December 28, 2018 Last updated December 26th, 2018 318 Reads share

5 Reasons Why Loyal Customers Are Essential for Your Business

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More than ever before, brand loyalty is the key to long-term business success.

For consumers, today’s world can feel like a cold, uncaring place full of people who only want their money. Spammy emails in their inboxes (even after GDPR), aggressive ads everywhere they look, and all the best deals pitched at new customers. They’re essentially incentivized to be retail itinerants, hopping from business to business, never staying long enough to get attached.

But your business needs that attachment to thrive, so the onus is on you to do something to make it happen. Earn attachment, earn loyalty, and you’ll be set.

Here are five specific reasons why loyal customers are essential.

Recommended reading: 5 Digital Marketing Tools You Could Use to Learn More About Customers

They convert more readily

Whatever you’re trying to sell — whether it’s a product or a service — you’ll sell more easily to loyal customers.

This is because the conversion rate of a second-time customer exceeds that of a first-time customer, and the same again with a third-time customer. It isn’t an unstoppable linear scale, but the improvement is obvious and consistent.

When the post-Christmas sales arrive this year and you jump on the discount bandwagon, don’t you want to be marketing to the people most likely to buy from you? It makes way more sense to use an existing list of loyal customers for an email marketing campaign to increase traffic to your site and generate sales. It’s by far the most efficient way to spend your promotional budget with a much higher ROI rather than paying for direct ads (which currently have a 0.05% click-through rate).

They bring indirect referrals

Word-of-mouth referrals still matter a lot, even in this online era.

In fact, they matter even more because they still stand out amidst relentless streams of social media posts, review roundups, and marketing materials. We still trust our friends to steer us in the right direction much more than we’d ever trust even the most helpful websites.

Not only will loyal customers often choose to recommend you purely of their own volition, but you can also more easily prompt them to recommend you using referral schemes (or simply by asking politely). And while those referred will come in with high expectations, they’ll also be fully willing to give you a try.

Exceed those expectations and you’ll end up with another loyal customer ready to extol your virtues.

They provide glowing testimonials

It doesn’t matter what type of B2B or B2C business you run: you need high-quality social proof that meets the needs of your prospective customers. And while loyal customers are the most valuable customers you can have, you do still need new customers (even the most loyal customer is unlikely to stick with you forever).

A rave review from a current customer can go a long way towards convincing someone that your company is worth their time.

Think about the best reviews on sites like Amazon.

They’re in-depth, rich (often featuring video or audio content), and enthusiastic. They’re also relevant to potential buyers. If you’re looking at a high-end drone, do you want to see a review from a hobbyist or a pro? Surely you’ll place more stock in the opinion of someone who really knows the topic.

In the same way, you’ll trust a positive testimonial more if it’s from a long-term customer — any company can look good briefly, but it generally takes quality to keep customers around.

They can provide creative UGC

UGC (user-generated content) is a huge win-win-win for businesses, because it earns them a lot of great exposure, leaves customers feeling more engaged with their brands, and doesn’t require them to do anything. Staying active on social media networks is important, after all — out of sight, out of mind, as they say.

And when requesting or suggesting UGC, which group will be more likely to be passionate about producing great content: your mostly-apathetic one-time buyers, or the customers who’ve stuck with you for years?

What’s more, the latter group will have a much stronger understanding of your brand identity (something every business needs today). This will shine through in the tone and style of their UGC, leaving much more of it actually usable.

They’re easier to keep that new customer are to win

If you just need the one reason to wrap up your conclusion that loyal customers are essential for your business, this might be the one you go with: it’s estimated that it costs roughly 5 times more to win a new customer than it does to keep an existing one.

Even if loyal customers didn’t spend more and convert more frequently, they’d still be hugely more valuable because of this.

In addition, every new customer you bring in slightly diminishes your pool of prospective customers. And every former customer is a wildcard of sorts, positioned to act the spoiler and turn people away from you through their criticism.

You can’t keep depleting the goodwill of your customers with the plan to simply find new ones. Sooner or later, you’re going to notice that it’s getting more expensive to win new customers, and then the huge value gap will get even bigger.

These five reasons don’t come close to detailing all the advantages of concentrating on customer loyalty for building your business and your brand.

To win that customer loyalty, you need to provide a fantastic customer experience, complete with exceptional communications throughout every stage of the process. Cover all the bases and let brand advocacy lead you to further success.

 Strengthen a positive customer experience

According to Forbes79% of online shoppers will turn to a competitor if they experience poor customer service in the first week. That’s a fast way to lose a customer, right?

At this stage, it’s not just about customer support, it’s also about the way you show your customers that you value them for making a purchase at your store. A loyalty program provides the perfect vehicle to do this. But how?

Let’s take a little detour into the field of social psychology.

When customers see that they can collect points in exchange for purchases, their first thought is, “Wow, it’s so cool that I get something extra for my money besides the product I purchased!”

A young couple arriving at hotel reception area stock image

Patrick Foster

Patrick Foster

Ecommerce is a vast, ever-changing landscape. Since its inception, the way we buy and sell online has been transformed. I'm an ecommerce professional sharing my views and insights over at ecommercetips.org.

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