Customer loyalty should be important to every executive in your company because it goes directly to the bottom line.

1. This article appeared in The Osborne Report, Spring, 2004.
Why is customer loyalty
so important?
Gray Hammond and Leslie Riley
Count on it! Customer loyalty will hit your bottom line. And cus-
tomer service is crucial to every executive and senior manager in
your organization.
A survey by The American Management Association concluded that
65% to 70% of your current customers will be with you next year. The
situation in Canada is the same. Canadian companies, on average,
lose one third of their customers to competitors each year. This can
be costly. The results from a study of loyalty and renewal rates con-
ducted by Brandwright show that:
 A satisfied, loyal customer not only spends 10% more next
year, but also refers new customers.
 It costs five times more to attract a new customer than to keep
one you already have.
 Increasing customer loyalty by 2% can boost your bottom line
by 10%.
Of course, customer satisfaction is a key element of loyalty. Loyalty
to your brand (image, value, promise) increases with each satisfying “Canadian
encounter a customer experiences with your company. Expect repeat companies, on
business from only 17% of customers who say they are “dissatisfied” average, lose one
with service. In contrast, 80% of customers who claim “complete sat- third of their
isfaction” give you repeat business. Don’t despair, even customers customers to
who claim to be merely “satisfied” or find your service to be only competitors each
“acceptable” indicate more loyalty at 73% and 45%, respectively. In year. This can be
other words, even focusing on one or two aspects of your customers’ costly.”
experience will improve loyalty which translates into profitability.
That’s why customer loyalty is everyone’s business.
Gray Hammond and Leslie Riley are principals of Brandwright, an alliance
of seasoned sales and marketing professionals focused on brand profitabil-
ity.
www.brandwright.biz
info@brandwright.biz
416.762.0394