It’s a bit obvious if you really think about it, there are only so many customers in the world so without a certain amount of customer loyalty one will eventually run out of customers. However, there are some stats that make all the difference to me. 83% of customers agree that loyalty programs make them more likely to keep doing business could be the most eye opening and this was made very clear in the airline industry, who doesn’t have a loyalty card with a specific airline. I am going to keep that for another blog, but for now let’s get to the meat of why Customer Loyalty Programs are so important and why they work.

  1. **Attracting new customers is expensive

In fact, 6-7 more expensive to attract new customer than keep existing. This means that if you spent R100 on a Google Adwords CPC or R100 on flyers at a robot or R100 on a Facebook boost to gain a new client it will cost you around 15c to get an existing customer to purchase the same amount again. That is something not to be ignored, in fact if you have a large customer base already and you do the numbers I’m pretty sure you will find out that you spending far too much money on the wrong demographic. Especially when you combine that fact with this one “Only 3% of new visitors that make a first purchase will return to buy again” Ouch that must hurt if you have no budget allocated to current customers!

**2. Referrals are the only way to make money without spending it

I have promoted many products, stores and services for free on social media, everyone has, because we feel they have deserved that recognition. I was never paid by those businesses for that endorsement, and they most likely got additional business for that. If you give your customers something to endorse you about nine times out of ten they will, which means their friends will then most likely become your new clients.

3. **Charge what you are worth

I have never met a business owner who has not looked at their competitors pricing and either not thought or verbalised these words. “We are going to price ourselves out the market if we don’t compete at that rate” As soon as we compete on price we are no longer looking at what we are worth and start a pricing battle to the bottom. If that was the only reason people bought things in life we would have no nice things like Ferrari’s, Gucci handbags, Jimmy Choo shoes and Rolex’s. We as people don’t buy things because they are cheap, but because of how they make us feel and if something makes us feel good we will most likely pay more for it. JoAnna Brandi says it best,” Remember that loyalty is a genuine emotional attachment that occurs when your customers appreciate the value of your product or service, as well as the way you deliver it.” Customers will always pay more for something they are loyal too because of that emotional attachment, and with that extra money you can make your product and customer service even better, growing that customer loyalty base. Oh yea, and you don’t have to stress about what your customers are charging and just focus on you.

**4. Happier people are easier to please

I use to work on a cruise ship as an internet café manager in my past life and at the time Internet on a ship in the middle of the ocean was both a very scarce and expensive offering. The reason for this is that one simply doesn’t lay a moving cable under the ocean to keep a secure and constant connection, we needed to connect via satellite and this was affected by location, weather, seagulls you name it it caused issues with Facebook loading. I found that customers who had bought an internet package and didn’t have access at the time who were near a bar and/or had a cocktail in their hands where much more understanding than the ones without. I obviosity took advantage of this situation by dishing out free drink coupons to customers who had difficulties and thus resolving any tensions. The point of this bizarre story is that if loyal customers who are kept happy will look past any issues they may experience with your business more than those who are not, which means easier to please which means happy you.

**5. Direct Insights from real Customers

Having clients that are loyal means they really get what your business is all about. These are the people that buy from you not because they can but because they want to and they are the most familiar with your day to day store procedures such as check outs, products, services and offerings. Leveraging these customer insights means that you can directly improve your business based off the people who are in the know, you no longer need to guess what works and what doesn’t, you have a fan base, and they will without a shadow of a doubt provide you with honest feedback and thank you for asking. You will never be able to expand your business if you don’t know your customer and what better way to collaborate with your customers on this topic via a loyalty program where you both benefit from the relationship.

And there you have it, the 5 reasons customer loyalty programs work.