Introduction
Most businesses formulate their marketing strategies targeting new customers. While it is important to increase the customer base, businesses must not overlook the critical role played by existing customers in the companys growth. Customer loyalty is often connected to the inclination of a customer to continue associating with the company. This paper looks at some benefits that can be realized by promoting customer loyalty, as well as ways of increasing e-loyalty.
Importance of Customer Loyalty
Loyal customers offer the company a chance for repeat business as they are likely to purchase company products on several occasions over a period of time. Contingent on the type of business the organization conducts, the company is likely to sell more products to a loyal customer than to ten first-time customers. Retaining the loyal customer base is also considerably cheaper and, therefore, more profitable than attracting new customers.
Customer loyalty also offers opportunities for the company to conduct cross-sales. The company can offer more products to meet the loyal customers needs across product lines. This allows the company to improve sales without necessarily looking for new customers.
A loyal customer base also protects the company from the competitiveness of the market, especially in product markets with many new entrants. In e-commerce, for instance, the internet has facilitated price competition that has made many markets recklessly competitive in terms of product prices. Loyal customers offer the company some sense of security as they are less likely to be persuaded by small price reductions.
Customer loyalty also facilitates word-of-mouth marketing that brings in new customers. Satisfied customers are likely to refer their friends to the company. E-commerce customers, for instance, can use the email service to recommend company products to friends and relatives. E-commerce companies are currently automating their referral processes and allowing customers recommend their services to others on the e-company website.
Customers who are loyal to the company brand are also likely to provide honest feedback on company products. This helps the company in determining the areas that require improvement. New customers are less likely to provide feedback and often prefer to try other companies if they are dissatisfied.
How to Increase E-Loyalty
The idea of e-loyalty stretches the conventional notion of customer loyalty to online consumer actions. To acquire the loyalty of consumers, e-companies need to try to obtain their trust.
This is particularly tricky in the e-business where business is carried out over long distances and customers cannot meet sellers face-to-face. When purchasing products online, a customer is supposed to rely on the images posted on the company website and promises made by the company. If the customers cannot trust the company that is offering the product, they may prefer to buy the product elsewhere.
When customers get to trust an online retailer, they often feel free to share personal information that enables the company to tailor its products and services to its customers individual needs. This circle works to enhance trust and provides the company with a competitive advantage in the e-commerce market. Other factors that enhance e-loyalty include customization, customer care, contact interactivity, availability of alternative choices and convenience.
In order to maintain customers in the long-term, e-companies need to offer added value in their products. The internet enables companies to tailor goods and services to fit customer preferences. The company can use the records of the customers previous visits to understand the customers needs. Customers are likely to appreciate the personalized experience.
The company can also design its website interface in an interactive and an easy-to-use way that motivates the customer to perform repeated visits. The website ought to be registered with search engines that enable customers to access different products easily. An appealing website presents a good face of the company to clients and motivates customers to identify with the company.
Conclusion
Customer loyalty is important in maintaining competitive advantage in any business. E-loyalty is even more important given the competitive nature of e-commerce. E-companies, therefore, need to work on their websites and products to make sure that their customers can identify with the company, and to encourage referrals.