It’s not an exaggeration to say that every single business completely revolves around its customers. It doesn’t matter what the business might provide in services or products; if no one is there to buy then the business will fail.
So naturally, looking after your customers is one of the best business moves you can make. And the thing about customers are, they’re a lot easier to keep once you’ve got them than they are to get in the first place.
Customer loyalty is something every business should aspire to earn. Not only does it provide you with the cheapest and most effective form of advertising – word of mouth and personal recommendations – but a constant and regular income. This is why your marketing strategy should be directed towards keeping current customers rather than getting new ones.
According to a post on Kissmetrics, acquiring a new customer is 7x more expensive than implementing tactics to retain an existing one. This only goes to say how customer retention is the key to grow sustainably in the eCommerce market competition.
Shopify conducted a research on acquisition vs retention for eCommerce businesses. The results reinforce the importance of customer loyalty.
Here’s an example they used – in the graph shown below, each store has 100 customers marking $10 purchases per month. The grey store is retaining 5% of these customers each month and the one in pink is retaining about 10%. The store represented by pink grows rapidly because retention is less challenging than direct acquisition.
As you can see, focusing on the customers you already have is beneficial for your marketing costs and also for your revenue. And when you have loyal and happy customers, they’ll recommend you to people they know. Never underestimate word of mouth.
Another important impact existing customers can have is their ability to provide you with reviews online. In an ever-growing technological age, it’s easier than ever to read up on a business online and hear directly from people who have had experience with them.
The Internet and digital tools such as advanced search engines, review sites, price comparison apps, and social media platforms have changed how consumers make purchasing decisions. This is especially true for millennials.
Three out of four millennials participating in a 2015 Medallia survey said they do extensive online research before making a purchase decision, and 50 percent reported that online reviews were the most influential factor driving a recent purchase.
This is consistent with a 2012 Nielsen report showing that online customer reviews are now one of the most trusted sources of brand information, second only to recommendations from friends and family — which also increasingly are delivered online.
Rather than relying on corporate advertising, customers can draw on the experiences of other consumers to predict, with far greater accuracy and certainty, which offerings will meet their needs and which won’t.
But knowing the importance of customer loyalty is only helpful if you are aware of how to inspire this loyalty. Basically, it boils down to one thing: provide your customers with an excellent product and excellent service. If your customers find your business a great place to spend their money then they’ll keep coming back to spend more.
Here are a few tips for inspiring loyalty in your customers:
- Provide high-quality products/services for a reasonable price. This doesn’t mean you have to undersell – it means you should provide the best service you can for what your customers pay, and go above and beyond expectations as much as possible.
- Show your customers you value them. Consider investing in a card or club for your business which gives customers the occasional freebie or discount. Make them feel like not just a customer but a part of your business.
- Listen to your customers. They know best what you’re doing well and what you could do better. Always pay attention to any advice or recommendations given to you.
- Have good customer service. This includes everyone your customers will have contact with: people working in your brick-and-mortar stores, helpline representatives, managers, etc. Make sure you have the right people for the faces of your business.
All in all, generally if you treat your customers well then they’ll do the same. Having a consumer-focused business strategy is the best way to inspire loyalty and keep people coming back for more.
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