Raul Galera
Raul Galera 9 April 2018

Why Customer Loyalty Is Important for Small Businesses

A lot of businesses are obsessed with attracting new customers, but although you do need to attract new customers to grow your business, you also need to make an effort to retain your current customers. In this article, we’ll discuss why you need to focus on improving customer loyalty.

A lot of businesses are obsessed with attracting new customers.

This isn’t bad, per se.

You do need to attract new customers to grow your business. However, you also need to make an effort to retain your current customers.

In fact, according to the Harvard Business Review, studies show that acquiring a new customer is five to 25 times more expensive, than retaining the ones you already have. It makes sense: first-time customers aren’t as easy to convince. They have no experience with your products and services, so its harder to convince them to make a purchase.

The bottomline is: customer loyalty is important.

You want to consistently grow your business and not struggle with convincing first-time customers, all the time.

Still not convinced? In this article, we’ll discuss why you need to focus on improving customer loyalty.

Lower Your Marketing Spend

It’s expensive to market your products.  

You need manpower, time and effort to create promotional materials, marketing campaigns and ads.

While social media allows you to send targeted ads to thousands of users, less than 5% will actually buy your products. And, first-time customers are harder to convert.  

The good news is you can reduce the money, time and effort you spend in marketing by fostering customer loyalty.

Tesla Motors is a fantastic example. You don’t see a lot of Tesla ads on billboards, social media, YouTube or TV. However, the company has created a cult-like following in the electric-car industry.

How? Tesla focuses on the satisfaction of its current customers. In fact, a Consumer Reports’ annual survey found that customers who owned a Tesla Model S gave it a 99 out of 100 satisfaction rate, which is the highest rating in the industry for years.

If you have a stable number of customers, you don't have to allot too much money on marketing, to profit. Instead, you'll be able to relax and shift your focus to providing better products and services.

Leads to More Repeat Business  

Again, acquiring new customers is costly.

In fact, the Gartner Group found that 20% of your loyal customers generate 80% of your profits. Meanwhile, Marketing Metrics found that the chances of converting first-time customers is 5 to 20%, as compared to existing customers which is 60 to 70%.

This is where customer loyalty comes in.

Loyal customers are more likely to check your campaigns and upsells. They already have experience with your business, and are more likely to trust your product and services.

Less Pressure From Competition

When you face a lot of competition, one way you can get ahead is to lower the prices of your products. After all, customers love cheaper products.

However, this strategy isn’t sustainable in the long-term.

As you lower your prices, you decrease your profits.

With a group of loyal customers, you don’t have to feel pressured to keep prices down. You can enjoy a certain level of security in spite of the competition.

And, loyal customers usually stay away from your competition, if they’re already satisfied with what you have to offer. They don’t mind if there’s a business offering cheaper rates, since they already trust your business.

Increase Customers via Word-of-Mouth

Loyal customers are your brand’s most valuable ambassadors.

They talk about your business and products with their friends, family and acquaintances. This influences their network to check out your business, and buy your products.

In fact, a study showed that people pay 2 times more attention to recommendations from friends, than from other sources. In addition, 92% of consumers trust recommendations from people they know, as compared to online ads and search engine ads.

This makes sense, since people are more likely to trust their friends and family, as compared to sponsored messages.

For instance, would you visit a restaurant after you saw a sponsored ad on Facebook, or after you heard about the good experience of your friends and family? Obviously, you’ll be more influenced by word-of-mouth recommendations.

This is why customer loyalty is important.

Loyal customer help spread the word and increase referrals for your business.

Loyal Customers Provide Better Feedback

Quality feedback is crucial to your success.

It’s necessary to understand how you can improve the experience of your clients and provide better services.

But where do you get quality feedback? The answer is: loyal customers!

Loyal customers are already brand advocates. They want to see you thrive. They provide honest feedback about your product or service, so you can serve them better.

In contrast, first-time customers aren’t likely to voice out their problems. They try your product, and if they don’t like it, they move on.

So, chances are, you’ll get the best feedback from loyal customers.

How Can You Improve Customer Loyalty?

There are a lot of things you can do to improve your customer retention.

You can create marketing campaigns, send promotional emails, create great products and offer quality service.

But there’s another trick to improve your customer loyalty.

We might be biased, but we’d like it if you tried out CandyBar—a digital loyalty card.

CandyBar allows you to get instant feedback from your regular customers. This way, you get the best insights to grow your business.

It also lets you track interactions of customers. How many customers have signed up? How many have become regulars? When is the best time to open your business? With CandyBar, you can get all the answers!

Ready to try it out? Try out their free 30-day trial. No credit card required!


Raul Galera is the Partner Manager at, a service that helps brick and mortar merchants run digital loyalty programs where customers collect stamps to earn rewards. 

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