Customer Loyalty: The Key to Business Growth

What keeps customers coming back, or telling their friends about you?

In the past, many companies aimed solely at acquiring new customers. Companies would sell their product to a customer and then move on to the next one with no thought for what happened after that initial transaction.

But now, things have changed. Especially in the SaaS industry where upfront payment has been reduced to a minimal amount and customers are more free than ever before to switch to competitors for any given reason at any time if they are unsatisfied with their current product.

In recent years, many businesses have realized that having an active base of customers who invested in their company leads to increase in profit. So before reading up on all the ways you, as business owners, can foster customer loyalty, let's take a moment first to go over what it is and why it matters to make sure everyone understands its importance

What is Customer Loyalty?

Customer loyalty is the act of choosing one company’s products and services consistently over their competitors. Loyal customers choose you over competitors, even if they have a better offer in the short-term, because of their past experience with your brand. They don't mind the changes in pricing or new features as long as it doesn’t change how much enjoyment they get from receiving what you provide for them!

A loyal customer is like a goldmine for your business. They keep generating the revenue without you spending any money on acquiring new customers, while also giving feedback to help improve the quality of your product and service!  

A bunch of these folks, combined together, form an important percentage of any brand's revenue and will be able to help to generate it through tough times when there are no other potential buyers out there!

Why is Customer Loyalty important?

Customer loyalty is important to every business. Without loyal customers, a  company will not be able to survive and grow over time.

Let’s take a look at some of the benefits of Customer Loyalty:

Brand Advocacy

There's a saying that the happiest customers are your best salespeople, and when you provide exceptional service to exceed their expectations they will be happy to share that with others. By word-of-mouth marketing, these satisfied customers can attract new prospects who would also become loyal followers for your brand!

Business expansion

There are many ways to grow your business through existing customers. You can upsell them on products they might need, or cross-sell two of their favorite items by offering a bundle at an attractive price. 

Through a higher number of loyal customers, you can achieve a net negative churn rate. Businesses cherish this as it’s the ideal situation where they do not have to acquire new customers in order to grow their revenue.

Attracting Investors

Investors will be more likely to put their money in your brand if you have loyal customers. This is because they use the LTV, which stands for a customer's lifetime value, to evaluate how strong any business really is and the higher the number the more motivated potential investors are into putting more funds into your company so it can expand its operations.

Customer Loyalty Means Higher Profits

To operate a business, revenue must be greater than expenses. If it costs $300 to turn a prospect into a client, they should spend at least as much with your business for you to break even.

The importance of customer loyalty is more than just a nice idea. It's the backbone of any business, and one that you should never take for granted. 

Investing in customer loyalty is one of the most profitable investments a business can make. 

In fact, it has been suggested by some studies that improving customer loyalty is more important than lowering operating costs. A 2% increase in customer loyalty has the same effect on profit as decreasing operating costs by 10%.

How To Encourage Customer Loyalty

As we said, investing in customer loyalty is one of the most profitable investments a business can make, so let’s see how you can encourage it.

Great customer service

When your customers feel valued and respected, they will form a positive emotional connection to your brand! 

Nowadays customers have high expectations when it comes to quality of service. So you need to make sure that your customer feels that they are valued and respected every time they come into contact with you. If they don't feel valued and respected, then there’s a good chance that their emotional connection to your brand will not be positive.

Feeling a sense of being looked after and listened to is invaluable. Customers who feel this way are likely to be more loyal, and tell others good things about your business rather than spreading negative rumors. 

When you provide them with a great experience they will be loyal to your brand.

Provide Value

The best way to create a loyal customer is to add value. 

You can be friendly in your relationship with people, or show empathy for the challenges they're going through, but, nothing will beat adding immense value to them every time you get in contact with them. 

Every interaction should add something of immense significance to your customer's life.

Build a useful community for your customers

Customers will always trust their peers more than they trust your business. 

Social media and forums allow any mistake or slip up to be recorded and uploaded for the world to see, which can greatly damage your reputation! You can take advantage of these interactions by building an online community that encourages customer-to-customer interaction.

One way to do this is with self-service support resources. You can add a community forum where customers are encouraged to communicate and share their experiences, troubleshoot product problems or tell stories about how your product or service made their life easier or better. Even if they leave negative feedback on your domain you're able to respond and also deal with it accordingly!

As online communities are developing, you may want to formalize them in order to keep things organized. Having a consistent system ensures fairness and keeps customers satisfied over time. This is where customer loyalty programs come in handy.

Long-term strategy

Why do people leave the company they’ve been loyal to?

It's because they don't feel the company cares about them. 

In the short-term, it can be easy to please most types of customers with introductory discounts and loyalty perks. But what about customers who've been loyal since day one?

Too often, businesses are stingy in their attention and take these kinds of customers for granted. They assume that those who have been there from the beginning will be loyal forever simply because they've seen how great this brand can be! In fact, all customers need to feel cared about in order to stay loyal, especially your long-standing ones! 

With a long-term customer retention strategy, you can proactively improve the experience for every segment within your customer base. Whether they are new or old customers, everyone will feel valued and important to the business!

Give customized support and services

You know that feeling when you find a perfect solution to your problem and it's just what you need? That is the experience customers have with customized solutions. You are providing them an answer they didn't even know it existed, so in turn, their loyalty grows exponentially as well!

Customers love off-the-shelf items for many reasons, but one of the most important ones may be because this way there is no chance of disappointment or having something go wrong. 

Employee experience

There is a clear connection between how companies treat their employees and the loyalty of customers. Take Starbucks for example, where 87% of customer affinity for the brand is driven by how well they treat their employees.

It’s obvious that customers are much more likely to have positive interactions with brands that care about their employees. The reason is simple: happy, engaged workers who feel valued by the company they work for will be naturally inclined to provide a good customer service experience.

Reward your loyal customers

Your customers are your greatest asset and you should reward them for their loyalty. For example, you might offer increased storage space on repeated subscriptions or bonus time limits with renewals in order to show appreciation for those who stick around over long periods of time.

This would make your customer feel special and will encourage them not to go anywhere else in the future because you care about what matters most - making sure they are happy with every purchase!

Conclusion

You can't build a relationship in minutes, hours or days.

It takes years to create the trust that makes for customer loyalty and only seconds to break it all with one bad experience. 

Have this in mind and remember: As long as you are honest and caring with your customers, they will continue to do business with you.