The Benefits of Customer Loyalty

When it comes to customer loyalty, there are obvious benefits – like making more money and increasing advertising conversion rates – but there are also a few more hidden, yet equally important benefits that businesses need to be aware of.

Brand Ambassadors

Many marketers are familiar with the concept of paid, owned, and earned media. While paid 

Many traditional marketers still only associate the third type – earned media – with public relation campaigns, as part of which they hope to increase brand exposure by trying to get brand-related stories picked up by the mainstream (e.g. TV commercials, PPC-based search engine marketing, promoted social posts) can help in raising general brand awareness, owned media (social media listings, YouTube channels, owned websites, as well as original branded content like videos, articles, or podcasts) can be instrumental in establishing a relationship with your customer base.

21st century marketers, however, know that with the social media revolution, a whole new level of earned media can be reached if you are smart enough to build customer loyalty not only among your general customer base, but especially with those who are considered social influencers – people with a big following and an impact on public opinion.

These influencers come with their own “micro-customer base,” which you can tap into if you are able to build trust and loyalty with the person the followers are looking up to.

What is important to understand in regards to the benefits of loyalty is that simply paying an influencer to endorse you would not have the same effect as doing everything you can to turn an influencer personality into an actual customer, who then becomes a passionate brand ambassador for you.

This can be achieved either by humbly approaching and offering free products to influencers who don’t know about you, or by seeking out influencers who might already be loyal to your brand, but have not been able to build a direct relationship with you or received the tools to share your message in an exclusive way.

Word of Mouth

customer loyalty

Of course you won’t be able to build as close a relationship with every single customer as you would with a brand ambassador. Working hard on establishing loyalty among your broader customer base is just as important, though, as it will eventually turn into word of mouth that will take on a life of its own.

The benefit of creating loyal customers and providing them with enough ammunition to share their experience with the world – such as exclusive content, promotions, or early product releases – are the resulting conversations that will happen both on- and offline.

There is nothing more valuable than a direct referral, because no amount of PPC or other forms of advertising will ever be able to replace your best friend’s recommendation of a product or service.

The best part? It costs you nothing and chances are that a customer who comes to you through a referral will also turn into a loyal customer and continue the snowball effect of word of mouth while allowing you to reduce your marketing spend.


Pricingcustomer satisfaction

One of the little known benefits of building and maintaining loyal customers is that, at a certain point, they will develop a level of immunity to your pricing that can help you set higher standards without losing customers.

Apple is a great example for this phenomenon. Even though their computers and mobile devices have continuously increased in prices, their customer base not only continued to stay loyal to them, but because of the perceived higher value of the product became even more passionate about the brand.

From a business and revenue perspective, this is undoubtedly one of the biggest benefits of customer loyalty.

Forecast Accuracy

Another hidden benefit of having loyal customers is that, over time, you will be able to make more accurate sales forecasts. This is one of the biggest challenges new businesses face when starting out; there is simply not enough data to accurately predict how many people will actually end up paying for a product or service.

Once you are able to establish a loyal customer base, though, it will be much easier to collect data and measure behavioral patterns of returning customers and their repetitive habits.

These increasingly accurate financial projections will also allow you to reduce risk in regards to cash flow, inventory management, and investment into the development of new products and services.

As you can see, there are many benefits to customer loyalty. In fact, it can make your entire business operation more efficient and effective.


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