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As a business owner, you might have asked yourself multiple times,” Whether rewarding my customers will lead to higher returns for my business?”. The answer is YES! Customer loyalty is not a new concept.
Many studies have shown that well-executed loyalty programs yield higher profit margins in ambitious markets.
Why do you think corporations like McDonald’s, KFC, Starbucks, and Subway invest millions in customer loyalty programs?
Thus, it’s better to invest in customer loyalty programs than in acquiring new customers, and listed below are the reasons why:
New customers cost more
Acquiring new customers costs 6x-8x more than clinging on to current customers. Many companies spend thousands of dollars monthly to reach new customers.
The issue is that advertising is expensive, and a positive return on investment is not guaranteed.
These ads don’t necessarily bring in new customers; the advertisement costs cut profit margins.
Increase revenue
Studies suggest that repeat customers spend up to 70% more money on products and services when compared to first-time customers. More spending is due to the trust that customers have developed over time.
Customers who like and trust the brand’s quality are more likely to spend in higher quantities.
Lead the competition
Every purchase made with you is a purchase not made with your competitor. Keeping loyal customers happy with your service yields more money on your brand. Resulting in competitors’ loss of potential revenue.
So, please continue to provide your customers with a service that keeps bringing them back to your business.
Gain valuable feedback
Most loyal customers usually don’t mind filling in questionnaires and leaving feedback.
These customers don’t mind leaving reviews that can be later utilized into actionable marketing tactics as they prefer your brand and want you to improve.