Loyalty Blogs

Why Focusing on Customer Loyalty is More Important Than Chasing New Leads?

  • Posted on December 7, 2023 by Robert
  • Reading time about 6 minutes
customer loyalty

The infamous crossroads where every business owner stands is whether to spend more on lead generation or build loyalty to retain old customers. It is always more tempting to spend more on attracting new customers through different marketing efforts. Reason? market pressure and competition. Just because your competitors have set a huge purse for marketing campaigns, you need not be jumping on the bandwagon.

Let’s face it. Customer acquisition is expensive. Attracting, engaging, and acquiring new customers takes time and money. Customer retention, on the other hand, benefits businesses in two ways. By investing in a customer loyalty software solution, you can keep your existing customers happy and ensure repeat business. If you think about it, you are saving money by not spending it on customer acquisition.

This blog will discuss the reasons why you must invest more in customer loyalty than marketing. Let’s get started.

Customer Loyalty Ensures Repeat Business.

If you ask us what’s more beneficial for a business—new customers or repeated business—we would say both are equally important. Let’s break it down for you. What’s more crucial for your business depends on your business objectives. If you are looking for stability and cost-effectiveness now, customer retention should be your priority.

Talking about the role of running an effective customer loyalty program, such initiatives are quite successful in retaining customers. Happy customers are repeat customers. That means you don’t have to put a lot of money into attracting new customers.

Repeated customers are the best brand advocates and become brand ambassadors.

Repeated customers are reliable revenue streams for your business.

Repeated customers add up to the overall Customer Lifetime Value (CLV).

Customer Loyalty Keeps the Marketing Costs Low.

You don’t need aggressive marketing but reliable customer loyalty programs or maybe a robust SaaS loyalty platform to increase revenue. Always remember not to oversell your loyal base. New businesses usually set aside big amounts for marketing to attract new customers. That makes sense. There’s hardly any brand narrative or loyalty at that juncture. For existing businesses that have been there for quite some time, investing in customer loyalty can significantly lower the marketing cost.

It’s easy to bring a happy customer back to the store. Some discounts, coupons, and rewards would do the job quite efficiently. On the other hand, even after spending so much on marketing, there’s no guaranteed return on investment.

Lower marketing costs leave scope for greater profit margins.

Reduced marketing costs lead to improved ROI.

A lower marketing budget offers greater financial flexibility to businesses.

Loyal Customers Spend More on Average than New Customers.

Did you know existing customers spend 67% more on average than new customers?

One-time buyers get done with your brand after availing themselves of an offer, discount, or festive frenzy. The seasonal rush of new buyers isn’t a new thing. Loyal customers who repeat business with you time and again spend more on average than new customers who may come and go.

Loyal customers offer a higher average transaction value.

There are better cross-selling and upselling opportunities with a loyal customer base.

Loyal customers contribute to a greater CLV.

Loyal Customers Ensure Higher Profits.

When you increase customer retention by 5%, it increases your profits by up to 25%.

The logic is simple yet gets missed by a lot of businesses. Spending more money per visit and making frequent purchases do add to the sales. There are great profit margins with marketing costs within bounds and a small customer acquisition cost.

The efforts it takes to convert happy customers into loyal customers are worth the investment because returns reflect greatly on your business profit.

Higher profit margins offer greater operational efficiency, which means you are keeping more revenue aside rather than losing it to operational costs.

With higher profits, you can invest more in product innovation. With continuous product improvements, you can offer premium pricing for your products.

Customer Loyalty Sets You Apart.

If you are performing great as a business, there must be some other business that might be doing better than you. The question here isn’t about being at the top. It’s more about not being part of the herd. The real MVP is the one that can differentiate itself from other players. Winning customer loyalty does the job for you.

A business that values its customers and rewards them for being loyal has its USP as a customer-driven brand. To top that, brands that are investing in advanced enterprise loyalty management software are redefining customer loyalty.

Customer Loyalty: Present Scenario

Brands that are evolving with time when it comes to offering unique loyalty benefits to customers are benefiting from it the most. A lot has changed since brands rolled out discounts and early access to upcoming sales as part of their loyalty programs. Let’s take a look.

What’s New How It Works

Digital Transformation Businesses are using customer loyalty software solutions for enhanced customer experiences and personalized engagement.

Personalization and CX Focus on tailored offerings, communications, and rewards based on individual customer preferences.

Subscription-based models Growing in popularity with loyalty perks for subscribers, leading to long-term commitments and repeat business.

Social Media Influence Crucial role in building communities, engaging with customers, and leveraging influencers for brand advocacy.

Value-Based Loyalty Programs Shift from traditional point systems to programs offering meaningful benefits, exclusive experiences, and instant rewards.

Data Privacy Concerns Increasing emphasis on transparency and compliance with privacy regulations in customer data use.

Omnichannel Engagement Essential for providing seamless experiences across various channels, including online and offline touchpoints.

Sustainability and CSR Growing interest in brands aligning with values, incorporating sustainability initiatives and ethical practices.

Challenges Due to Global Events Adaptation of loyalty strategies to meet changing customer needs and expectations in the face of global events.

Competitive Landscape Intense competition driving differentiation through customer experience and innovative loyalty programs.

Experience the Difference with a Customer Loyalty Software Solution

Investing in reliable enterprise loyalty management software can streamline loyalty programs for you. Customers are looking for immediate gratification and one-click reward redemption. Loyalty solutions like Novus Loyalty can be a real game-changer. Novus has helped a reputed range of brands digitalize their customer loyalty programs and find a unified platform to roll out different benefits.

Wait no more and book a consultation today to learn more about how Novus Loyalty can help your business.

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