Why we’re passionate about customer loyalty
Two reasons: It’s a leading indicator of profitability. And it’s the only thing left to talk about. (We’ll explain presently.)
What is customer loyalty? Loyal customers:
- Purchase your products and services again and again over time.
- Increase the volume of their purchases.
- Buy beyond traditional purchases, across available product lines.
- Refer your company’s products and services to others.
- Become immune to the pull of the competition.
- Give your company the benefit of the doubt.
By understanding what makes loyalty happen in your category you can:
- Plan within a leading indicator of profitability.
- Know how to most efficiently sequence initiatives.
- Fight commoditization.
- Leverage competitive strategies to your advantage.
- Enhance your brand’s equity.
- Focus on growth in an increasingly competitive marketplace.
Most importantly, it boosts profits and future revenue streams. For instance:
- An increase in customer loyalty of only 5% can lift lifetime profits per customer by as much as 95%.
- An increase in loyalty of just 2% is, in some sectors, equivalent to a 10% cost reduction.