The Value of Customer Loyalty

There are few things as important to the long terms success of a business as the loyalty of existing customers.  Consider the following:

  • It is more costly to get a new customer than to retain an existing one.
  • Existing customers are more profitable than new ones because the costs of dealing with that customer are known and usually less – credit risk, shipping preferences, less time required to process orders.
  • Existing customers are usually the best prospects for sales of additional products or services.
  • Existing customers are the best source of qualified referrals.
  • It is usually more enjoyable to work with an existing customer because of the existing relationship.

Why do customers leave? inline-780ef20639dc47dd81b4995b98812263
Most people do not relish change, especially change just for the sake of change.  This is good news in terms of maintaining customer relationships.  Unless something bad happens, most customers are likely to stay customers.  Customers are usually lost as a result of one of two circumstances:

  • Customer dissatisfaction due to poor quality product or service.
  • A competitor convinces your customer to leave and switch their business.

While both of these types of events are unpleasant, the first is often the result of a problem that will take time and money to rectify.  The second can be the most frustrating and easiest to prevent.  Many times, it is not the products or the sales skills of your competitor, but that your competitor makes contact with your customer at the right time.

Here are some situations that can put your customer relationships at risk and some ideas of how to prevent losing customers.

Customer is unaware of one of your products that will fill his needs
Often, once an initial sale is made, there is little effort to further explore other needs the customer may have.  The time just after the initial sales is an ideal time to ask if there are other needs that may be met with your products.

Customer needs change and is unaware you have products/services that would fill need
Your customers’ wants and needs are constantly changing.  Try to keep informed about what your customers are doing so you can identify how you can sell additional products/services to respond to their changing businesses.  A communication program such as newsletters or just frequent updates can keep customers informed of your products and reinforce your presence.

Customer feels neglected and taken for granted
Even if the usual contact is through the sales group, a contact from your senior management (call, letter, visit, email, etc.) demonstrates the value you place on their business and their relationship with you.

Nurturing customer loyalty can result in immediate and long-term benefits.  With the competitive environment that exists for most businesses, it is critical that working to strengthen customer relationships be a high priority.  As relationships get stronger, your customers can not only be the source of continued business, but also increased business and new customer referrals.

customer appreciation day

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