The idea behind customer retention emphasis is simple: there are only finite number of customers any given business can serve. But returning and loyal customers is what makes it possible for the business to perpetually make sales and stay profitable. If we may borrow Pareto’s principle, 80% of your sales come from only 20% of your customers.
According to Invesp, juts an increase of 5% in customer loyalty can lead to a 25%-100% increase in profit per customer, and on average, loyal customers are 10X more valuable than first-time customers. Therefore, it is clear nothing beats customer loyalty and retention when it comes to guaranteeing business continuity. So how do you increase customer loyalty?
Customer loyalty programs are very effective when it comes to retaining customers. In a competitive market where customers can make snap decisions to switch their service providers or suppliers, customer retention programs can make all the difference. For instance, Starbucks has a reward program called My Starbucks Rewards which has significantly contributed to the coffee giant’s growth and profitability.
According to an infographic released by Invesp on how loyalty programs are influencing buying influencers, 69% of customers say that loyalty programs influence their choice of retailer. Customers join loyalty programs because: they want to save money (57%) and receive rewards (37.5%). 50% of customers say they would change their behavior to reach higher tier of customer loyalty program.
Accordingly, 76% of customers believe that loyalty program deepens their relationship with brands. This view is shared by 64% of retailers who view customer retention programs as the best way to connect with customers.
Customer retention isn’t always easy
Sustained customer loyalty programs can see the average customer spend 67% more. This means that loyalty programs aren’t short-term customer retention strategies. The longer the customer enjoys your loyalty program the more likely that person will remain loyal to your brand.
However, many brands say customer retention is their biggest obstacle. Customers are becoming more and more enlightened and choosy; they won’t settle for second-rate products even if that means switching companies. 66% of customers say they consider poor customer service as the main determinant when changing companies. So it is important to ensure you have excellent customer service as well as a great product.
Brand recognition is also another important factor that increase customer loyalty. In other words, customer retention doesn’t just happen. You have to work hard for it.
It is time for you to set up a loyalty program
If you haven’t set up a loyalty program then you are missing out on huge businesses because 83% of customers say loyalty programs can influence them to make a buying decision. Almost any business can implement a loyalty program. Although setting up reward programs requires effort, it is worth it. Loyalty programs can help improve your brand recognition, increase growth and improve customer service.Digital & Social Articles on Business 2 Community