Why You Should Invest in Customer Loyalty
Businesses that have just started out will usually put a lot of focus on customer acquisition. After all, you need sales if the business is to move forward. Finding people that will be interested in buying what you’re offering is necessary for a brand to survive.
It is common to see new businesses invest a lot in advertising materials that are meant to catch the people’s attention. Numerous new technology tools are also emerging and are being widely used these days to expand a business’ reach. While such tools to help get businesses the exposure they need to be noticed, they are not enough.
Businesses need to think for the long term. It is not enough that they capture the attention of their target audience. They’ll have to find ways on how they will be able to retain their business too. If you refer to a business coach about why your business doesn’t seem to progress despite your efforts in drumming up new customers, he will pinpoint your lack of loyalty and customer retention program as the likely cause.
More than accumulating customers
There is more to growing a business than accumulating new customers. It is not enough that you get people to be interested enough in what you have to offer that they buy your product. The real challenge is how you can get them to keep coming back.
Your business consultant will advise you on how crucial customer retention is to the business. Along with loyalty programs, it will become easier to convince people to stay when you provide them with incentives for staying. When you have a pool of loyal customers, even when times are tough, you will feel a sense of security knowing that there are customers that will stick with and stand by you. A loyal customer base also helps with brand awareness and increased sales.
To ensure profitability, businesses need to pay close attention to their recurring customers. This is where a customer loyalty program works. When there are incentives for them staying, then they will never even think of leaving you for a competing brand.
Customer accumulation costs more
Research has shown that acquiring new customers actually costs more. Compared to how much you’ll have to spend to retain an existing customer’s business, it makes sense that you put a lot of focus on retention.
Catching the attention of new customer require advertisements. You’ll need to supply them with introductory brand and product information too. Then you’ll need to offer then deals and discounts so they’ll be encouraged more to try out what you’re offering.
These are all costly. However, if you will focus your attention on a customer-base that s already convinced that you have a good product or service to offer, it will be less costly. They already know you are offering something good. You just have to make it more exciting for them to keep buying.
Selling to existing customers is easier
Most business coach will highlight how it will require less work to sell to loyal customers. Their familiarity with your business means that they are likely to trust your recommendations in new services and products. Selling to new customers will only usually have a 5%-20% success rate. Meanwhile, existing customers are likely going to have a 60%-70% chance of buying what you’re offering. These figures alone make it worthwhile to do what you can to have a wider base of loyal customers. This means that while you will be putting forth the same amount of effort, you just get better results with loyal customers.
You’re protected from competition by loyal customers
Loyal customers serve as a cushion against your competitors. The padding that loyal customers provide your business when times are tough cannot be discounted. When budget is tight or when the competition is stiff, the presence of a loyal customer base can serve as an economic moat.
Loyal customers are less likely to switch to competitors. Meanwhile, new customers will likely do the opposite that can hurt your sales. With loyal customers, you are cushioned against price sensitivity. Loyal customers aren’t just going to jump ship just because you decide to make a few adjustments to your pricing. How you can retain your customers’ business when times are tough can make or break your business.
You get honest feedback from loyal customers
One of the best things about a loyal customer base is they know your brand. With their help, it becomes easier for you to take the necessary steps to improve your business. They can be a great source of constructive and honest feedback so you know exactly which areas you’re lacking and which areas you’re doing well.
This isn’t something that you can expect from new customers. They will still have that finicky attitude towards you and your business. Instead of giving you feedback if they have a bad experience, they may have a tendency to move on to the next provider instead. Hence, the importance of maintaining a loyal customer base.