6 reasons why building customer loyalty is important

Table of contents

By the end of this blog, you will have a renewed perspective on the various boons of customer loyalty.

For your business to succeed, it is no longer enough to just have a wonderful product or amazing marketing campaigns. What matters now is the holistic experience that a customer has with the brand. This in turn translates to one of the most vital necessities for success which is customer loyalty. Building customer loyalty goes much beyond the obvious advantage of repeat business and increase in sales. Here we’ll take a deeper dive into its extended impact and know the 6 reasons why customer loyalty is important for a business.

1. Improved brand advocacy

Put yourself in your customer’s shoes for a second: If you have a product from a brand that you love, the chances are very high you will not stop talking about it. loyal customers are your most capable and organic channels for word-of-mouth marketing. It is observed that 88% of people are more likely to trust a brand or product through recommendations from family or friends. When loyal customers speak about your brand to their circle, they are perceived as an honest and unbiased source of information. Their words can often be even more convincing than your marketing campaigns. This brings you good quality leads with high purchase intent entirely free of cost.

2. Enhanced social proof

The digital world has its counterpart of the word-of-mouth concept which we all know as “reviews”. Online reviews are a lot more impactful than word-of-mouth due to their widespread visibility on the internet. Happy customers who are loyal to your brand leave better and more detailed reviews about your products. These reviews not only convince others to buy your products but also give a boost to your off-site SEO.

3. Greater effectiveness of ads

It is an established rule that for converting leads, they need to be shown your ads multiple times. However, loyal customers do not require repeated exposure to ads before making a purchase. Their familiarity and recognition of your brand make them inclined to convert much sooner. This increases the prominence of your advertisements which is a favorable factor in ad networks. Thus, cultivating customer loyalty greatly improves your advertising efficiency.

4. More revenue from the same customer

A loyal customer sticks with your brand for long. In many cases, customers have shown loyalty to a brand only to cease due to the brand itself closing down. As their time with you increases, so does the number of products they get from you and their tendency to upgrade. This directly increases an important performance metric known as average order value or AOV. A higher AOV leads to higher values in another important metric called customer lifetime value or CLV. This is expressed as the product of AOV and the number of times a customer has purchased from a brand. A higher AOV and CLV are direct telltale characteristics of good business performance.

5. Reduced expenditures

While logic dictates that the more customers you have, the more money you will make, market trends and statistics are contradicting this. Customer acquisition costs (CAC) are nowadays almost 7 times more than customer retention costs (CRC). This means you spend nearly 7 times more money in the various processes leading to acquiring a new customer compared to what you would in converting an existing customer to a loyal one. CACs are so high in certain industries that they lose money with every new customer they acquire.

6. The culmination: ROI max!

When we summate all the above points, we come to the ultimate positive effect of customer loyalty. Every advantage you get with an increased number of loyal customers points to this: more results at lesser costs. So, all in all, more customer loyalty directly implies more return on investments. The more returns you get with your investment means the more profits you make and thus the more successful you are.

Make the best use of loyalty with a mobile app from Vajro

We’ve established enough as to why loyalty is a very important asset for profitability. The best way to reap its benefits is through a mobile app for your business. Vajro’s mobile app builder goes beyond your conventional loyalty programs and loyalty solutions. Give your customers unforgettable shopping experiences with live selling, personalized discounts, push notifications, and more. Try Vajro for free or book a demo today. 

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