Our pace of life is faster and faster, as the result, business world is constantly in flux, the changes in marketing methods as well as strategies occur every day. They will come and go even faster than you can think. In that continuous changing trend and in the effort to keep business profitability consistent, business owners have allocated more resource to customer retention or in other words, investing in building huge amount of loyal customers. According to the result revealed by Baines and Company, a global business consulting firm, each 5% increase in customer retention will lead to 75% increase in company’s profitability. However, it seems that not all business owners have habit of paying attention to missing opportunities, they still focus on attracting new consumers more. So, in this article, we will give and analyze three main reasons why loyal customer should be a top priority.
The biggest secret in getting retail right is no secret at all
To prove for this statement, let’s see the case study of Simon Tooley, who responsible for launching Michael Kors in Canada. Few years ago, he decided to leave big retail world and launched his own store called Etiket, in the luxury skin care and fragrances segment. Despite of working in so competitive market, he still found his own way and has experienced stellar growth. Simon said that what he achieved all based on the loyalty of his customers as well as favorable relationship built day by day.
Money can’t buy you love
When ecommerce mushrooms, consumers have been empowered more. They are freedom to choose suppliers as well as products they want. And among millions of choices, they will choose the one they trust, trust is important than anything. Trust is earned, not bought, they trust you means they love. Let’s build the trust through embodying consistent attention to customer demands and expectations. You should show them your enthusiasm and knowledge for the products, be the close friends of customers, not just simply a provider.
Using suitable tools
There are a lot of questions around loyal customers such as: who will be the most profitable, communicating them how many times per week, how you can personalize your interactions with them, etc. Not all business owners can find the proper answers for those questions because of lacking of time, data and tools, they even do not have professional marketing team to compete others.
Let’s turn back to the case of Etiket, they had a plan to find and produce unique products, deliver world-class service and wonderful experience in-store and online. To get the right data, they use reward program, and then analyze them to get customer insights. Finally, they found that their monthly sale revenue increase 70% in comparison to the previous months.
All in all, loyal customers are always worth more than you think. Loyal customers spend more money, more frequent for you product and the time need to keep less about 7 to 10 times than new ones. In other words, nurturing a loyal customer base makes good business sense and should be an integral part of any retailer’s strategy.