Customer Loyalty Research


by Margaret Ross


In this competitive economy, customer loyalty is a necessity to keep your business growing. So how to you keep your customers and keep them coming back?
During my two decades as a business marketing strategist, I’ve observed that top performing companies focus on attracting and keeping customers. Why? Loyal customers provide greater profitability. Profits are powerful. Loyal customers spend 80 percent more than other customers. Eighty percent of a company’s sales come from 20 percent of their customers. Loyalty can’t be purchased by the pound nor can it be stocked on shelves in colorful ‘new and improved’ packaging.


Customer loyalty is built over time. Customer loyalty is built in stages.

Customer Loyalty Takes Time: In the consumer goods and services industries (e.g. food, health, beauty, restaurant, telephone) it takes 12-18 months to build and earn a customer’s loyalty.

Customer Loyalty is built in Stages: Each customer loyalty stage has a number, a name and a cost. The stages of customer loyalty are: Try > Buy > Ask >Tell Others > Loyal

Customer Loyalty Begins At Try It Stage : To get a customer to the “Try” stage, she must first become aware of the product and sample it. Across most industries the average cost to get someone to ‘try’ something new is between $60 and $120. That’s a lot. This is known as the Customer Acquisition cost or CPA.


Stages: Customer Loyalty





(Ask for product by name)


(Tell others about product)

Cost is six to eight times more: A good customer is like a good friend. It should be worth a lot to keep these customers and buld customer loyalty. Many companies replace their entire customer base every few years. They still haven’t grasped the dollars and cents of this.

They need to do the math. It costs six to eight times more to acquire a new customer than it does to keep a customer and build loyalty. If the customer doesn’t continue to buy the product, the $60-$120 spent to get them to TRY your prodict or service the first time was wasted.

Customer Loyalty Wise Spending and Fiscal Priorities.

Priorities Wrong: Many companies continue to spend 75% of their sales and marketing budgets to get non-customers to try their products while spending relatively little on the 20% of their customer group who provides them with 80% of their revenues.

Telecommunications is an industry (telephone, cable, satellite, voip) are famous for getting this part of the business backwards. We see telecom companies pay to acquire the same customer over and over again. They’ve been known to write checks to get people to switch to their service or offer large incenvtives over a short time period. 

Then they take such poor care of those same customers that they drive customers away again.

Break this cycle requires a giant amount of long-term cultural and corporate change. Spending money to acquire new customers doesn’t require change- it requires cash.

Most choose cash over change. Most are wrong and confuse this short term tactic with strategy.


Build customer loyalty. Customer loyalty and customer relationships Make Business Work.


Margaret Ross is president of Visible Strategies Communications a Business Marketing Consultancy specializing in a online reputation marketing and Founder of the Kamaron Institute, a premier management consulting and educational consulting firm, advising leading companies and educational organizations on issues of market strategy, organizational dynamics, personal development, communications and technology.


© All World-wide rights reserved. Margaret Ross the Kamaron Institute, Visible Strategies Communications


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