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Discussion in 'Growing and Managing a Business' started by TimB, Jan 9, 2013.
Is it true that customer loyalty is more valuable than fringe sales?
What do you mean by "fringe sales", I'm not familiar with that term?
i think "fringe sales" are what we would consider impulse or passing sales, as opposed to regular customers that buy on a daily basis
Fringe sales are Peripheral sale, Impulsive or random repeat sales!
CUstomer Loyalty is of utmost important for any business. You got to monitor your conversion funnel as number of the returning customers constitute your brand loyal ones. Creating hard core loyal customers through promotional product offering is also a new way out. Try to bring in the switchers to your conversion funnel to as they might serve as word of mouth in a better way to your business.
Yes, a loyal customer is highly valuable for any business. With every new customer there is a customer acquisition cost attached which is almost nill in case of a loayla customer who makes repeated purchases.
A loyal customer if retained properly could refer your business to 10 more customers.
It probably depends on the type of product or service you are selling. If you are selling a novelty or gift type product, impulse purchases are probably most important. If you are selling a branded food product such as bread, repeat purchases stemming from customer loyalty would be much more important.
Depends entirely on the business. If you're selling something your company makes, it helps to have loyal customers who are willing to tell their friends about the brand, their experiences, and buy again from you.
If you're doing like me, I recycle electronics, loyalty isn't as important. Why? Because the products differ widely on a day to day basis and I make nothing myself so there's not much to be loyal about. Chances are you'd find me on a shopping comparison site and the reason you visited is because of price. I rarely see repeat buyers because how often does the same person need a part that I happen to have? Not often... There's been the rare ones in between, like I have one loyal customer that buys every dictaphone I get in stock regardless of condition.
It's always important but the level of important depends on the business. A company like Apple thrives and fails on loyalty, a company that runs thrift stores will probably exist with or without loyal customers.
As per my personal view, the customer loyalty is the measure of the success of the supplier in retaining a long term relationship with the customer. The customer loyalty tends the customer to choose a particular product against the another as per their need and requirement. Loyalty of the customer varies as per the company or the product. And its true that the customer loyalty plays a very significant and prominent role in the growth and development of the business organization.
Customer loyalty is what I value the most because the trust that they have for the business that I run is more precious than anything...
I really value customer loyalty because it shows you how customers love you and your product.
Well I think it does. Something like what happen to Twinkies. Eventhough they are shutting down there are still a lot of brand loyalist that don't want them to shut down.
Most often what is important is the customer's loyalty. For me, I think both are important. Loyal customers will support you and your business even at the hardest times. You can ask your loyal customers to give statements regarding your product. They may also do "word-of-mouth" advertisement with their friends, colleagues and their closest individuals in the neighborhood.
It varies from business to business but in most cases customer loyalty is extremely valuable, so valuable that companies pay a lot of money just to acquire a customer. Think of cable companies or cell phone companies, for example. For those types of companies, their valuation is based almost entirely on what is called "monthly recurring revenues."
Loyalty is also a major goal in the travel and lodging industries. Every airline, hotel chain and car rental company has some sort of loyalty program to encourage customers to continue giving their business to the same company.
Loyalty is equally important for retailers which is why almost all major retailers have some type of customer loyalty program: grocery stores, drug stores, department stores.
Repeat customers are also the backbone of successful service businesses, from accounting firms to law firms to technology consultants. If you had to find a new customer every time you finished a project, you would spend a large portion of your time chasing new business rather than performing billable services.
In any business I have ever been involved in, it costs more to get acquire a new customer than it does to retain an existing customer or sell to an existing customer a second time.
So loyalty and repeat business means everything.
Take any local business and analyze their customer base. You will find that the vast majority of that business' revenue and profits are derived from their most loyal customers. (The 80/20 rule applies. It's called the Pareto principle)
One of the reasons that new business owners struggle so much with their new business is because they don't realize how much value exists in this customer loyalty and repeat business. Instead, they are constantly chasing after new clients and new customers. It is a rookie mistake that pretty much every business owner (every one I have ever known to my knowledge, including me) makes when they start their first business. Once you have been in business for years and someone explains how valuable your existing customers are, it is like a friggin epiphany. You are dumbfounded by how right they are. You look at your numbers and it is a "no-brainer".
I suppose if you sell your products to tourists who are only likely to ever buy from you once, then this might not apply. I suppose there are other businesses where a purchase is a once in a lifetime event. In those cases obviously you are focused on new customers. In the vast majority of businesses, it is going to be cheaper and more profitable to retain customers than it is to go find new ones. That is why every really successful business will (or at least should) fight hard to retain their best customers.
In our business both are important. We have loyal customers that have been with us from the start and those have referred many, many new clients to us. We don't do a lot of advertising so these referral sales are very important.
However, those random sales that come in are also very important and the bulk of our business. What's best is when we take one of these random sales and they become loyal customers and fans of the brand. They then in turn go out and refer more clients that become loyal and so on and so forth.
It's a profitable cycle.