What is customer loyalty and why is it important?

Customer loyalty can simply be described as a customer’s willingness to interact with or buy from your business on a regular and ongoing basis. Loyalty can stem from many things, but in general a loyal customer will associate their most favourite experiences with a brand, and therefore it naturally increases their likelihood to make repeat purchases with what you have to offer. Loyal customers are known to spend 67% more on products and services than new customers. Even though your most loyal customers only make up 20% of your audience, they provide up to 80% of your revenue.

We can prove to you that it is 5x easier to retain a customer than it would be to acquire a new one, if you focus on existing customers, they’ll continue buying from you and will spend more over their lifetime with your company – they will also become your biggest advocates and help you attract new, loyal customers in the long run! 

User case: revamped loyalty program

Starbucks has been known to attribute a majority of the additional $2.65 billion in revenue to their rewards program. Reward memberships grew over 25% in the last two years and they now have 16.8 million members.

It really pays to be a member – free drink on your birthday, free in-store refills on coffee and tea, free bakery item after just 50 stars… the list goes on. This also bring is a layer of convenience as loyal customer can look ahead, find what they want and even pre order if they wish to – Loyal customers in general are just far more responsive and engaging with what you, your business and your brand are saying. 

User case 2: The Reebok experience

Where Starbucks rewards customers mostly with gifts. Reebok has an alternative approach, and one that may cost the brand less money than a gift-based rewards plan. Reebok provides VIP experiences, training and wellness programs, partner rewards, and much more.

Members gain points for every interaction. As points accumulate so do the value of the rewards. Even going as far as providing access to partner events and product releases.

Let us share 5 benefits of customer loyalty for your business

1. Drive repeat business

Thinking logically, this goes without saying, it is a fact that loyal customers are the most likely to keep coming back to purchase from your business. They may have a favourite product they can’t live without, or simply feel inclined to try your latest product or service because they have had favourable experiences in the past. Whatever their reason may be, loyal customers are more likely to drive repeat business, making retention of loyal customers key.

2. Increase revenue

As mentioned earlier, returning customers are proven to spend close to 70% more money on products and services when compared to first-time customers. The likelihood to spend more stems from a sense of trust that the customer has developed over time for their favoured brand. In essence, once a customer likes and trusts the quality of your brand, they’re more likely to purchase in higher quantities.

3. Create brand ambassadors

Not only will loyal customers keep coming back themselves, they will spread brand awareness through word-of-mouth marketing. Happy customers are likely to tell friends and family about your business and your products, essentially advertising and spreading great vibes on your behalf. Existing customer referrals help bring in new customers, making your loyal customers your biggest brand advocates.

4. Defend against the competition

When loyal customers spend money with your brand, competitors lose out on potential revenue. Essentially, every pound spent with you is a pound not spent with your competitor. Be sure to keep your loyal customers happy with great customer service (and a great loyalty program using Roam) so they continue to purchase from your business and not your competitors.

5. Gain valuable feedback

You tend to find that it’s your loyal customers who answer surveys and respond to questionnaires distributed by your team in charge of marketing. Because they like your brand and what you want to improve (or stay great as you are), loyal customers will not mind taking the time to share valuable feedback that you can then turn into actionable marketing tactics. 

Final thoughts

Great customer service helps to show customers you care. In return these customers will become loyal and buy from you repeatedly. By forging a relationship with your current customers, they’ll continue to engage with your brand and recommend your company to friends and family. True word-of-mouth marketing and customer loyalty go hand-in-hand.

Just know that a loyalty program should enable your brand to increase in value and drive up the loyalty of customers. Don’t forget, that not every loyalty program offers discounts, some companies engage members through exclusive experiences.

To conclude, have a think about what your business can offer, that makes your customers feel special and allows them to connect on a much higher level with your brand for the months and years to come and remember, Roam for business is here to support you the whole way through this important customer loyalty journey.