What Is Customer Loyalty?
The concept of customer loyalty is a simple one — it is the degree to which a customer can be expected to repeatedly do business with a given company. This loyalty translates to a number of strong benefits for businesses, including:
Lower Costs for Acquiring New Customers
Customers can be hard to come by, and the costs associated with acquiring new ones are significant. Small and medium-sized businesses of all types are especially susceptible to high customer acquisition costs, making it especially important that they retain the majority of the customers that give their products and services a try.
Far Lower Customer Churn Rates
When customers churn too heavily — doing business with a company only for a short time without returning — organizations can end up with insufficient revenue to power their processes. Low churn rates correlate closely with profitability as the exorbitant cost of acquiring new customers diminishes.
Easier Revenue Expansion
Loyal customers make growth a lot easier to achieve for businesses at any stage of development. These types of customers do not disappear as quickly and can thus serve as a dependable foundation for an organization’s growth efforts, providing consistent income to fuel new initiatives.
They are also much more open to upselling and cross-selling from the brands they trust, which makes maximizing customer lifetime value a possibility as well.
Brand Sentiment and Advocacy
Your most loyal customers – those with a positive brand sentiment – are likely to recommend your business and your products to their friends and family members.
They might even become an enthusiastic champion for your brand on social media and other channels. Brand advocates can have a tremendous impact on generating trust and driving loyalty.
Thanks to CallMiner