8 Reasons to Keep Your Customers Loyal

With so much emphasis on ROI these days, it can be easy to lose sight of just why you’re in business—to serve customers. And it’s also easy to assume that if you never hear a customer criticize your product or service, everything’s fine.

That’s a huge mistake, says customer service expert JoAnna Brandi. “You may think that because your customers stick around and don’t complain, they are loyal,” she says. “Be careful not to mistake customer inertia for loyalty. Remember that loyalty is a genuine emotional attachment that occurs when your customers appreciate the value of your product or service, as well as the way you deliver it.”

Here are eight benefits that loyal customers bring to your operation, according to Brandi:

(1) They buy more and are often willing to pay more. This creates a steadier cash flow for your business.

(2) They refer others to your company, saving you the marketing and advertising costs of acquiring customers.

(3) They are more forgiving when you make mistakes–even serious ones–especially if you have a system in place that empowers employees to correct errors on the spot. Then loyal customers become even more loyal!

(4) A loyal customer’s endorsement can outstrip the most extravagant marketing efforts. For instance, a low-budget movie can become a blockbuster hit because of positive word-of-mouth (“My Big Fat Greek Wedding”). By the same token, mega-stars and publicity blitzes can’t prevent high-profile films from tanking (“Alexander”). The word on the street is usually more powerful.

(5) Thriving companies with high customer loyalty usually have loyal employees who are genuinely engaged in their work, and loyal employees save you money in a variety of ways. You don’t have to spend money attracting, hiring, and training new staff, and you have knowledgeable people at all levels of the organization serving customers and each other.

(6) Thriving companies with high customer and employee loyalty are generally known to outpace their competitors in innovation. Think Gore-Tex, Southwest Airlines (the 20-minute turnaround), and Progressive Insurance Company. In addition, their cultures support continuous learning.

(7) Loyal customers understand your processes and can offer suggestions for improvement. Their feedback can help with R&D as well as process enhancement efforts.

(8) An increase in customer retention can boost your bottom-line profit by 25% to 100%, depending on your fixed costs.

This article was originally published in 2005 and is frequently updated

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