A company’s success can hinge not only on its ability to bring new customers into the business, but also to retain its existing customer base. The following brand and customer loyalty statistics illustrate how important it is for any business marketing strategy to include goals for customer retention. Doing your research while crafting your marketing plan, understanding your target audience, listening to customer feedback, implementing a customer rewards program and exploring customer win-back strategies are all ways to promote customer loyalty to your business.
Customer loyalty statistics
65% of a company’s business comes from existing customers
A majority of a business’s sales are estimated to come from existing customers, according to the Customer Service Institute. And following the Pareto Principle, 80% of a business’s future profits will come from 20% of its customers.
Customers spend 43% more money at brands they’re loyal to
Loyalty program members spend between 12-18% more per year than non-loyalty program members. And 80% of customers are willing to pay more for a better customer experience. If you can gain their loyalty, it’ll quite literally pay for your business: Customers spend 43% more money at brands they’re loyal to.
It costs 5X more to acquire a new customer than it does to retain a returning one
Another reason why investing in brand loyalty is smart for small businesses is that is costs significantly more — 5X — to acquire a new customer than it does to retain an existing one.
Lowering your customer churn rate by 5% can increase your profitability by 75% or more
Churn rate refers to customers who stop transacting with your business. If you can win back just 5% of these previous customers, your business’s profitability can increase by at least 75%, according to data from Hoover’s, a subsidiary of Dun & Bradstreet.
54% of customers would stop using a brand if they had a negative review go unaddressed
Customers want to feel recognized when they have a negative experience. An effective way to boost customer retention is to respond to reviews — both positive and negative — quickly and professionally. The alternative: 54% of customers would stop doing business with a brand if they had a negative review go unaddressed, despite receiving additional communications from the company, such as promotions for their products.
88% of consumers share their negative brand experiences
Of these customers, 59% will share these negative experiences with friends and family, according to a study by Oracle. Why does this matter? The same study found that 77% of consumers trust family members and 75% trust friends over any other source for shopping recommendations.
71% of customers are unlikely to buy from a business that loses their trust
According to data from PricewaterhouseCoopers’ Consumer Intelligence Series Survey on Trust, 71% of consumers would be unlikely to buy from a brand that lost their trust. The same survey found top factors that affect consumers’ trust in a brand include affordability of its products or services, employee treatment, quality and variety of products or services and resolution speed of customer concerns.
68% of customer churn is attributed to company indifference
If customers don’t feel that a business cares about them, 68% would stop transacting with that business. Separately, 68% of consumers believe a business should tailor its experience based on their tastes and preferences, according to Oracle.
92% of loyal customers ranked price and value for the top reason why they stay loyal to brands
An International Council of Shopping Centers survey found that brand loyalty is driven by price and value for 92% of consumers. Product and quality, and variety and selection were the next most important factors.
69% of consumers say choice of retailer is influenced by where they can earn customer loyalty/rewards program points
If your business doesn’t have a rewards program, consider this a sign to implement one: 69% of consumers say choice of retailer is influenced by where they can earn customer loyalty or rewards program points.
More small-business data from NerdWallet
A version of this article originally appeared on Fundera, a subsidiary of NerdWallet.