If your business has been in operation for a some time now, it would be safe to assume that a portion of your customers are now loyal to your business. In the context of your marketing strategy, this information becomes important when you reach the point where you need to make the following decision.
“Do I focus on keeping the customers that I already have or do I focus on attracting new customers?”
The intuitive response is the latter. In fact, over 63% of marketers believe acquiring new customers is the most important advertising goal (Fivestar). This logic seems reasonable enough. The more customers you have, the more money you will make, right? The power of loyalty marketing suggests otherwise.
According to a recent Fivestar study. About 20% of your customers are what would be considered ‘loyal’ (meaning that they have visited more than 10 times). This seemingly small proportion is responsible for 80% of your business’s total revenue. Yes, that is correct. 20% of your customers drive 80% of your business. This massive contribution is incredibly vital to your business’ success and is a game changer in terms of whom you should be targeting.
A common way that many businesses target their loyal customers is through Loyalty programmes.
Loyalty programmes are structured marketing efforts that reward, and therefore encourage, loyal buying behaviour (behaviour that is potentially beneficial to the business). A loyalty program may give a customer advanced access to new products, special sales coupons or free merchandise. Customers typically register their personal information with the company and are given a unique identifier, such as a numerical ID or membership card, and use that identifier when making a purchase.
When creating a loyalty programme, it is important to do something that suits your business specifically. Look into who your customers are, what their needs are and cater to those details. For example, if your business sells gardening tools, there is no use making a deal where if you buy one lawnmower, “you get 30% off your second lawnmower.” This product deal does not cater to the customer’s desires. They won’t buy more than one lawnmower at a time, so they aren’t being “rewarded” at all for being loyal.
Some interesting facts about loyalty marketing:
- 48% of consumers say that it’s when they make their first purchase or begin service is the most critical time to gain their loyalty (ClickFox 2012 Brand Loyalty Survey.)
- In a brand loyalty survey, 88% of respondents indicated that quality is a key factor in their decision to remain loyal to a brand and 72% identified customer service as a top priority.
- Up to 15% of a business’s most loyal customers account for 55-70% of the company’s total sales
When creating your next marketing plan, it is worth considering implementing a loyalty programme to target your loyal customers. Attracting new customers should not be neglected, but focusing on loyal customers will provide a secure base for future revenue-seeking endeavours.
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