For a small business, customer loyalty is often the key to expanding and growing. While customer loyalty can help a business grow, it can also help it stay afloat during turbulent economic times. We’ve determined the importance of a loyal customer base and how you can gain returning customers. With these ways to improve customer loyalty, you’ll see a growth in business and revenue.
First Off: What is Customer Loyalty?
Customer loyalty is, essentially, the phenomenon of retaining customers who frequent a business. A loyal customer is someone who returns to a company again and again, giving them repeat business. There are numerous benefits to customer loyalty, including regular sales, good word-of-mouth marketing, and higher profits.
While a small business should always seek to acquire new customers, it is important to retain your current customers: repeat customers on average spend more money than new customers, and it costs a business five times less to retain loyal customers than to seek out new ones. Larger businesses have the benefit of brand awareness, so it is important for small businesses to create customer loyalty to grow their brand and profits as loyal, returning customers spend more money than new customers and drive sales and brand awareness through word-of-mouth.
While it may seem costly to divert funds toward building customer loyalty, it is incredibly worth it. Idea Financial offers lines of credit and term business loans that help small businesses fund their goals to grow.
So, how can a small business build a loyal customer base and reap all the benefits that come with it? Read on to find out.
Build Customer Loyalty in Four Simple Steps
As a small business owner, you recognize the importance of creating loyal customers who frequent your company. So how exactly can you achieve this?
Identify your customer base
Knowing the kind of customers who frequent your business is important when deciding how to create loyalty. Consider their values, wants, and spending habits.
Perhaps one of the most important things to do with your growing business is cultivate trust with your customers. You cannot just expect to have devoted customers; a business must earn customer loyalty. To earn customer loyalty, small businesses must cultivate trust with their customers. One way to do that is to be transparent about prices and business practices. It is imperative to develop solid relationships with your customers through trust. This can be achieved also through positive and helpful customer service interactions.
Emphasize brand values
Consumers are increasingly putting their money where their mouths are. People seek to support businesses that align with their values, which can be anything from political to something as simple as spreading kindness. Identify your brand values and promote them, live by them. This will attract passionate customers who will want to see your company thrive, which in turn encourages them to be loyal to the business.
Create a referral program
One of the previously mentioned benefits of having a loyal customer base is effective word-of-mouth marketing. Word-of-mouth is one of the most helpful forms of marketing; people trust their friends, family, and coworkers to give valuable recommendations. Encourage this act by incentivizing it with a referral program. If a current customer refers a friend or loved one to your business, they should be rewarded with something valuable and personable. Make it desirable but within reason. You don’t want to break the bank for a referral program.
Offer loyalty rewards
Similar to the referral program, a loyalty rewards program incentivizes existing customers to spend more at your business. A robust referral program can also attract new customers. This program can encourage consumers to purchase more in hopes of receiving a desirable reward, such as $5 off their next purchase. A loyalty program can also offer benefits to their dedicated customers who are signed up for the program, such as free shipping. Consider the type of business you have and what benefits and rewards you can offer your repeat customers to give them the best experience possible.
Fund your business
You know you want to create a loyal customer base, but it just feels like another upfront expense. Consider utilizing small business loans or revolving business lines of credit from Idea Financial to finance these goals. Idea Financial offers a speedy application process and you can receive a decision in as little as one business day. With fast access to capital, you can fund your goals to cultivate customer loyalty and grow your business.