Loyalty Blogs

With stiff competition in the business market, small businesses and store owners always struggle to find innovative ways of generating revenue. To grow and thrive, your business must stand out from competitors and gain customer loyalty, which is one of the biggest profit sources. Customer loyalty is the best thing that can help in gaining profits and long-term ROI. This is why, it is crucial to know where you should allocate your marketing budget i.e. retaining existing customers or attracting new ones to get the best return on investment.  

In this blog, we will learn the significance of Customer Loyalty Programs and how investing in customer retention rather than simply focusing on attracting new customers is beneficial to unlock business growth in the long run.      

Marketing for Retaining Existing Customers vs. Acquiring New Customers  

Marketing for customer retention focuses on bringing current customers back to the brand, while customer acquisition marketing refers to techniques that help introduce products or offerings to new customers. Depending on the business goals and its customer base, an organization can use different marketing techniques- whether to go for customer retention or acquisition.  

Before you take the help of reliable loyalty software, let’s check out some of the major differences between these two marketing techniques to understand them better- 

• Focus on Budget 

Talking about the cost, customer retention marketing methods often require lower expenses as compared to customer acquisition campaigns. A report from Harvard Business Review states that acquiring a new customer is 5 to 25 times more expensive than acquiring new ones.  

Marketing to new customers is all about introducing your products and offerings to raise brand awareness and show their usefulness. As the existing customers are already aware of your products, business owners can create simpler campaigns to retain them. However, to win the trust of new customers, you need well-planned marketing strategies like giveaways, social media campaigns, blog posts, etc., which can be time-consuming and costly. 

• Know Customers 

When existing customers make a purchase, your brand gets an idea about their purchasing decisions like preferred products, shortlisted ones, etc. These insights can help in tracking their demographics and site data, which helps to create specific marketing campaigns to engage existing customers and make them stay longer. 

On the other hand, creating campaigns for new customers requires different tactics that will help to reach out to a broader audience and cater to many types of customers.  

• Make Connections 

Both marketing approaches require your business to make connections with customers. While marketing to new customers, you need a positive connection between your brand’s offerings and customer needs.  

Making a connection is important for returning customers as you need to remind them why they find the brand and products useful. In both methods, one must highlight the competitive advantage as well as the benefits of the products.  

• Business Benefits 

Customer acquisition marketing focuses on finding new customers to unlock benefits such as higher sales, market share as well as brand awareness. On the other hand, customer retention can help businesses achieve immense benefits like enhanced customer service, maintaining positive customer relationships, higher customer referrals to bring in new customers, and genuine feedback to enhance offerings.  

How to Decide Between Retaining Customers and Acquiring New Customers? 

As a business owner, you know that gaining new customers and maintaining existing ones is important for a business to grow. However, the main goal is to find out your specific requirements and choose the best marketing option for your business.  

One thing that must be kept in mind is the company goals, which means your business must define the goals first and choose the right kind of marketing to achieve the company’s goals. For instance, if your business goal is to expand your business and grow into new market areas, customer acquisition is the one. However, if you want to increase sales, and enhance the brand image with lower costs, then you must go for customer retention marketing.  

Another factor is the budget, which means how much marketing cost can you propose for the campaigns. Though many brands think customer retention is an affordable option, a bigger budget can help to gain new customers & produce a larger increase in profits. A successful customer retention program can help not only in increasing the budget for the next marketing plan but also provide the opportunity to focus on finding new customers in the long run.   

Apart from that, one must also study how competitors are marketing to similar customers as it can help you decide which marketing campaign can be the right choice. For this, you must take time to focus on market competitors as it can give valuable insights into their customer base, help you market to new customers and increase the company’s market share.  

Top Reasons to Invest in Customer Loyalty 

After comparing both marketing approaches, we know that both are important. However, many business owners end up making a blunder mistake by keeping focus on acquiring new customers and not giving their focus on existing ones. Here are some of the main reasons that show how important it is to focus on customer loyalty- 

• Loyal customers are the ones who are more likely to make repeat purchases and even recommend your business to their friends and family, making them valuable assets in the long run.  

• Making use of a loyalty program can be a great investment to retain customers and encourage them to continue doing business and unlock benefits in the later phase.  

• Happy and loyal customers are the ones who are more likely to become brand advocates and help spread the word about your business through word-of-mouth marketing.  

• Retaining customers is the best way to encourage repeat purchases, which will help to boost profits and the overall value of your customer base over time. 

Final Takeaways 

As we can see, gaining customer loyalty not only contributes to an increase in ROI with repeat purchases but also has the potential to drive referrals and positive word-of-mouth, bringing in new customers without additional marketing costs. Take time to reframe your business strategy to give more emphasis to customer loyalty rather than just focus on attracting new ones.  

If you are planning to retain and reward your existing customers, connect with the experts of Novus, an all-in-one SaaS loyalty platform that enables businesses to build customized loyalty campaigns and unlock long-term benefits with fine-tuned marketing. Book a demo to learn how Novus can add business value to your business by delivering customer rewards that are relevant and valuable.  

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