Why is customer loyalty important to your business?

Whether you’re running a small mom-and-pop store or a global software consultancy, customer loyalty is invaluable to you. Customer loyalty can be loosely defined as the predisposition of any customer to buy your goods or services instead of comparable ones available in the market. When talking about products (rather than services or the broader classification that includes both), it’s often referred to as “brand loyalty.” Investing time and energy in promoting customer loyalty should be an integral component of any company’s marketing strategy. When business owners think of “marketing” in general, they tend to focus on activities aimed at attracting new customers. While expanding your company’s customer base is a crucial task that you must work on with clearly defined goals, the importance of retaining existing customers should not be overlooked. Working to promote customer loyalty (or brand loyalty) is critical to your goal for many reasons. Some of the biggest reasons why customer loyalty matters to your business are outlined below.

repeat negotiations

Loyal customers, almost by definition, will buy your goods or services again and again over time. Depending on the type of business you have and what the sales cycle is like, you may end up selling more to one loyal customer in a year than to 10 first-time customers.

Greater volume

As you build relationships with your loyal customers, it will become easier and easier to sell them higher volumes. This can happen naturally or you can choose to incentivize the process for your clients. In either case, higher volumes mean higher sales, which translates into higher overall profits.

Cross-selling opportunities

Customers who exhibit brand loyalty have a relationship with your business. They trust you to provide quality products and customer service. This creates a great opportunity to meet more of your customers’ needs than the traditional ones you currently meet. What does this mean? You can sell to loyal customers across all product lines and therefore increase your overall sales volume without having to focus as much on attracting new customers.

Protects you from the competition

The more loyal your customers are, the safer you will be from the draw of the competition. Establishing strong brand loyalty can make you virtually immune to competitive forces. This is especially important in places where new players enter the market frequently.

word of mouth marketing

Loyal customers can also bring you new customers. Clients who have great relationships with companies tend to talk about it. Happy and satisfied customers who keep coming back to you are very likely to refer others who may need your products and/or services.

Benefit of the doubt

Let’s be honest; sometimes things go wrong, even in the best deals. Sometimes we receive an incorrect order, miss a deadline, or fail to keep promises made to customers. In today’s economy, it’s even easier for small mishaps like these and others to happen in business. These kinds of mistakes can damage your business’s reputation in the eyes of a new customer. A programming error can make your business seem disorganized and unreliable. This is a very easy way to lose customers. The good news is that loyal customers are much more likely to give you the benefit of the doubt and/or overlook mistakes. If you maintain the level of customer service and quality that it takes to achieve brand loyalty in the first place, your customers will be willing to forgive you when bad things happen.