case, higher volumes means greater sales, which translates to higher overall profits.
Cross-selling Opportunities
Customers who exhibit brand loyalty have a relationship with your business. They trust you to provide quality products and customer service. This creates a great opportunity to fulfill more of your customers' needs than the traditional ones you currently meet. What does this mean? You can make sales to loyal customers across product lines and so increase your overall sales volume without needing to focus so much on attracting new customers.
Protects You From the Competition
The more loyal your customers tend to be, the safer you will be from the draw of the competition. Establishing strong brand loyalty can make you practically immune to competitive forces. This is especially important in places where new players enter the marketplace often.
Word-of-Mouth Marketing
Loyal customers can also bring you new customers. Customers that have great relationships with businesses tend to talk about it. Happy and satisfied customers who keep coming back to you are very likely to refer others who may need your product and / or services.
Benefit of the Doubt
Let's face it; things go awry sometimes - even in the best businesses. Sometimes we get an order wrong, do not meet a deadline, or are not able to deliver on promises made to customers. In today's economy, it's even easier for little hiccups such as these an others to take place in business. These types of mistakes can damage your business' reputation in the eyes of a new customer. A scheduling error can make your firm seem disorganized and unreliable. This is a very easy way to lose customers. The good news is, loyal customers are much more likely to give you the benefit of the doubt and / or overlook errors. If you maintain the level of customer service and quality that it takes to achieve brand loyalty in the first place, your customers will be willing to forgive you when bad things happen.
