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What is Customer Loyalty

What is Customer Loyalty

| On 05, Jun 2014

Defining customer loyalty can differ based on perception, but what most of them neglect to perceive is that loyalty goes hand in hand with emotions. Customer loyalty is the output of consistent affirmative emotional experience and physical attribute based satisfaction which is directly contingent upon the products and services rendered by the organization or vendor. This customer loyalty is of integral significance to the purveyor as it not only builds an enduring relationship between them, but also increases the sales profoundly. Understanding the needs of the customer, so that he or she feels more inclined towards procuring goods and services from you again is the most elementary step in the process of acquiring customer loyalty.

Promotion of Customer Loyalty

custLoyalitySmlBefore the advent of any demarche, one has to think about the reason behind the initiative. Similarly, before we come to building customer loyalty, one has to wonder what the sine qua non is. Besides the motive of profit, customer loyalty is built for psychological, contractual and functional reasons. Generally, the customers develop loyalty not for the organization they’re purchasing from but the person working for the company who’s rendering the products to the customer. The certitude that people develop loyalty for another person can be catalogued as a psychological reason. Technical and functional reasons are the foundation of customer loyalty as a commutation in the adopted technical procedures can cause a massive effect on the customer’s loyalty to the services and goods rendered. And a contractual reason for the customer to portray loyalty exists if the customer is bound to the organization for a certain period of time due to statutory agreement or for legal reasons. These are the main reasons why a customer might display loyalty for any business organizations or ventures and development in these arenas respectively can help alleviate the level of allegiance between the customer and the vendor.

Building customer loyalty for small-scale businesses

The golden rule of fabricating customer loyalty is to acknowledge the fact that existing customers drive small scale businesses. In proportion to recent BIA survey, more than sixty percent of small business organizations now generate the majority of their annual revenue from repeat customers rather than new ones. The weight of this is reflected on how Small Business organizations spend their time and money. It is observed that sixty two percent of the small business organizations disburse the preponderance of their annual budget to perpetuate existing customers with less than half going to acquisition of new customer base. Prominent research asserts that procuring new customers is more exorbitant and less lucrative than repeat business. Another factor that can be used to establish customer loyalty is that existing customers can be leveraged to gain new customers, lowering the overall cost of customer acquisition. A loyal existing customer can be a brand champion and an indispensable source of new revenue. Existing customers that have an affinity with the brand can be easily used to up-sell and cross-sell. Also repeat customers are likely to refer to their family and friends to a business which again helps increase the customer database. Before leaping to the adroit prosecution of any customer loyalty programs, the small business organization should start with thinking about the desired outcome of the program in mind. Definition of the goals and achievements expected from a customer loyalty program is the first step. The next step is the determination of the eligible audience for the loyalty program, upside of which is that business would be rewarding the ideal buying behaviour and subsequently driving more of it. And at the end of the day, a business does not want to be “out of sight, out of min” from existing customers so its of chief importance to remain visible with consistent and relevant communications. Businesses should target their communications to their customers’ interests and preferences and when done in the right manner, these businesses have a tremendous opportunity to increment the value of their business through existing and new customers.


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