An Introduction to Customer Loyalty

By Femto15 Team - June 4, 2020

Customer loyalty is every business's dream, it's the fruit of customer success efforts and strategies. What would a business need more than a stable customer base that doesn't only guarantee future revenue with high lifetime value, but also works as a marketing media, reduces CAC, and supports the business towards scaling fast and steady?

After all, loyal customers can make small businesses big!

What is customer loyalty?

Loyal customers are those who achieved their goals through your business while having a great customer experience, so, they stuck.

They do some actions that indicate they prefer you over competitors, they refer you, they come again and again to buy from you (or subscribe for your SaaS) with their friends and families, they write good reviews about you, they share their great experience with you, they, simply, love you!

The relationship with loyal customers is very personal, they feel they are part of your business and your success leads to theirs.

Why do you need loyal customers?

At his researches about loyalty, Fred Reichheld found out astonishing results that connect growth with loyalty and states that no growth will happen without customer loyalty. Let's look at what he mentioned about that at one of his speeches!

"What really drive growth not anything that you see on the income statement or balance sheet. What drives growth our customers who behave in these four ways: they repurchase, buy more stuff, bring in your good new customers, and take the time to help you get better and build a better relationship.

| Fred Reichheld

You must have got the idea right now, but let's shed more light on the importance of customer loyalty!

  • Reducing CAC (Customer Acquisition Cost), as loyal customers are more likely to give word-of-mouth and bring more customers without your interference.
  • Increasing customer LTV (Life Time Value), as the customer trusts your business, so they put more money into it while knowing it's worth it.

In short, you got more people and more revenue.

Customer loyalty and customer retention

There is a difference between keeping customers and keeping happy, satisfied, and engaged customers who resist competitors and love your brand. The first ones only seek their success through your business while the second ones are willing for your own success as well.

With that said, each loyal customer is a retained one, but not vise versa. Thus, customer retention is the way for customer loyalty as retention is the nurturing stage at which customers convert to be loyal. You need to keep them for the amount of time enough to prove yourself, right?

So, though customer retention metrics don't indicate loyalty, they're a good sign after all. Great work, but keep working on it!

Final words

The way to customer loyalty may seem rough with all customer service, customer experience, and customer success challenges and strategies. But if you know all the aspects that affect it and how to manage them, you can come up with a nice loyalty program that fits you.