Retaining customers is just as important, if not more, as getting new customers. Business success comes not solely from a great marketing strategy but also from loyal, satisfied customers. Bringing new customers in is important, of course, but the majority of business comes from existing customers who like and trust your product. The following brand and customer loyalty statistics demonstrate the importance of retaining customers and the impact of loyalty programs.
Customer Loyalty Statistics
Many factors affect customer loyalty to a brand. Knowing the key brand loyalty statistics will help your business thrive and increase customer retention rates.
65% of business comes from existing customers
If customers are invested in and trust a company, they will be more inclined to do business there. As opposed to a new customer who will be less likely to give their money to a company they have no experience with.
The top 10% of customers spend more than 90% of the consumer base
Loyal customers who repeat purchases spend more than the majority of your consumer base—investing in those loyal customers can increase revenue significantly. Plus, according to The Pareto Principle, 80% of a brand’s profits comes from 20% of its customers. With the majority of revenue coming from your existing consumer base, it makes sense why retention is vital.
Repeat, loyal customers spend 31% more than new customers
People like what is familiar and trustworthy. That is why repeat customers are willing to spend 31% more for a brand they trust. Similar studies have found that 43% of customers will spend more at the brands they are loyal to because they know they will get a good product. Additionally, existing customers are at least 50% more likely to try new products from their trusted brands. By increasing brand loyalty, businesses can increase income and see success with new products.
About 52% of consumers will recommend a brand to friends and family when loyal
Interestingly, this number varies some between generations, with the younger generations more likely to offer referrals: 62% of Gen Z, 55% of Millennials, 53% of Gen X, and 45% of Baby Boomers are likely to recommend a brand to friends and family. Perhaps it is no surprise that Millennials and Gen Z, the generations who grew up with posting online and social media, would be more likely to share their experiences with others to help others.
When people are loyal to a brand, they can become “evangelistic” (e.g., consider Nike fans, Apple users, and Dunkin’ Donuts enthusiasts), lending credibility to your business. Advocacy is far more valuable than you might initially think.
- 93% of consumers are influenced by reviews from others.
- 72% of people are willing to pay more for a trusted brand.
The authority of reviews and recommendations has skyrocketed in the past decade, especially with sites like Amazon and Yelp. With e-commerce and social media giving rise to thousands of online businesses and scam websites, reviews have become a major indicator of brand trustworthiness.
- 98% of consumers believe reviews are essential when making purchasing decisions.
- 45% of shoppers won’t buy a product if no reviews are available.
Reviews are vital to business success, but they can be challenging to manage on top of everything else. Luckily, some companies specialize in managing reviews and boosting e-commerce, like Yotpo.
Leveraging and encouraging loyal customers to review your brand is vital for business. However, garnering reviews is not the only goal in building brand-to-customer relationships. Demonstrating trust and delivering quality is by far the most important.
Customer experience impacts brand loyalty
Customer experience is becoming increasingly important to retaining customers. Churn rate is affected by many factors, but customer experience is the biggest. 69% of customers are willing to pay more for a brand with good customer service, and more and more people are ready to leave a brand after only a few bad experiences. Even if you have a great product, poor customer service can drastically increase churn rates. That is one reason why finding loyal consumers is necessary.
Loyal customers are like pearls—precious, rare, and fragile.
- 51% of consumers will be less loyal to a brand if the online experience is not as engaging.
- 63% of consumers will stop buying products and services from a company after their trust is broken.
- 97% of consumers say that contact center interactions affect brand loyalty, and 60% of customers will leave a brand if they have bad experiences with the contact center.
Most of the time, trust in a brand doesn’t break immediately, but it can happen shockingly fast. Customers lose trust if brands repeatedly get orders wrong, offer faulty products, leak customers’ personal data, or have poor contact center experiences.
- However, one study found that 73% of customers will leave a brand if they have just one bad experience with a brand.
Another factor that can affect customers’ trust is a brand’s stance on social issues. With political issues pervading society more in recent years, some consumers are choosing brands that support issues they feel are important. One study found that 59% of consumers will trust brands more if they agree on social issues. So, in addition to quality of product and service, you may consider how your stance on certain issues will affect customer loyalty.
With so many brands vying for consumers’ attention, it’s easy for people to switch to a competitor if they think they will have a better service experience or preferable stance on social issues. Keeping customers satisfied with your brand is essential, as a large churn rate will negatively impact a business. Plus, the acquisition cost is more expensive than retaining current customers.
- The general consensus is that acquiring customers can cost 5x to 25x more than retaining current customers.
If businesses focus too much on customer acquisition, they will not only spend more money but also lose out on the money loyal customers are willing to invest. More and more companies are realizing this fact, which is why 67.7% of businesses plan to increase their investment in customer retention and brand loyalty.
Investing in Customer Loyalty Programs
One great way to increase brand loyalty is to offer quality customer loyalty programs and personalized experiences. Below are some key loyalty program statistics to keep in mind.
70% of consumers in America believe that loyalty programs are very important
A recent study by The Marigold Team found that brand loyalty is on the rise. As stated previously, 72% of consumers are willing to pay more for a trusted band. Conversely, with recent economic concerns after the pandemic, the majority of consumers (96%) plan to adopt cost-saving behaviors. As a result, loyalty programs are becoming more popular.
52% of Americans are more likely to engage in loyalty programs that benefit them
In fact, about 55% of consumers already belong to at least one loyalty program. But, what makes a good loyalty program? The Marigold study looked into what American consumers want in a loyalty program. They found that 61% still want discounts, but that’s not the only thing customers are looking for nowadays:
- 30% want exclusive or early access
- 26% want personalized product recommendations
- 26% want communication to occur on preferred channels
- 18% want interactive experiences
- 16% want to be part of the brand’s community
- 14% want brand recognition
Loyalty programs are a great way to keep customers invested in the brand and its community through perks and incentives. In fact, loyalty programs members tend to spend 12% to 18% more per year than non-loyalty program members. Plus, 56% of consumers will stay loyal when they feel like the brand understands them. Personalized offers and perks are a great way to build loyalty in your customers while increasing annual revenue.
Increasing your retention rate by just 5% can potentially increase profits by 25-95%
Loyalty programs are a great way to boost your customer retention rate, customer base, and revenue. However, it’s important to remember that customer trust is easily broken, and maintaining that trust requires businesses to deliver consistent quality.
The Bottom Line
Running a business is complex, and the success rate is low. However, focusing on customer retention can increase your chances of success. Since the majority of business comes from existing customers, it’s important to focus on retaining your customers once you get them. Keep in mind that demographics will often value different things. So, it’s important to research your customer base and engage with your loyalty program members to learn what they value about your brand.
A brand’s loyalty program has the potential to bring lifetime value to global and U.S. consumers through personalized rewards programs and quality products. People enjoy it when their favorite brands engage with them. It builds an emotional connection, making consumers feel like they are part of a community. Humans are social creatures, after all, so it is no surprise that this type of customer engagement yields brand loyalty.
Reviews and referrals are also great tools businesses should utilize. Email marketing campaigns and tools like review management software can make this job easier. You can also survey customers to learn more about how they view your business’s service experience.
In order to ensure your business’s success, it’s essential to research what your customers want and need. You can do this by studying statistics or through targeted marketing campaigns. Understanding the relevant statistics to ensure you practice what is most advantageous while giving your customers positive experiences is sure to boost customer satisfaction.
- Antavo. “Global Customer Loyalty Report 2023.” Accessed September 6, 2023.
- Calabrio. “State of the Contact Center 2022.” Accessed September 6, 2023.
- G2. “SaaS Customer Retention: Reduce Churn and Drive Loyalty.” Accessed September 7, 2023.
- PowerReviews. “Survey: The Ever-Growing Power of Reviews (2023 Edition).” Accessed September 7, 2023.
- PwC. “Creating loyalty in volatile times: PwC Customer Loyalty Survey 2022.” Accessed September 7, 2023.
- PwC. “PwC’s 2023 Trust Survey: 9 key findings and lessons for business executives.” Accessed September 7, 2023.
- Rivo. “6 Shocking statistics about the importance of DTC brand loyalty.” Accessed September 6, 2023.
- The Daily Egg. “Customers, Come Back! Learn How to Use Customer Retention to Your Advantage.” Accessed September 7, 2023.
- The Marigold Team. “The State of Brand Loyalty in the U.S. in 2023.” Accessed September 6, 2023.
- TNC. “TCN Consumer Survey Reveals Nearly Three-Quarters of Consumers Will Abandon a Brand After Just One Bad Customer Service Experience: 2023 Consumer Survey.” Accessed September 7, 2023.
- Zippia. “30+ Invaluable Customer Loyalty Statistics : What Makes Customers Come Back?.” Accessed September 10, 2023