Why is Customer Loyalty Important to an Organisation

Meaning of Customer Loyalty

Customer Loyalty simply refers to a long term positive relationship created between customer & business.  It is the result of repetitive purchases that customers make of same brand. It means long term association of customers with the business. Customer satisfaction is the main factor governing customer loyalty.

The customer when are properly satisfied by a particular brand, they stick to it for a long time. They prefer particular brand over other ones available in the market. They become loyal to the brand & do not prefer switching to other brands easily. Businesses are able to retain customers for a long time if they once become loyal to them.

It helps in increasing their sales as loyal customers tend to use different products of the same brand. As these customers have full belief in their brands, they even suggest their friends, relatives & known ones. So, by spending fewer customers are easily able to acquire more customers. Customer loyalty thereby enables businesses to increase their profit & sales easily.

Why is Customer Loyalty Important to an Organisation

Customer Loyalty plays different roles in running the business.  Some of the important roles played by customer loyalty are discussed below:

importance of customer loyalty
importance of customer loyalty

Helps in retaining customers

Customer loyalty helps in creating better understanding & relationship between business & customers. Loyal customers build faith in a particular brand. They always prefer a particular brand over others available in the market.

They remain stick to the same brand & avoid shifting to other brands. This helps the businesses to retain their customers for long terms with fewer efforts.

Acquire new customers

Businesses that have large number of loyal & satisfied customers enjoy good image in the market. They are easily able to attract new customers. Large number of loyal customers become the benchmark for businesses for facing competition in the market.

These loyal customers refer the brand products to their relatives, friends, family & other known ones. It helps in increasing more & more customers with minimum efforts.

Increase sales & profit

Customer loyalty helps the business in increasing their sales & revenue easily. Loyal customers tend to try different products of customers. They without hesitation uses different products of the company & become loyal.

These customers have complete faith in brand quality. They don’t make a comparison or analysis with other brands. They even refer these products to their known ones. It helps in increasing sales & ultimately revenue of business with less effort.

Reduce selling cost

Businesses having large loyal customers require less cost for selling their products. They need to be incurred less amount of advertisement expenditure. Brand who is able to make more loyal customers enjoys a good reputation in the market.

Business customers do the work of promoting their brands. Their customers are served as the benchmark for market competition. It lowers their cost involved in promotional & advertisement activities.

Helps in forecasting

Forecasting has a very crucial role in the smooth functioning of business. If a business is able to forecast future conditions, it can take the appropriate step. Your loyal customers helps in successful forecasting about your business.

They can give you right & honest feedback about your business products & services. Management can easily take steps accordingly to manage it. They can properly help you in deciding your future products & also your pricing policies.

Helps in facing competition

Business today faces tough competition in the market. Today there are different brand providing the same product as your product in the market. Customer has different options available with them for their needs.

If your customers are loyal towards you, they will remain stick to your products. They will not easily shift to other brands. Hence, customer loyalty will help you in facing tough competition easily.

Provide quality & honest feedback

Feedbacks & suggestion are important tools for business for bringing improvement in them. Loyal customers always share their right & honest opinions with business. These suggestions help the business to acquire important data.

It helps the business in measuring the satisfaction of their customers. Business can use this information in expanding their size & serve customers better. It helps them in fast-growing.

Makes customer happy & appreciated

Loyal customers are always happy & feel appreciated to be connected with the brand. Over repetitive purchases, they develop an emotional bond with business. Business by developing proper loyalty program wins the heart of their customers.

In case of any mishap, these customers show patience & even support business in its hard times. Business should also keep certain rewards & prizes for its customers for making the relationship better.


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