It’s not a stretch to say that business and customers are in a kind of symbiotic relationship. A business offers a solution, while a customer supports that solution with their hard-earned money, thus helping the business improve said solution. 

This is where the often nebulous concept of “customer loyalty” comes into play. Clients are free to go wherever they want and to whichever solution provides the most value to them, so any business worth its salt has to invest a sizeable amount of its resources into customer loyalty and retention. Which is exactly what this article will cover.

What is customer loyalty?

Put simply, customer loyalty describes an emotional relationship between a business and a customer. It’s “measured” by the customer’s willingness to engage and repeatedly purchase the products and services of a certain company versus their competitor’s. 

Usually, this is a byproduct of a customer’s positive experience with a business. It creates trust between the customer and the business which, in turn, increases the likelihood that they’ll go to them first before considering other alternatives. 

Why is customer loyalty so important?

Here’s a number for you: loyal customers spend 67% more on products and services than new customers. 

But the benefits of investing in customer retention/loyalty go beyond just vanity numbers. Customer retention is a vital indicator of a company’s health and long-term viability. 

Let’s quickly go over a few reasons why customer loyalty is important:

  • Gain valuable insights/feedback. More often than not, it’s your loyal customers who respond to surveys and answer to your calls for feedback. This is the group that will allow you to get more Amazon reviews for your products (if you are selling there). This is because, being loyal customers, it’s safe to assume that they’re heavy users who know your product inside out and consequently, are able to offer more qualitative feedback than casual customers.
  • Creates brand ambassadors. Also known as “word of mouth marketing” or “a marketer’s dream come true”. Having brand ambassadors is one of the best indicators that you’re doing things right, because it basically amounts to happy customers spreading the word about your brand to their friends, organically. Or even on social media — the bigger their following, the better. The best thing about it? It’s free.
  • Drives repeat business. This brings us full circle to the beginning of this article — happy customers are more likely to keep coming back to your business and try out new products. This may go without saying, but many businesses focus too much on bringing in new customers to the detriment of the customers they already have. So it is always a good idea to start by answering  the WIIFM (what is in it for me?) fof your customer  (

What drives customer loyalty?

  • Factors about product and services

It is the main driving factor through which an organization differentiates between its products and services. It further helps in reducing the influence of market competition on the customers. Secondly, if a customer is offered multiple options in terms of products, the relationship grows, thus increasing loyalty. 

As the customer remains loyal towards one brand, it is easier for the business to retain loyalty for a range of the same brand. 

What’s the quality of interactions your customers have with your company? From the first time they interact with someone from your team (maybe even before they’re a customer), to the 7th support request they send your way—do you make your customers jump through hoops and make them answer the same questions each time? Or do you track your customer data so that the members of your team have the context they need to provide your customers with a great experience, feel valued, and understood? 

This is why a strong CRM implementation is crucial—it’ll provide you with all the insights and project charts your team needs at the click of a mouse. What’s more, it can help you identify opportunities to service the customer better, increase loyalty and drive more repeat sales and referrals.

  • Customer attitude

Attitude is another factor that plays a pivotal role in retaining a loyal customer. A customer will stick to a particular brand because of the emotional or sentimental attachment. This kind of customer attitude towards a brand is challenging to break; thus, loyalty enhances. 

The other kind of attitude is the rational one, where a customer buys a product or service rationally. It involves a certain amount of work and research done by customers before making a purchase decision.

Are you a satisfied or loyal customer?

Customer satisfaction is defined as the measure of needs or desires fulfilled based on customer expectations. Any business will treat the customer as the king of the market and thus keep the customer satisfied. The more customer satisfaction, the more will be a healthy relationship with the customer. 

Customer satisfaction is a part of the customer’s experience based on the supplier’s behavior. Any business organization or company needs to communicate with customers regularly to enhance customer satisfaction. 

Let us take a look at the next section that throws some light on customer satisfaction and loyalty. 

How are customer satisfaction and loyalty linked?

Many businesses assume that if a customer is satisfied, they are also loyal. In reality, it purely depends on the customer’s level of satisfaction, with loyalty being a byproduct of that.

The factors mentioned below will help you to get a better understanding of how customer satisfaction and loyalty are linked.

  • Satisfied customer, but not a loyal customer

As a customer, you can become satisfied with the product or service you have purchased, but you may not become loyal to the brand. That’s because the typical customer will try to squeeze as many benefits as possible out of the product — and if a better option presents itself, they will jump ship.  

  • Not satisfied, but a loyal customer

In this scenario, a customer is loyal to the company but unsatisfied with their products. 

This section deserves an article of its own, as there are many reasons why a customer would stick with the same company despite being disappointed by their output. One of these reasons could be related to what is known as the “sunk cost fallacy” — which basically describes our (inherently human) tendency to  “get our money’s worth” after making an uninspired investment, be it through our money, time or effort. Sunk cost fallacy is a real phenomenon that may lead some people to stick to a particular brand or line of products, even though they’ve long served their purpose or they don’t offer value anymore. 

This is a symptom of impaired decision making and you can expect loyalty from this type of customer to quickly fade away. 

How do businesses track loyalty?

  • According to time 

The time tracking method takes into consideration the loyalty trends of customers. In this sense, the organization prepares a graph that shows the product purchase of a customer and the time gap as they lose interest in the subsequent purchase. 

If the graph shows that the organization is losing the customer, some corrective measures can be taken to retain the customer. To help you gather ideas, you can create a survey or questionnaire asking the customer for feedback using an online form builder.  If this works, the organization sees an increase in loyalty. Now, the customer will be more unlikely to switch to a competitor.

This method cannot be used as an accurate indicator for tracking the loyalty of the customer. However, the data may not be 100% precise, which can lead to loyalty variation.

  • According to the value matrix

In this case, loyalty is tracked using matrix quadrants, wherein a service judges the customer based on values. Customer values can relate to neglected, premium, or pitfall. If loyalty shifts from neglected to premium, then it is a good sign that loyalty is intact. However, if it goes from premium to pitfall, it indicates a downfall in loyalty. 

If this scenario occurs, the customer would probably divert from one business to another. It’s a good wakeup call that it might be time for the service to take action in order to retain the customer. 

What is the most direct cause of customer loyalty

There is no one single thing that can be definitely stated to increase customer loyalty, but the following can be used as a starting point:

  • The business provides excellent support to customers.
  • Enables customers to make repeat purchases
  • Acknowledges the customer by anticipating their needs based on profile.
  • The service offers a loyalty program exclusively for long-time customers.
  • Using new technologies that improve the way customers interact with the brand. For instance, making it easier to leave a Google review for the business.
  • Connecting with customers directly and organically via social media. In fact, maintaining a consistent social media presence is key to connecting with your customers long-term. Using a social media scheduling tool for platforms such as Instagram or Twitter will do wonders.

Why is the loyalty that results from building relationships so important?

Businesses don’t earn profits with their activities done in the competitive market. It is the customer base through which the business thrives. Thus building relationships is important to raising customer loyalty. 

It all depends on the transparency a business keeps to build trust and confidence among the customers. Secondly, a human sales approach works best as opposed to a more business-like approach. as this generates leads that help the company stand out in the market.

Wrap up

That’s a wrap on this piece about customer loyalty. The main takeaway is that businesses should focus on raising customer loyalty and retention as much as on bringing in new business. Long-time customers may be the harshest critics, but they can also be a great source of insights that businesses can tap into to expand and improve their products. 

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