Every brand wants to make customers happy. They try many ways to turn current customers to be loyal customers. For example, store loyalty credit card, email and mail special discount offer, free gift, etc. Those are very common strategies to make customers stay with the brand.
However, does customers really care nowadays?
Unfortunately, they don't care that much anymore.
Morning Consult shows that only 19% of US adults are loyal to a particular brand and buy most of their products. And 30% of customers will try different products even if they like a brand. ("What Drives Brand Loyalty?", 2019)
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| screenshot from morning consult |
Moreover, the study also found 65% of customers have given up their loyal brands mainly because the quality of products has decreased and (or) product prices rose.
What does this mean?
It means customers customers won't fall in love with a brand forever. Every brand are facing serious competition. No matter how hard you try to keep your customer happy, competitors will find a way to steal your customers.
You may hear a theory :"The cost of acquiring a new customer is five times that of keeping an old customer."
In fact, all brands are losing their customers. The key point is customer losing rate for each brands doesn't have large differences. The customer losing rate depends on how many customers a brand can lose.
For example, a new or small brand won't have 1 million customers, so it won't lose 1 million customers. Large brands will lose more customers than small brands each year, but they also can get more new customers than small brands can. However, large brands will have low customer losing rate because the radio between lost customers and new customers is lower.
It is very hard to reduce the customer losing rate. Getting new customers seems more beneficial and easier than keeping "loyal" customers.
Actually, all brands have a lot of customers who buy the products occasionally, but they contribute a large part of sales.
A study stated that although a brand's sales volume has not changed so much, 14% of sales are indeed from the group of customers who have not bought before. In contrast, the loyal customers (about 9%) generated 34% of sales in the second year compared to the 43% of sales in the first year. Therefore, the proportion of loyal customers contributing to sales has decreased. (Anschuetz, 2002)
Overall, even though many brands still believe that build customer loyalty can increase profits, it is hard to say in the high competitive market. Instead of thinking keep old customers, it may be more practical to gain new customers. Developing new products, optimizing the services, improving the quality, and setting right prices can really benefit both current and new customers.
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