The Advantages of Customer Loyalty

There are a plethora of courses available to entrepreneurs purporting to teach them how to acquire new customers (ie sales). But there is very little training available for people that want to learn how to retain the customers they have already got, and help them to build up long-term customer loyalty. 

This is very strange because customer retention is far more important for the long-term success of a business than customer acquisition. There is no point in winning new customers if you can't subsequently retain them!!

I have had a think about the reasons why customer retention is more important than customer acquisition, and I have come up with my Top 10 reasons why it is so important.

(NB: all of these reasons are supported by statistics and hard academic research. Please let me know if you'd like more details).

1. Acquiring a new customer costs a lot more than retaining an existing one. For example, academic research suggests that in some areas (such as insurance) it can take 5 years for the seller just to reach break-even point on a new customer.
2. Loyal customers tend to negotiate less on price.
3. Loyal customers are more likely to provide word-of-mouth advertising and new business referrals.
4. Loyal customers are more likely to buy additional products with less marketing effort.
5. Loyal customers can help you with market research.
6. Loyal customers often provide ideas for product innovations.
7. Loyal customers often place similar repeat orders, and therefore take less effort to serve.
8. Loyal customers understand the workings of your company, so they make fewer demands on your employee's time.
9. Loyal customers are more forgiving when things do go wrong.
10. If they experience a problem, loyal customers will give you more time to make amends, rather than just asking for a refund and finding a different supplier.