Customer Churn & Retention

What is Customer Loyalty?


Want to know what keeps customers coming back to successful businesses? Here’s the low-down on customer loyalty.

Customer loyalty is an ongoing positive relationship between a customer and a business. It’s what drives repeat purchases and prompts existing customers to choose your company over a competitor offering similar benefits.

One way to look at loyalty is in the context of brand. People offer loyalty to a brand because they associate it with a positive experience, such as great customer service, feeling connected to brand values and ideals, or consistently high product quality.

It’s not about an individual product or service – loyalty happens as a result of multiple positive interactions that build up a feeling of trust over time. It also doesn’t mean that every interaction has to be perfect. Customer loyalty can withstand a few negatives, although too many will break down the strength of the connection.

Why is customer loyalty important?

There are a lot of stats circulating about the exact figure, but most experts agree that the effort of keeping a customer is substantially less than the effort of acquiring a new one. Why would you spend extra money to make a sale if you didn’t have to? This alone is a good reason to prioritize customer relationships and look at ways of nurturing them through your customer experience, marketing and customer loyalty programs.

Customer loyalty isn’t just about repeat business, though. Beyond reaching for their credit cards, loyal customers can boost your business in other ways. Whether you think of them as brand champions, Net Promoters or heroes of word-of-mouth marketing, your happy customers all have the potential to bring more business to your door. That may be by sharing their positive opinions about you on social media, leaving positive reviews or simply telling their friends and family.
Finally, many businesses report that loyal customers tend to spend more, and be less sensitive on price when they shop with a brand they have loyalty towards. And when there’s high customer satisfaction, you can expect a lighter load on your support and customer service teams too.

Customer loyalty over time

We’ve talked about customers being loyal, but in fact loyalty isn’t an on-or-off, yes-or-no thing. Some people will have stronger loyalty to your business than others. They may be strongly loyal at a certain point and become less so (or conversely, start off neutral and develop loyalty). You might notice that loyalty shows up in their purchasing patterns, but doesn’t lead to related behaviors like recommendations, referrals or positive reviews.

Because of its power and its complexity, it’s important to measure customer loyalty over time, using a range of metrics that capture the entire customer journey through business data and customer feedback. That way, you can understand which parts of your customer base should be your priority, what drives loyal behaviors, and how you can encourage customer loyalty towards your company. That’s true whether you’re a multi-national corporation or a small business – knowledge and insight is the cornerstone of building customer loyalty.

Want to learn more about how to increase customer loyalty and boost customer retention? Dig deeper with our guides.

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