What is customer loyalty?
Customer loyalty describes the reciprocal relationship you share with your customers. Strong brand loyalty encourages customers to make repeat purchases and consistently choose you over your competitors.
Keep reading to learn the importance of customer loyalty, and how it can benefit your business in the future.
What does customer loyalty mean?
Customer loyalty comes in a variety of forms, but primarily relies on the type of business you are and the services or products you offer.
For example, many trade companies are unlikely to visit the same client twice because they offer more expensive or one-off services. After all, it’s unlikely you’ll need two conservatories or need to replace your roof more than once. Therefore, their experience of customer loyalty isn’t based on the expectation of repeat custom. Instead, a recommendation from an existing client to their friends and family, or a review on social media, is a great way for customers to show loyalty to the company.
On the other hand, beauty and fashion retailers will see more transactions from the same customers over time. Customers will eventually run out of their favourite make-up or perfume and need a replacement, or will buy new clothes for holidays and when the weather changes. In these cases, their experience of customer loyalty is more directly sales-based and relies on actively maintaining an ongoing positive relationship with their followers.
Why is customer loyalty important?
But why is customer loyalty important? Well, the idea of a one-in-one-out marketing strategy is unsustainable over time, which is why striking the right balance between attracting and retaining customers is essential to keep your business running. Building stronger relationships with existing customers is also one of the best ways to help your company grow quickly and organically.
It obviously goes without saying that loyal customers are financially important for your business. According to CRO experts Invesp, existing customers are 50% more likely to explore and buy from new product ranges – and spend on average 31% more than new customers, making them the backbone of your revenue stream.
Plus, from a marketing perspective, it’s much cheaper to advertise to existing customers. Loyal customers need to see fewer ad views to influence them to buy from you, and are far more likely to complete a transaction with a brand they’re already familiar with – especially if they trust they’ll get great customer service.
In fact, trust is the cornerstone of customer loyalty. However, this trust is only built through repeated positive experiences with a customer service team. That’s why, according to Zendesk, 57% of consumers say that their experience with customer service influences their loyalty to a brand.
Whilst consumers depend on you for quality products or services, they also rely on you providing an excellent customer experience. So, you need to consider every aspect of the customer journey to ensure you convert regular buyers into loyal champions of your brand. One way you could do this is through using a telephone answering service. Excellent customer service encourages customers to choose your company over competitors because they feel listened to, and know their queries will be resolved. So, having a dedicated team of people at the end of the phone shouldn’t be underestimated.
What are the benefits of customer loyalty?
So what are some of the benefits to improving customer loyalty? Aside from the obvious financial incentives, cultivating a strong sense of customer loyalty has several advantages, including:
- More recommendations: Loyal customers make the best cheerleaders. People that believe in your brand are far more likely to recommend you on social media, and to their friends and family. This is the best kind of free advertising because people tend to trust advice from their social groups and will be more inclined to buy from you over your competitors.
- Better reputation: Customer loyalty has a strong influence on your reputation as a business. Having a large following of dedicated customers lends more credibility to your brand, and prospective customers will be more willing to trust your products or service – and spend their money.
- Better feedback: Improving brand loyalty gives you the chance to get valuable feedback on new and existing products or services. Not only are existing customers more likely to reply to surveys or review requests, but they’re typically more honest too. This gives you the best data to understand how you’re performing and learn where you need to improve.
Overall, it’s well worth noting that customer loyalty has far more benefits than you may have considered. Even the seemingly passive advantages we mentioned above can have a huge impact on your business, so it’s vital that you put the time and effort into securing your customer base before working to attract new buyers.