Most businesses today are so much obsessed with new client acquisition. While there is nothing wrong with this, it is without a doubt that it will cost your company six times more money and resources acquiring a new customer as opposed to retaining one. For a business to enjoy accelerated growth on its goals and objectives, it needs to pay much attention to customer retention and one of the best ways is by building the loyalty of a customer.
Generally, client loyalty can be defined as the tendency by a customer to buy your business goods over comparable ones in the market. Customer loyalty is crucial to the success of any business, and it is for this reason that most businesses have resorted to measuring the effectiveness of their customer loyalty. The following is a brief overview on how to measure your customer loyalty and its effectiveness to the business.
Why is customer loyalty important to your business?
You will spend five times less if you will focus on the customer loyalty (means on customer retention which saves your existing customers), then on attracting new one (means customer acquisition). Focus on customer retention will help you to stick out from the crowd.
Whether you run a local cereal shop or an international law consulting firm, you need loyal customers in order for your business to thrive. The following are some of the reasons why you need to focus your marketing strategies to your regular customers too.
- Customer loyalty protects you from competition
One of the greatest benefits of having a strong customer loyalty is that it makes you immune to the market competition. This is practically good in markets where there is a crowd of a particular product or service you are trying to supply.
- Customer loyalty leads to repeat business
In order to build loyalty, you need to first build a relationship with your clients. Once you have established your brand as a choice, your customers will be able to trust in your services thus prioritizing your business and products over your competitors. One of the marketing strategies that can help you achieve this with ease is B2B marketing.
How to measure customer loyalty?
To maximize your sales revenues, you need to know how to calculate your loyalty figures. There are quite a number of ways of doing so including:
- The share of wallet approach. While this is a commonly overlooked method, it is one of the best ways of measuring your customer loyalty. This is calculated as; customer spend / customer category spend.
- Sales per customer. This is a simpler approach to calculate your customer’s loyalty. You can derive it by dividing your revenue figures by the number of your customers. This calculation helps you appreciate the trends in customer segment.
- Customer Lifetime Value (CLV). CLV is a very useful indicator of customer loyalty and one that helps you trace your progress over a lengthy period. It is a simple calculation that involves; (average transaction value X the average number of times a customer transacts before lapsing) – your cost per acquisition
- Visit frequency. A simple calculation that involves observing the number of customers visiting your premises.
Customer loyalty is without a doubt one of the easiest ways to achieving success in your business.
While this is true, you need to find a partner that will help you evaluate your customer loyalty to ensure you get the most out of it.
Consider WOW24-7 for this matter.
