How Investing In Customer Loyalty Will Improve Sales

Loyalty may seem like an old-fashioned concept, but increasingly big brands are focusing their attention on how to drive sales by encouraging repeat purchase from existing customers.

The benefits of customer loyalty

Repeat customers have a longer ‘lifespan’ for businesses – that is, they’ll buy from you many times and therefore help guarantee future income. There’s also evidence, from BIA/Kelsey that suggests a repeat customer spends nearly 70% more than a brand new one (2014).

Loyal customers are also key to creating positive word-of-mouth marketing, either on social media or in person. These ‘ambassadors’ for your brand can increase trust in your business as well as expand your customer base through positive reviews and recommendations.

Repeat customers can also be more cost-effective when it comes to your marketing budget. As mentioned, they’re likely to spend more, but they are also six times more likely to try a new product or service from a business than a regular customer (Rosetta, 2015). This means your spend on marketing is reduced, because loyal customers are much more likely to want to buy new items from you.

Keeping customers and building loyalty doesn’t have to be difficult, but you do need to think about it carefully. Knowing the key characteristics that set you apart from your competitors is important, as this will be a pivotal reason your customers want to stay with you. After that, there are a number of common challenges which local businesses need to overcome to make sure they retain their customers.

Here are a few examples of them:

1.) Happy customers are repeat customers

Good customer service makes a huge difference to the chances of repeat purchase. In 2013, CEB found that 94% of customers who had a good customer service experience will buy from that company again.

Luckily for local businesses, their customer service is often friendly, efficient and good quality. However, if you feel your business isn’t doing as well in this area as it could do, take a look at our article on Six Common Customer Experience Mistakes to Avoid.

2.) Stay in contact

The next challenge to customer loyalty is making sure you regularly stay in touch with your customers. This can be time-consuming for local businesses juggling their marketing and the day-to-day running of their business, but keeping in contact with customers is essential to developing repeat business. Research company Strativity found that the more frequent the interaction with customers, the more loyal they became – peaking at an 87% increase in loyalty with daily interactions (2015).

There are lots of ways you can stay in touch with your customers, from newsletters and email to social media to simple phone calls.

3.) Reward loyalty

Another challenge for building loyalty is making sure you reward your customers for staying with you. Often businesses can be so focused on getting new business they forget about the service they offer after a customer has bought something from them. This ‘aftercare’ service is key to turning a one-time customer into a loyal advocate for your brand.

Rewarding your loyal customers doesn’t have to be complicated. It could be as simple as a loyalty card which you stamp each time the customer visits your store, or a referral code which they can use to gain a discount when a friend shops with you. There are also several paid-for reward services, like Perkville, which is an automated rewards scheme that connects to social media, allowing your customers to earn points and redeem discounts, while you focus on running your business.

What’s most important in rewarding your customers is understanding what they would really value as a reward for loyalty – is it a discount, an opportunity to buy before other customers, or something like an event or experience? Getting this right will mean they’re more likely to tell friends about your business, and therefore increase your customer base.

Loyalty isn’t just a marketing buzzword for local businesses – it’s an excellent way to secure future sales for your business and encourage new customers through word-of-mouth. Focus on customer service, staying in touch and rewarding regular customers and you’ll soon see the benefits.

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