Customers are the lifeline of any business. Undoubtedly new customers are important for the growth of a business, but it is also vital not to ignore prevailing customers. Nowadays, customer retention is at the lead of every company's strategy. There are several effective customer retention techniques, and one of them is - customer loyalty program.
Many people often get confused between customer retention and customer loyalty program. So in this post, we will read about these two programs in detail.
Customer Loyalty Vs Customer Retention
Customer Loyalty is when a customer will not only buy from you again and again but also encourages others to do the same. This results in positive word-of-mouth reviews and quality referrals. Loyal customers not just vouch for you but also serve as advocates for your business.
On the other hand, customer retention means retaining loyal customers over a while. The percentage of Customer Retention is measured by how many customers a company keeps at a specific period of time and the number impacted by the new customers acquired and the number of churned customers.
While both programs share some similarities, but when defining customers, they can't be used conversely.
Importance of Customer Loyalty and Customer Retention
According to a Garter Group study, 20% of the existing customer base generates 80% of the business profit. It means a small rise in customer loyalty can boost your profits dramatically. The buying journey of a customer starts before they directly engage with a brand.
Existing customers can endorse a brand and therefore promote it to their friends through word-of-mouth. According to a report of Accenture, 31% of existing customers like to recommend brands to others. This lessens advertising as well as marketing costs.
Best Practice of Loyalty Program