Loyal Customers Bring Big Dividends

It's no secret that customer loyalty is important. But why is that so? Customer loyalty does two things. First, it increases your "inventory" of customers, and secondly, it dramatically increases your per-customer profit.

Revenues grow as the best customers are swept into the company’s business, building repeat sales and referrals. If your business’s value proposition is strong, you can afford to be more selective in new customer acquisition and to concentrate its investment on the most profitable and potentially loyal prospects, further stimulating sustainable growth.

Customer loyalty equals employee loyalty

The other advantage of fostering customer loyalty is your business’s ability to attract and retain the best employees.

Consistent delivery of superior value to your customers increases your team members’ loyalty by giving them pride and satisfaction in their work. They get to know their long-term customers, delivering still more value and so further reinforce loyalty on both sides.

Loyal long-term employees also learn on the job how to reduce costs and improve quality, boosting productivity and enriching the customers’ experiences of your business.

Manage customer ‘turnover’

It’s common for a business to lose 15% to 20% of its customers each year. Slowing the defection rate of clients can have a dramatic increase in revenue over time — all other things being equal. In fact, simply cutting defections in half can more than double the average company’s growth rate.

A mature customer generates cost savings, referrals, revenue growth and usually a price premium (i.e. will pay more because of the added benefit of staying with the same business).