Loyal customers are a result of consistent positive emotional connection provided by your business. This leads to customer retention which, obviously increase your company’s profits.
Apart from increase in sales, here are 7 more reasons why you should focus on customer loyalty:
- Cost Savings
- Customer Referrals
- Complain Rather Than Defect
- Chanel Migration
- Special Awareness
- Greater awareness of brand assets.
- Turn left rather than turn right.
- Final Two Cent
Loyal customers who have patroned at your shop normally do not require much of your time and money to spend in their next trip to your online store. They have already familiarized themselves on the nature of buying from you.
This is mainly the reason why business owners prefer returning customers as they don’t use up much of your operational costs primarily, especially in the marketing and sales department. They have become efficient in utilizing the company’s resources, reducing the operational costs of your business. Therefore, your business gets to save money and to invest on other activities such as marketing etc.
Satisfied customers are more than willing to share brand worth mentioning to their friends. People like to share opinions and like to be ‘in the know’ with the current trends. These led them not hesitate to make recommendations to friends and colleagues.
Loyal customers are made based on trust and when consumers begin trusting your brand, they would recommend you to peers which proves to be more cost effective compared to spending money on expensive marketing campaigns.
For instance, Amazon decided to cancel $50 million worth of advertising believing that “Word of mouth is powerful” as quoted by its founder, Jeff Bezos.
Complain rather than defect.
Loyal customers would often file complain each time they experience difficulties. The reason for such behavior is due to their position of loyalty towards the brand has made them part of the company; as stakeholders. They feel they are obligated to treat the company as their ‘own’ brand and less likely to defect to other brands.
Throughout the time trust was developed, customers have the tendency to help build your brand rather than leaving you at the sight of trouble. When people start believing your brand, they will start taking active role by providing feedback to your business which is very useful and free too.
In today’s world, there are many other alternative channels or platforms to perform transactions such as eBay and Amazon. In this particular context, customers who are loyal are likely to make purchases through different channels which your brand has setup.
It helps maximising your profits while at the same time reducing operational costs from direct business transactions with them.
By constantly keeping customers satisfied and loyal to the brand, these help improve customer retention since the brand keeps coming up in their minds whenever the need arises. Referrals are also influenced in this context too. It helps business to become more cost effective.
Greater awareness of brand assets.
Apart from being efficient at using company’s resources mentioned above, loyal customers also become more aware of other benefits provided by the brand and its assets.
The best example would be your offer of free delivery or Buy 1 Free 1 promo which customers would take advantage of. Or perhaps your weekly offer which many loyal customers are aware of and like to participate. It further adds value to your brand.
Turn left rather than turn right.
Another benefit company would gain from loyal customers is the psychological reluctance to defect from the brand. As explained in Duffy’s (2003) paper, there will be a time where last minute choices need to be made where often leads to customers end up buying brands which they have become loyal to.
People tend to buy products which they trust rather than trying on new brand. Why change when your product is already working well?
Final Two Cent
“Businesses with Loyalty Programs, On Average, are 88% More Profitable Than Competitors Who Don’t.” – Deloitte Retail Survey.
At the end of the day, customer loyalty is mainly about building long term relationship with your consumers. Your company has to be genuine and sincere each time dealing with them. Be honest, and avoid from giving excuses. My final advice, whenever your brand is unable to solve their issues, tell them that you’ll do your best to resolve it. And in return, provide customers with discount code(s) or let them gain access to premium product at affordable price. Just be creative.