Customer loyalty is something that most brands and most companies realize they need to build much later than they should have. Everything that is taught or is perceived to be right revolves around acquiring new customers, and pumping money into customer acquisition. This is the perception of more customers = more profit.

However, with the ease of switching to competitors and the skyrocketing costs of acquiring new customers, it’s heading in a direction where solely focusing on acquiring new customers will cease being financially feasible.

There is a way to offset these costs and gain extra benefits in the process. By building customer and brand loyalty as early as possible, you increase the likelihood that new customers become returning customers and eventually turn into loyal customers.

Loyal customers cost less to bring back, they can help grow and evangelize your business, and are much more tolerant to your mistakes.

By making a conscious effort in building customer and brand loyalty, the payoff can be tremendous.

Loyalty helps you keep your customers, yours

It’s been said time and time again. In the perspective of your customers, your competitors are a single click away. It’s the biggest reason that having great customer and brand loyalty is more important than ever.

For example, with customers that are loyal to Amazon, most won’t bother with checking competitors anymore. Amazon has won them by providing a consistent level of service. For most, it’s simply not worth the potential hassle to save a few dollars.

Although offering great customer service and a great shopping experience is something that every brand should offer. It shouldn’t be the defining strategy to build loyalty for your brand. These things alone have become commonplace, and should be considered the basic standard for the foundation of loyalty.

This is an issue for most merchants. If there isn’t an effort to prevent switching beyond a basic level of customer service, it’s very easy for customers to be persuaded to go elsewhere.

New customer acquisition costs are huge

It costs you five times more to acquire a new customer than to keep an existing one. Again, the cost of a new customer is inflated by 500%, compared to keeping an existing one.

Also, the acquisition of new customers are also becoming increasingly expensive on their own. Both Facebook Ads and Google Ads have been increasingly steadily. As everyone makes their shift to social ads and mobile, the number of advertisers increases faster than available inventory. This causes bids to rise, driving up the overall cost of acquisition.

New customers are expensive, and not 100% of them will make a second purchase, or even become a loyal customer.

This report from RJMetrics simply states “Only 32% of customers place a second order in their first year as a customer.” This number jumps to 50% for customers making their third purchase.

Simply put – there’s tremendous value in your existing customers. Not only do they cost less to maintain, they’re more likely to make future purchases.

Loyal customers bring more business

Simply stated in this Bain study: “Repeat customers refer more people and bring in more business.”

Loyal customers help promote your business, whether that’s by buying a gift for a friend, writing praise on social media, or just a simple recommendation. It’s a great reason to dedicate resources to help customers become loyal.

As a bonus – customers that are referred have a higher lifetime value (PDF from Wharton). The list of reasons grow all the time. It really pays off to dedicate time and resources to nurturing customers and incentivize loyalty.

Loyal customers are more likely to refer, referred customers are more loyal. It’s the circle of life.


Regarding mistakes

It’s inevitable that mistakes will be made. Whether it’s by you, your staff, or something totally out of your control. As we see very frequently, customers can lash out against companies when they have a bad experience. It may be an extreme reaction, but it does happen.

Adding to the tremendous value in loyalty, customers that are loyal to your brand are less likely to lash out.

There are countless examples of companies that have made mistakes in the past. Our favorite example is Nordstrom – their incredible customer service and loyal customers have allowed them to recover from various mistakes, such as the one seen below.


In the book “Smart Business” by James Leibert, he writes “loyal customers are more tolerating of experiments and occasional mistakes…”

Keep your customers happy, and they’ll make your business life a lot easier.

Loyalty has tremendous value

Everywhere in the customer lifecycle, customer and brand loyalty has shown its value. With new customers moving further out of reach, and competitors getting closer to your customers; it’s easy to see why doing everything you can to build loyalty for your brand, and rewarding your customers for staying loyal is becoming extremely important.

Your loyal customers are worth more, are more tolerant, and they can even help you grow your business. All of the facts point to loyalty as an investment with a high return.

About S Loyalty

Here at S Loyalty, we create products to help Shopify and BigCommerce merchants better engage their customers, and reward them for their loyalty. Try the S Loyalty rewards program, free for 14 days.