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Friday Five: 5 Reasons Why Customer Loyalty Matters


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blog_brand_loyalty In recognition of International Customer Loyalty Month, today’s Friday Five provides tips and tactics to ensure your business leverages customer loyalty to the fullest. Last week’s post, 5 Tips for Creating Customer Loyalty For Your Business, provided actionable steps any business can take to jump-start a thriving customer loyalty strategy. Today I share five reasons why your business should care about customer loyalty:

1) The 80-20 Rule

The 80-20 rule simply states that 80 percent of business comes from 20 percent of customers. This rule is widely accepted amongst businesses of all shapes and sizes – generally, a small group of your customers are generating the bulk of your revenue. Celebrating, acknowledging and rewarding these 20 percent help to ensure they continue to show loyalty to your business.

2) Word-of-Mouth Marketing

To quote Bonnie Raitt, “Let’s Give Them Something To Talk About”! Every business hopes to capture the attention of new customers, and what better way than word-of-mouth-marketing? With a strong loyalty program, you give customers something very specific to talk about. When a customer is treated as a VIP, they tend to want to tell everyone. “I got a free cup of coffee today,” “RingCentral sent me a package with a ton of cool swag,” etc. If your loyalty program is fun, engaging and rewarding, you’re sure to get people to talk about it!

3) Customer Retention

Loyal customers tend to stick around through the good times and the bad. Many companies focus on getting new customers, but keeping those customers you’ve already done business with is imperative. A loyalty program ensures your business continues to focus on the customers who continue to transact with you. (More on how to calculate your customer retention rate here.)

4) Invested Customers

Loyal customers care about more than just transactions, however. They want to see you succeed and genuinely care about how both you and your business are doing. Your loyal customers can provide honest and constructive feedback and look out for you during a crisis. They share success stories and provide useful referrals. Loyal customers are on your side!

5) A Competitive Edge

If your competition has failed to implement a customer loyalty program, you’ve got a serious competitive edge. With a strong loyalty program, you’ll make it easy for consumers to select you over businesses that do not reward and acknowledge their loyal customers. People choose to do business with those who appreciate them, listen to them and value their business.

Why does customer loyalty matter to your business?

Originally published Apr 12, 2013, updated Dec 30, 2022

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