New vs. Existing Customers – Whose Loyalty is More Valuable?

Posted by Dan Kelly

It’s a competitive marketplace with businesses endlessly fighting for customer share.  The trick to staving off competitors is to make your business stand out and look attractive compared to your competition, which isn’t always easy. Even longstanding customers can be lured away by money-saving offers, so you need to ensure that your offer is more attractive, and a customer loyalty program is the perfect way to do just that.

Regardless of industry sector, most senior managers acknowledge that retaining existing customers is the most profitable and time-efficient way to run a business. Loyal customers provide repeat business, so the more loyal customers you have, the more profitable your business will be.

Establishing loyal customers isn’t necessarily easy, as they will be looking out for the best deal to suit them, so your product or service needs to be positioned carefully to ensure they’ll bite.

Keep Them Coming Back For More

An effective way to maintain customer interest is to offer rewards in exchange for business. This might be awarding points for repeat business on an ongoing basis, or money off when a specified amount is spent. Strategies such as these attract customers and can induce them to spend even more at each transaction.

The customer perceives an added value that makes your offering stand out from the crowd. And if these deals are specifically targeted, then customers are likely to feel singled out and appreciated, which builds an emotional bond between them and your brand, cementing a loyalty that will keep them coming back.

Know your customer

As your customer loyalty program becomes more established, the data collection element will provide valuable information that you can put to work to develop these relationships even further. The more information you can gather, the more targeted your promotions can become, enabling you to anticipate customer needs making you indispensable. If you can pre-empt your customers and make their lives easier then they are highly unlikely to seek out an alternative supplier. Trust is a valuable commodity.

While some decision-makers can be deterred by perceived investment costs, it’s important to recognize that costs are easily balanced by the benefits and return on investment through customer retention and increased customer spending.

The loss of customers to rock-bottom deals with competitors does nothing for a company’s bottom line, and the costs involved with constantly fighting for new customers to replace old ones is prohibitive. Investing in your existing client base to keep them spending with you will boost profits and underpin your business’ stability and turnover.

While the value of existing customers is significant, any business with plans for growth must also attract new customers. Customer loyalty programs can be an extremely appealing perk for potential customers who are deciding where to place their business.

This additional aspect can increase your return on investment as new customers bring fresh revenue, which adds to the profits from your existing, loyal customer base to create a healthy, growing bottom line. And with your loyalty program in place, these new customers should remain committed to your offering, and very likely to share their good experience, creating yet more potential for new business wins in the future.

Buying In

Getting a customer loyalty program up and running is easier and more cost-effective than you might think. The time and financial investment is clearly worthwhile and the implementation process is extremely straightforward. The evolution of digital programs has made it quick and easy, even for smaller companies who don’t have their own team of experts in-house.

We all know how competitive the marketplace is, so whatever you do to stand out and win over more customers is a wise investment. A customer loyalty program can be your greatest asset considering the huge impact it can make.