This Is Why Customer Loyalty Is Important in 2023 [& Beyond]

Whether you have a business or are planning to start one, creating customer loyalty should be at the top of your to-do list. If you're wondering why customer loyalty is important at the beginning, then keep reading.

Regardless of the size or industry of your business, café, or restaurant, customer loyalty is how you build a long-term relationship with your customers.

And loyal customers are the ones who keep your business running. They are people who pop in to your store regularly.

But let's begin at the beginning and answer the question "Why is customer loyalty important for a business?"

What is loyalty?

In the world of business and marketing, loyalty is coming back. It's being loyal to a brand or business and becoming a regular visitor or buyer.

Business owners value loyalty because it helps them grow.

But customers aren't willing to give you their loyalty easily or for free. They want to see what's in it for them.

However, with the growing number of brands in almost every industry, attracting customers and building loyalty is becoming harder.

That is why, loyalty marketing has re-emerged with vigor and why loyalty programs are becoming quite popular now. More brands, large and small, global or local, are investing in loyalty programs.

Companies as large as Starbucks and Sephora have some of the best loyalty programs in the world.

Every brand wants to not only attract customers but also build loyalty and retention.

Why customer loyalty is important

But why are businesses so intent on building loyalty and rushing to create loyalty programs, offer rewards, and retain their customers?

Let's look at some statistics that show why customer loyalty is important for businesses.

• Acquiring a new customer is 5 to 25 times more expensive than retaining a current customer. (Harvard Business Review)

Which begs the question, why don't more businesses focus on customer loyalty and retention?

Of course, businesses and brands that are just starting out would have to invest heavily in customer acquisition. You'd have to acquire customers in order to retain them. But if your business has been running for a year or more, then it's time to focus on building loyalty and retention.

• Brands who don't engage customers are likely to see a 54% drop in loyalty (Fundera)

Although people like to believe that their buying decisions are based on logic, many of those decisions are built on emotions and experiences – especially good ones.

Customer engagement helps brands make that emotional connection with their customers.

Brands that engage with customized messages, ads, experiences, and great customer support throughout the customer journey are able to build loyalty and influence that emotional connection with their customers.

• 70% of happy customers are likely to recommend your brand to friends if you've got a great loyalty program (Bond)

Happy customers are great for business. Not only do they keep coming back, but they will also recommend you to friends, family, and colleagues.

If you're following loyalty program best practices, you can ensure that your customers will be looking forward to visiting your store over others every time they need to shop.

They'll also be recommending it – or referring you – to others, which means more referrals, more customers, and more sales. So it's a win-win.

• Nearly 75% of customers are willing to switch brands if there's a better loyal program (KPMG International)

Well that's competitive! This research from KPMG International means your loyalty program can't just be about collecting points with no rewards in sight.

In fact, you need to tailor and personalize the rewards you have in your customer loyalty program.

"Retailers who are serious about customer centricity need to ensure their loyalty programs are in line with the expectations of their customers. And today's consumers like to interact with an ecosystem that covers payments, fulfilment, social media, etc. as this can drive value, convenience and a positive experience. And that's a platform experience." - KPMG International in its "The Truth about Customer Loyalty" report.

• A 5% increase in customer retention can grow a brand's or store's revenues by 25% to as much as 95%! (Brandongaille)
• Having 12% to 15% loyal customers within your customer base can represent 55% to 70% of your sales. (Brandongaille)

What do these stats show? The better your customer retention efforts and fruits of those efforts, the higher your sales and revenues will be.

The biggest source of revenues for a business is, ultimately, its loyal customers. Those who know you, trust you, and come to you for their needs.

So why is customer loyalty important? Because of this 👆🏼👆🏼👆🏼  

Build loyalty with these rewards program tips

We've established why customer loyalty is important. Now it's time to take it up a notch and show you how to create a successful rewards program that attracts customers and creates loyalty.

1. Understand your customers

Your customers are in different parts of their customer journey. Some don't know you, some are still considering whether they'll buy from you, some are ready to buy but hesitant about your brand, and some are making their first purchase.

And then there are some customers who have been buying from you for months or years. These are your loyal customers.

Your loyalty program should offer different rewards for the different buyer stages each customer is in.

2. Consider a tiered rewards program

In any loyalty program, customers accumulate points, usually by making purchases or taking actions, so they can get rewards.

There are two types of tiered loyalty programs. The first involves leveling up, while the second is about dividing customers into different tiers based on their spending habits. Customers can also rise from one level to another when they spend more.

One of the most popular tiered loyalty programs is Sephora's. Similarly, the Starbucks loyalty program had tiers in the past but because they were confusing for customers, the coffee chain had to remove them.

Both types of tiering offer a unique customer experience, are engaging, and turn customers into loyal followers. And you can create both with Gameball.

3. Provide personalization

In a world where everything is available and, often times, appears the same, customers want personalization.

Providing a personalized experience can come in various forms.

Whether you address customers by their name when they log into your store by sending customized push messages, or send them personalized email notifications, reward them with points or special offers on their birthday, or let them accumulate points with options other than purchases, … all this counts as personalization and customers love it and appreciate it.

Personalization makes all the difference to your customers. It entices them and makes them feel like it's not all just money.

And with Gameball, the opportunities to personalize your customer loyalty program are endless!

4. Engage customers

Brands have to go out of their way to engage with customers.

With Gameball's gamified loyalty program, this engagement process is automated, fun, and personalized.

Using Gameball, you can engage customers with challenges and reward them with badges and points when they complete those challenges.

5. Offer a variety of rewards and redemption options

One of the reasons many customer loyalty programs fail is because they are boring, don't offer benefits or rewards.

That's why one of the loyal program best practices is to offer a variety in how rewards are redeemed.

For example, customers can redeem points in exchange for vouchers, free shipping or as cashback rewards.

You can even run cashback campaigns for specific tiers or customers or customer attributes such as customers whose birthday is between 1 and 10 September.

Wrap up

Creating loyalty isn't a one-time or one-step thing. It's a process. But the reward for that process is immense.

Data is released annually to stress and highlight why customer loyalty is important and why brands need to focus on building those connections with their customers.

After all, without loyal customers, businesses like you are likely to overspend on customer acquisition.