How to survive in tough economy and even boost profits?

How to survive in tough economy and even boost profits

Simple answer – Keep Customers Loyal

No matter what size or type of business you run, customers are essential; without them your business could not exist profitably.

Customers that are loyal will return more often, giving higher sales! However, a surprising number of businesses appear to just expect customers to arrive, and seem to do nothing to make them want to return.

This article looks at different ways in which you can help to keep customers loyal.

Why Is It Important To Have Loyal Customers?

Repeat Sales

If your customers develop a loyalty to your business, they will be much more likely to choose you over your competitors in the future. Over the course of a year, the sales of one loyal customer can add up to a significant amount.

Something every business benefits from is a ‘customer for life’ – a customer who will always buy from your business where possible. If your business satisfies loyal customers every time, then hopefully many will become customers for life.

“80% of your business comes from 20% of your customers”

80/20 Rule

Most businesses tend to find that 80% of their business comes from only 20% of their customers. These are the ‘customers for life’ and loyal customers who purchase regularly.

Although it is vital for any business to attract first time and occasional customers, it is usually much more beneficial to turn the ones you have into loyal customers.

This is especially true in fast moving markets, where customers may use your product on a daily/weekly/monthly basis.

If you have 1000 customers who buy 1 product each year, you will sell 1000 products a year.


If you have 100 customers who buy 10 products each year, you will still sell 1000 products a year.

Word of Mouth

This is the cheapest form of marketing, where your satisfied customers speak to their friends and family, effectively selling your business to them.

Loyal customers will be much more likely to tell their friends about your business than occasional visitors, even if the service given to both of them is great. Not only do loyal customers spend more, but they can also help bring in even more new customers.

Loyal customers can be especially useful in service businesses such as plumbing and electrical repairs, where most people use word of mouth recommendations to decide which business/person to use.

“it costs five times more to gain a new customer than keep an old one”


Probably the best reason for making (and keeping) your customers loyal is also the simplest: It is commonly stated that it costs five times more to gain a new customer than keep an old one.

Turning just 10% of your occasional customers into loyal customers could save you up to 8% of the costs of gaining customers (Such as: marketing, price offers, staff costs and time, etc…).

Discounts For Loyalty

One way to encourage loyalty is to offer discounts on future purchases. This could be money off the same item or related items (e.g. A discount off a TV stand when you buy a TV.)

These discounts encourage the customer to save money, with the ideal outcome being a satisfied customer who becomes loyal to your business.

A popular form of offer is ‘introduce a friend’ discounts, whereby if a customer introduces a friend, they both get a discount or special offer. This not only encourages customers to return and be loyal, but also provides a positive introduction for new customers.

E.g. Introduce a friend to our furniture and get £20 each on their first sale over £200

Loyalty Schemes

Many large businesses (mainly shops and stores) now have ‘loyalty schemes’ (e.g. The Nectar Card, Air Miles) which use discounts to encourage people to buy from them. They usually work using ‘points’, the more you spend with them, the more points you earn, points can then be used to save money on some items.

The discounts are usually minimal (Often as little as 1-2%), but they provide a direct reason to remain loyal to one business. The cards given out with most schemes also provide a reminder of the business.

The main benefit to most stores was being able to monitor what their customers bought, allowing them to move products and send out discounts for the products those customers purchased often. (e.g. If you bought lots of dog food, they would send you offers related to dog owners) This type of information gathering is very useful.

Customer loyalty programmes have been the key weapon for businesses in the battle to win the hearts of customers who might have been wavering as the recession dragged on, our recent research shows.

Popularity of loyalty schemes during recession

Our study of 500 marketing decision makers found that 71% of respondents felt that loyalty schemes had become more important to successful business during the recession and 60% of businesses are concentrating more of the their budget on loyalty programmes and their associated marketing activity than they were a year ago.

Changes in consumer behaviour and spending during the downturn made it essential for marketers to alter their strategies in order to retain customers. As tough economic times encouraged a culture of promiscuous shopping with consumers seeking out the cheapest deals, many businesses started to concentrate on customer retention and development in a bid to stem customer churn.

Many businesses have clearly recognised that making use of existing customer loyalty programmes and customer data to better understand customer needs and shopping habits during the recession was a wise use of the marketing budget. Some firms even launched loyalty schemes during the recession – e.g. HMV, CDWow, and CBS Outdoor – proving that businesses are realising the value of having a programme in place.

So, although the resources of many businesses in various sectors took a pounding during the recession, it appears that loyalty schemes are still paying dividends in the eyes of the majority of businesses.

Nonetheless, 50% of marketing decision makers believed that the vast majority of loyalty schemes were not fully integrated with all other marketing activity. If marketing activities are not integrated, then a business is less able to ensure consistency of message, which could be problematic as the UK exits recession. Companies that fail to integrate marketing activities – especially when it comes to existing customers – risk being inefficient and contradictory in their communications to customers, thus hurting the potential ROI of their campaigns.

However, those that have integrated their loyalty schemes with other marketing activities will be in a better position to develop strategies for retention once the downturn is over.

Perfect Cards company helps in creating, implementing and running loyalty schemes for any size of business. Request free consultation now!

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