Why Customer Loyalty Matters?
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Written by Atila on November 21, 2008 – 11:41 pm
The U.S. Department of Commerce confirms that it costs five times more to get a new customer than it does to retain a current one. Research from Xerox Corporation shows that customers who claim to be “totally satisfied” are six times more likely to become repeat purchasers than customers who claim to be only “satisfied.” Other studies show that a loyal customer is worth ten times the value of a single-purchase customer.
In war and sports, defenders are the ones who protect from threats, withstand attacks, and prevent opponents from gaining an advantage. Defenders protect the goal. They place more emphasis on preventing an opponent from gaining an advantage than on winning new territory or scoring new points. There’s a marketing lesson in the analogy.
When sales are down or the balance sheet is under siege, many businesses go on the marketing offensive reducing prices, launching promotions, and increasing advertising to win new customers. Defensive marketers place greatest value on keeping existing customers and protecting ongoing relationships by providing unrivaled service and communication. They fortify themselves against competitive attacks by training customers to expect service levels other businesses can’t meet. They build customer loyalty and reap the resulting benefits by delivering consistently enhanced value to customers who grow ever more loyal as a result.
Consider this list:
- Loyal customers account for higher buying rates and lower marketing and service costs than other customers.
- Loyal customers involve fewer business risks because you know their credit status, buying preferences and purchasing patterns.
- Loyal customers respond to customer service that costs far less than the cost involved to recruit a new customer.
- Loyal customers are the best source of qualified referrals to your business.
- Loyal customers lead to a loyal staff (and vice versa), because the longterm relationships create a pleasant environment in which to work and do business.
