Why Is Everybody Talking About Customer Loyalty?

May 1, 2013
min read time
Sam Aparicio
Sam Aparicio
Co-founder & CEO,
Why Is Everybody Talking About Customer Loyalty?

In today’s business world, customer loyalty is more than just a neat idea; in many places it’s becoming an imperative. Many of those who have observed business trends for several decades have seen the idea of customer loyalty get a lot more relevant as new advances in data and analytics drive more informed business strategies, and businesses have started to get a lot more raw information about their customers. In the old days, there was the intuitive understanding that customer loyalty was a “good way of life” that helped the reputation of enterprises that tended to be local and plugged into a community, but these days, there is an additional element to why executives and business leaders see customer loyalty as so important.

Customer Retention

Behind the idea of customer loyalty is the similar but different term “customer retention.” Using the latter, business experts are often looking more at the technical statistics around various kinds of business strategy, including the idea of the relative value of keeping existing customers compared to generating new ones.

With that in mind, there are plenty of business studies that have shown that it’s much cheaper to keep existing customers or clients than it is to acquire new ones. For example, this release from Baxter Strategies Incorporated puts the issue in terms of return on investment, stating that “ROI is up to 10 times higher for investments in customer retention than for the acquisition of new customers.” To put this another way, keeping your established clientele is many times cheaper than going after a new customer base. Most small business leaders who have built a company from the ground up can testify to the work and money that goes into finding new customers, but now there’s a lot of actual statistical data to back up this concept.

Using Customer Loyalty Programs for Customer Retention

Simply put, there is a reason that supermarkets, “big box” department stores and even pet stores are now signing their visitors up for little plastic tags that will track purchase activity and reward money spent with visible incentives, while other kinds of businesses are pushing branded credit cards offering deep discounts. Giving these incentives gives customers a reason to come back to a business, which can pay dividends, again, based on highly sophisticated market research about how to retain a customer. But these kinds of broad-based approaches are not the only ways to keep customers interested; in many smaller or more precise markets, it’s all about communication.

When sales and support take a more personal form, businesses of any size can benefit from adding customer relationship management or CRM software to their toolkits. These kinds of software help provide organized, detailed information on each individual customer, so that businesses can reach out with new information and serve their existing customer base in better, more efficient ways, and perhaps more importantly, in ways that resonate with customers instead of irritating or annoying them. In going after additional business from those who have purchased before, business experts warn companies about simply using any customer loyalty program, rather than crafting one that is carefully designed to work to the firm’s advantage, for example, in this business broadsheet from Deloitte.

Building those precisely calibrated customer loyalty models is one way that enterprises use visual CRM tools to their advantage. The kinds of at-a-glance business intelligence that CRM provides can help staffers to relate to customers better and serve them more efficiently and precisely, which can be its own kind of incentive value – customers who feel appreciated are more likely to stay with a particular vendor, even without a value card saving them a few dollars on this or that product or service. It’s the human touch that’s important to many customers, and that’s part of what CRM provides, for a business model that helps the company to avoid becoming an impersonal, faceless business.

Justin Stoltzfus is a freelance writer covering technology and business solutions at Techopedia, Business Finance Store and Ringio, focusing on emerging trends in IT services.

Ringio is an intelligent business phone software that comes with built-in CRM features. Try it free to explore how it can improve your customer service and retention.


10 tips for top sales performers

See what separates you from the world-class sales leaders and get the short-cut to becoming one.

10 tips for top sales performers

Shared Team Templates

The impact of Shared SMS and Email Templates on sales performance

The use of shared SMS and email templates can significantly enhance sales performance by allowing teams to reach out to more leads in a shorter amount of time and ensuring that every message aligns with the company's branding and communication standards. Furthermore, consistent, professional communication can increase response rates and conversion rates, leading to improved customer engagement and higher sales.

Shared Team Templates


Try out the channels that truly engage

Channels are not created equally. You might discover that one is working better for your prospects or customers than other. We hand-picked channels and their combinations to deliver the percentage of engagement you can close your quota with.