Customer loyalty is at risk as the economy limps along

Lack of growth in the economy, combined with high interest rates, are placing extreme pressure on household budgets. As a result consumers are spending even less. At such times they are especially prone to changing buying choices based on price. The danger is that businesses could permanently lose customers who do this, so brands  need to concentrate on retaining their customers before it happens.

The most successful brands not only keep their clients but also increase their revenue per client — quite significantly — by focusing on improving the customer experience and cross-selling to an existing client base.

This point was made clear in the Australian publication Accountants Daily which shows that 65% of a company’s new business comes from existing customers and that loyal consumers spend 67% more than new ones.

The publication says the probability of selling to an existing customer is 60%-70%, while the likelihood of a new prospect buying is only 5%-20%. Similarly, existing customers are 50% more likely to try new products.

These figures shouldn’t be a surprise. If a well-cultivated relationship is already in place, the result is usually an easier sell. This is where cross-selling and up-selling opportunities work their magic; businesses that can offer their existing customers relevant add-ons are far more likely to achieve solid growth.

 It’s far easier to achieve this growth if the marketing and sales plans are informed by customer data. Understanding consumers’ attitude towards a brand helps agile organisations to adapt their offering and experience to give customers more of what they want.

 Doing so successfully relies on mining customer data and conducting research to find out customers’ needs, wants, likes and dislikes.

 Working with customer data helps business leaders avoid knee-jerk reactions like slashing prices or releasing products that are not quite market ready. More times than not, doing this only encourages fickle consumer behaviour that is driven by short-term gains rather than appealing to long-term, loyal customers.

Not only is it far easier to sell to customers you already have, statistical, long-term research conducted by nlightencx shows a clear correlation between consistently high levels of customer satisfaction and increased sales, which could be up to 30% higher.

Our research used proprietary predictive modelling to track customer satisfaction scores and sales over at least two years. The results reveal that achieving consistent client satisfaction scores of at least 70% does appear to improve sales. Clearly, companies who keep their existing customer base happy are in a better position to grow than those who are throwing lots of money at sales and marketing efforts to get new customers.

Brand loyalty is built when marketers listen to the data, avoid the tendency to slash prices and cheapen their product, develop a robust client retention strategy and make sure they know how to articulate who they are and what their business stands for.

Competition for a share of consumers’ wallets is only going to grow fiercer due to tight budgets and the likes of Amazon launching in South Africa. The battle can be won by focusing on the customer experience. In tough economic times, it’s incumbent on business leaders to step up and win the hearts of and minds their customers by delivering exceptional experiences.

Nathalie Schooling is the CEO of customer experience specialists nlightencx.