Every business aims to build strong and lasting relationships with its customers. They focus on building a community that is aligned with their ideas, values, and methods. Meanwhile, the markets are growing larger with multiple products and services available to customers. Today, there are more than enough options for customers to invest their time and effort in purchasing any product or service. Therefore, it becomes imperative for brands to devise mechanisms to have a competitive edge.
How do some companies manage to keep their consumers in this ever-growing market of brands? This is where customer loyalty comes into being.
Let’s go through the five important reasons why building customer relationships is important.
Why is it important to build customer loyalty?
These are the core reasons why it is important to maintain and build customer loyalty and a few facts on how it helps businesses.
When you build customer relationships and stay on their radar constantly, the customer will likely seek your product or service again. Loyalty programs help is constantly interacting with the brand with the help of games and referrals that in return help them gain points that can be redeemed.
According to the book Marketing Metrics, businesses have a 60 to 70% chance of selling to an existing customer while the probability of selling to a new prospect is only 5% to 20%. It’s easier to retain customers than get new ones. When it comes to your time and the company’s time, I think it’s better to engage existing customers first.
The most effective way to grow your business is not to lose your customers. When a brand retains its customer base, it has the potential to double or even triple its growth rate. Stats have proved that a brand loses between 20 to 80 % of its customers because of poor customer relationships.
One of the best practices of a long-term thinking company is following up with their customers after every sale. They engage with their customers and hence see continual growth in customer loyalty.
Save customer acquisition costs
According to research done by Bain & Company, “increasing customer retention rates by 5% increases profits by 25% to 95%”. Nurturing existing customers is more effective than targeting new customers. Long-term vision companies save money by getting repeat business from existing customers. It also benefits from referrals as happy customers spread the word to others.
“The first rule of any business is to retain customers and build a loyal relationship with them, thereby avoiding customer acquisition costs. It’s a well-established fact that 44% of companies have a greater focus on customer acquisition vs. 18% that focus on retention. Also, only 40% of companies and 30% of agencies indeed have an equal focus on acquisition and retention.” (Source)
Positive word of mouth
Customers become involved in your success when they are treated right. They become brand advocates and recommend your brand with positive word of mouth. A brand gains value and more customers with small actions such as a positive review online or a mention on social media.
While maintaining a positive relationship with customers helps in growing your business, it is stated by experts that a dissatisfied customer could tell around 13 people about a terrible service he got from your business. Therefore, you must take great care to monitor customer satisfaction to avoid having a bad reputation on the streets.
5. Build an emotional connection
Building an emotional connection with the customers is a long-term vision for any brand. Hence it is a continuous practice of small and large businesses to emotionally connect with their customers and increase brand loyalty.
Businesses that perceive the importance of building customer relationships develop an emotional connection towards them and retain them for a long time.
Brand loyalty and customer relationships are integral parts of growing your business that go in tandem with one another. Continuous customer engagement allows you to know what they are seeking and how a brand can accommodate their wants and needs. Once you have a happy customer, they help in promoting your brand.
A perfect loyalty program analyzes your customer base and provides you with the necessary tools that help in maintaining and growing your business.
Reach us at firstname.lastname@example.org to start your loyalty journey with Unifynd.