Customers are the backbone of every business. As a result, it can be easy to get caught up in the lure of potential customers, of grabbing their attention and encouraging them to give your store a chance. While new customers will always be important, the immense value of loyal customers must not be forgotten. Below we’ve listed five reasons why customer loyalty is vital to your business.
Repeat business is cheaper than new business. In fact, acquiring a new customer is as much as 25 times more expensive than keeping an existing one. Longtime customers don’t require the extensive marketing efforts that potential customers do. Yes, an advertised deal or coupon might bring a loyal customer into the store, but they were already on the way there to begin with. You can depend on loyal customers to choose your business over others, so carefully craft campaigns to acknowledge their commitment - don’t oversell the loyal base.
Businesses can depend on their loyal customers to represent their brand. Loyal customers are knowledgeable about your product, experienced with the service you provide, and can be eager to talk about it. They serve as an unbiased source of information, no strings attached, which is even more convincing than your company’s marketing efforts. Brand advocates will bring you business, at no cost, simply through their recommendations. These leads aren’t just free, they are valuable: leads gained from advocates are 7 times more likely to convert than other leads.
Nothing is more meaningful than an online review containing the phrase, “I’ve been a customer for over a decade.” This speaks volumes about the kind of service your business has been providing consistently year after year. It demonstrates that your business values its customers and delivers a product worth going back to. This type of testimonial is the kind that wins over the 86% of consumers who read reviews. An easy way to double down on this value and further demonstrate how much you invest in your customers is by responding to these reviews in a meaningful way.
Loyal customers come to your store regularly and fully trust the service you provide. With this trust already earned, it makes sense that they would try your other products. For example, customers who have had consistently great experiences with your sales team are more likely to give your service or parts department a chance. The proof is in the profit: existing customers spend an average of 67% more than first time customers. In fact, repeat customers make up only 8% of all customers but account for 40% of a company’s revenue. Loyal customers spend more money per visit than new customers, bringing us to number five.
The ultimate reason why loyal customers are vital to small businesses: they lead to more profits. Spending more money per visit to your store adds up over time, so much so that increasing customer retention by just 5% will increase profit by 25%. The effort it takes to create loyal customers has a great return value, and this value means sustainability. Repeat customers provide the sturdy foundation your business needs to not only survive but flourish.
Assess your business plan and make sure you aren’t getting distracted by the allure of new customers. Remember to allocate enough time and money into building and retaining loyal customers. With the right balance, you can maintain a base of lifetime customers, save money, and grow your business.
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