Lina Barfoot
Lina Barfoot Editor at SavvySME

Does it pay to invest in customer loyalty?

I guess really I'm asking if retaining customers is always better than acquiring new ones?

Top voted answer
Brett Dashwood

Brett Dashwood at The Document Institute

I 100% agree with Jef.

If you don't care for them, they won't care for you, and the time and effort of training and grooming them to your systems and processes (and the way your products serve their needs and pain) needs to be continually repeated if you are just looking at new customers (which is just like you should be thinking about staff too).

If you are in a purely transactional commodity market where loyalty doesn't feel like it matters (people are simply after the cheapest price) then it could be argued that the focus should be predominantly on getting new customers. However even in this case, it is a lot cheaper and easier to sell to loyal customers again (and again and again and again) than finding new customers.

Jef Lippiatt

Jef Lippiatt, Owner at Startup Chucktown

Great additional thoughts. I totally agree that this doesn't just apply to customers but staff as well.

Jef Lippiatt

Jef Lippiatt, Owner at Startup Chucktown


I would say that retaining customers is almost always better than trying to acquire new customers.

  • Cost - you don't have to market the same way to current customers as you do to potential new customers. Keeping customers long term will keep your upfront costs down.
  • Profit - current customers are likely to become long term customers if they are happy with your products and services. This means that over time they will likely purchase from you again (potentially order size / sale size will go up or at least repeat with consistency).
  • Marketing - current customers who align with your brand and values will not only become long term customers, but they will become loyal customers. Loyal customers are likely to tell others about your products and services (for free) based on their good experiences with your company. Word of mouth is one of the most trusted and lowest cost ways to gain new potential customers.
  • Feedback Loop - current customers that become long term and/or loyal customers are much more likely to share candid feedback with your organization. They are also potentially more willing to give of their time. So are you planning to test a new product or service? Chances are they would be great people to put it in front of and get early feedback. They already like your products / services so if the new product / service doesn't resonate with them, chances are you need to make some tweaks.

These are just several of the reasons that current customers are of vital importance to your venture. With Current customers you can measure their engagement levels, spending levels, interests, price points and more. You can use this to determine how value they will be to you over the Customer Life Cycle (CLC). With potential customers you don't know if they are likely to make repeat purchases or if they'll only buy something once. It is harder to measure the impact of a potential customer than keep an existing customer.

Steven Freeman

Steven Freeman at

Yes because it is generally more costly to acquire new customers than look after (and reward) existing ones.

Kate Smith

Kate Smith, Head of Marketing at The Kate Project

Hi Lina,

I would recommend shifting up the mindset of 'you can always find new customers'. The simple truth of that matter is that you can't. Ask Kodak. Ask Nokia.

Putting your customers at the centre of your decision-making process, and building loyalty because of that focus, is strategically sound and will help drive up revenues and down costs. We all know the adage that it costs more to find a new customer than to keep an existing one. It is a cliche because it is true.

Customer loyalty is difficult to build certainly, particularly if you have a product or service that is built around price, but if your value proposition is built around pretty much anything but price, customer experience and the corresponding loyalty are great for your business health.

Not only will loyal customers buy more, and more frequently from you, they also become advocates - brand ambassadors that willingly spruik your excellence. They do this because you make them feel valued.

Customer loyalty also doesn't have to be a formal loyalty program. These are often time consuming to set up and monitor. Customer loyalty can be as simple as delivering on their expectations and delivering the occasional surprise. It might be making your returns process simple to execute. Or including a handwritten note with their purchase. It might be remembering their name and what you talked about last time you met. Loyalty takes almost no revenue to build effectively if you aren't a low price driven business.

Invest in your customers and they will invest in you.

Brad Lyons

Brad Lyons, Consultant at

Retain your customers is always good, if you can do that getting more will be easier. For example, one of my companies is online courses. Not the best industry for retaining customers if you only have a couple of courses. However instead of just letting the customers go I ended up creating an industry organisation. So the customers who have completed the course that gets them in the industry now have a place they can get more industry information and network with others.

Normally those customers would do the course and that was the last I heard of them. Now they are still customers, they pay an annual membership fee and stay in contact. Best marketing move I made as they promote my course to others and I have more insight into the industry as I have a industry organisation now.

So even if you business is setup for one time customers there is still a way to retain them. Just think outside the square.

New customers will come if your current customers spread the word.

Brian Bijdeveldt

Brian Bijdeveldt, Principal Business Coach at Profitkoach

Clever move Brad! Yep, all good feedback from the group. Basically you would be shooting yourself in the foot by not investing in customer loyalty/retention. Without engagement the attrition rate will be high, marketing costs high and profitability low. Your existing (good) customers are a gold mine of future business potential and referrals to new (good) customers.

Nandita Reddy

Nandita Reddy, Sales and Marketing Manager - Australia and New Zealand at Aimia Inc

I think we should firstly stop looking at customer loyalty as a points system, and start looking at it as a way to engage with our consumers, and build longer lasting, meaningful relationships.A recent study by Aimia Inc, a data-driven loyalty marketing company show that engaged customers are nearly 3 times as valuable, stay a customer nearly twice as long and at the end of 5 years are significantly more valuable.These stats really reinforce the age old 80-20 rule, where 80% of your revenue will come from 20% of existing consumers. But if you're not looking after your customers, if you're not keeping them engaged, or making them feel valued, they will go elsewhere! Technology has enabled consumers to have so many a variety of shopping/purchase options - and fingertip-ready information with which to make decisions. In this new environment, brands must use new technologies to deliver always-on, personalized experiences to stay relevant and drive preference, otherwise you will get left behind. As touched upon by Kate, if we look at Nokia, Dick Smith, etc, it's easy to see that companies that aren't being innovate or staying relevant, will get left behind. Once again, if we look at the stats from Aimia's loyalty lens, we can see how Australian's actually view and value loyalty programs.The report can be found on: membership of loyalty programs happens to be amongst the highest in the world, with 87% of Australians being members of at least one loyalty program (global average 85%). 72% are members of a supermarket loyalty program; followed by airlines (39%) and department stores (30%).Consumers understand that personal data is a currency they can share with marketers in exchange for offers, recommendations, content and experiences that are tailored to them. So as a marketer, this is the perfect opportunity to leverage this insight to create those meaningful experiences and develop a long-term relationship with your customer!