Customer Loyalty – The Power of Brand Building

by TTF Consultants LLP

In today’s competitive world, acquiring new customers can be expensive for companies. Businesses spend a significant sum on marketing to acquire new customers.

However, one of the smartest and most cost-effective ways to save on the customer acquisition cost is to gain customer loyalty.
Loyal customers not only bring repeated business but also promote the business to their close ones, thereby introducing new customers to the business without it spending as much on marketing for customer acquisition.

Customer Acquisition Cost

Customer acquisition cost is the total cost spent on acquiring a new customer for the business. It includes spends on marketing, sales and advertisements of the products or services. 

It is observed that the cost of acquiring new customers is often higher than the cost of retaining an existing customer. This signifies the value of a business’ existing clientele.
It also highlights why a company should focus on retaining its existing customers whilst acquiring new ones, as this would help the company to build a wider loyal customer base which would eventually reduce the customer acquisition cost.

Why the focus on Loyalty: Benefits of Building Customer Loyalty

Loyal customers possess a built-in brand affinity and therefore repeatedly buy from the brand irrespective of company promotions. This helps the business to optimize their marketing expenses whilst maintaining an ongoing revenue stream, through its strong customer base, built off of brand loyalty.

In addition, satisfied customers share their brand experiences with their family and friends which leads to organic promotion of the brand, wherein the business incurs no real investment for customer acquisition. 

Other than this, Referrals, from happy customers, help in gaining new customers that require very less or no advertising expenses, leading to a reduction in the customer acquisition cost. These satisfied customers also act as a strong marketing tool, providing positive reviews and testimonials about the products and the brand.

Therefore, customer loyalty makes each customer more profitable for the company as both the cost of acquiring new customers and the supplementary promotional expenses reduce, making the company more profitable. 

Tata Group, for example, with its wide range of customer-facing businesses like Tata Motors, Tanishq, Tata Tea and many more, offers consistent customer experience and various brand saving schemes like the Gold Savings Program of Tanishq to build consumer loyalty and ensure long-term success.

Samsung, on the other hand, works more on its customer satisfaction to get repeated customers. This reduces its dependency on paid advertisements. Its innovative range of products encourages users to revisit them and spread their positive feedback to others.

When brands build customer loyalty, they rely more on organic growth through marketing and end up spending less on the paid advertisements.

Building it up: How do we build it up with customer loyalty?

Loyal branding and engaging with the customers on a regular basis build a sense of trust and belonging in the customers. Thus, this approach makes them value the brand and visit it on a regular basis. 

Social media is medium that helps brands to engage with their customers and provides them with insights about new products or offers.

Implementing loyalty programs, for customers, that offer certain benefits like offers, discounts, freebies, etc. encourage repeated purchases from these customers which eventually builds a long-lasting relationship with them.
Let’s consider Beauty Insider Cash, at Sephora, as one such loyalty scheme program introduced to allow customers to gain points on each purchase and redeem these points to get a reasonable discount on their future purchases.

Brand Loyalty builds further when businesses provide personalized experiences to their customers to better engage with them. It is important for businesses to understand customer preferences, as it enables them to tailor their services or products to meet their customers’ requirements. Such customized approaches further enhance the brand equity and make customers appreciate the brand efforts, leading to repeat purchases and thereby creating customer loyalty.

Please note, customer loyalty is not just a customer retention strategy but is a strong marketing tool to reduce Customer Acquisition Costs and ensure sustainable company growth. 
Most businesses can achieve higher profitability by retaining their existing customers and building stronger relationships with them. To sum it up, when we grow a business, it becomes pivotal to have unwavering customer loyalty. Therefore, businesses should focus on initiating loyalty solutions, through client loyalty programs and brand loyalty campaigns, to preserve and enhance their brand trust whilst increasing customer loyalty for their brands.