Why is customer loyalty important to your business?

Whether you run 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 willingness of any customer to buy your goods or services rather than comparable ones available on the market. When talking about products (rather than services or the broader classification that includes both), this is 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 entrepreneurs 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 should work towards 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 most important reasons why customer loyalty is important to your business are outlined below.

repeat negotiations

Loyal customers, almost by definition, will buy your goods or services over and over 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 to 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 satisfy more of your customers’ needs than the traditional ones you currently do. What does this mean? You can make sales to loyal customers across all product lines, thereby increasing 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 competition’s giveaway. 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, 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 the wrong order, miss a deadline, or fail to deliver on promises made to customers. In today’s economy, it’s even easier for small mishaps like these and others to occur 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 company appear 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 it takes to build brand loyalty in the first place, your customers will be willing to forgive you when bad things happen.