Did you know that 62% of consumers report feeling an emotional connection to brands they most frequently buy from? This emotional connection is what makes customer loyalty — the willingness to make repeat purchases — so strong. Because retaining customers is less expensive than acquiring new ones, it’s desirable for brands to keep their customers feeling connected. But that’s not the only benefit of customer loyalty. In this article, we discuss 3 key benefits of customer loyalty and 3 ways you can improve it.

Benefits of Customer Loyalty

1. Increased Sales and ROI

According to Bain & Co, as little as a 5% increase in customer retention creates over a 25% increase in profit. Loyal customers spend more than new customers and make more frequent purchases. Reaching existing customers is much easier, and obtaining their feedback provides key insights for improvement. Moreover, loyal customers share their experiences with friends and family, leading to organic growth. Brands are also able to save on their marketing costs by focusing on customer loyalty.

As little as a 5% increase in customer retention creates over a 25% increase in profit.

2. Word of Mouth Marketing

Another great benefit of customer loyalty is the ability to reach new customers through word of mouth marketing. Happy customers share their experiences with people they know. By focusing on relationship building, businesses can improve brand equity.

Here are some examples of brands that do a great job of using word of mouth marketing:


Netflix is a household name for good reason. The content streaming service continues to wow us with a variety of binge-worthy shows we can’t stop talking about. By using user generated content on their social media, they are able to prompt conversations and excitement about their upcoming shows.


Wonderfold is an innovate brand that designs and sells foldable wagons for children. They are able to grow word of mouth marketing with their legacy program, which rewards customers who join by offering points and rewards for the activities they complete.

Offering rewards, showing customer appreciation, and aligning with customers’ values all help support positive word of mouth marketing. Moreover, when you understand who your most loyal customers are, it’s easier to find and attract new ones.

3. Greater Brand Loyalty

A recent consumer survey by Havas group found that only 47% of brands are viewed as trustworthy. When brands focus on customer loyalty, brand loyalty improves as well. By offering excellent customer support, quality products and incentives for repeat purchases, brands gain trust. Another great way to do this is by aligning with customer values – such as being environmentally friendly, inclusive, and sustainable. The survey found that 73% of participants believe brands should act for the good of the planet and society. To further strengthen connections, offer ways for customers to become a part of your community, such as brand ambassador opportunities or loyalty programs.

55% of consumers feel brands aren’t making true progress in championing social causes. Source: Nielsen Scarborough

How To Improve Customer Loyalty

There are a number of ways to improve customer loyalty. For starters,  it’s important to offer high quality products and services. Without providing real value, customers simply won’t come back. The next step is to offer excellent customer service, providing multiple ways for customers to reach you and the shortest response times possible. Beyond that, creating customer loyalty programs is an excellent way to incentivize customers.

An excellent way to improve customer loyalty is by establishing loyalty programs. Loyalty programs have grown immensely in recent years. They provide ways for your customers to interact with you and grow relationships. According to Salesforce’s Connected Shoppers Report, 56% of consumers say they are more likely to buy from brands with loyalty programs. Below are 3 types of loyalty programs that provide value to businesses.

1. Loyalty Rewards Programs

Loyalty reward programs offer additional benefits to customers to incentivize them to buy more. Here are some examples:

  • Point rewards – Businesses can offer reward points on purchases to later be used in store. For example, Petco offers 1 point for every $1 spent. 100 points = a $5 coupon.
  • Product rewards – Customers receive free products for their purchases.
  • Personal shopping codes – Gives buyers a percentage off their purchases.
  • Punch card programs – These are popular with local restaurants. Ex. “Buy 10 sandwiches, get one free.”
  • Tiered rewards, such as the Sephora Beauty Insider, gives customers greater rewards the more money they spend.

These types of rewards are easy to set up and great for small and large businesses alike.

2. Brand Ambassador Programs

Brand ambassadors are people who already love your brand, and are offered incentives to help spread the word about it. Starting a brand ambassador program is a great way to improve word of mouth marketing and increase brand awareness. They nurture long-term relationships and build trust. When done right, they also increase sales for a lower cost than traditional advertising.

Popular brand ambassador activities include:

  • Creating and publishing promotional content on social media
  • Becoming experts on your products and services
  • Providing feedback and reviews
  • Attending product launches and brand events
  • Writing blog posts about your brand

If you’ve started a brand ambassador program but are struggling to stay organized or measure success, consider using BrandChamp. We’ve created an all-in-one platform where you can manage every kind of ambassador marketing program with built-in analytics and automated features to save you time.

3. Referral Programs

A customer referral program is a way to give rewards to customers for their referrals, as well as increase company sales and ROI. Participants are typically given referral links and discount codes to share with friends and family. When a purchase is made, they earn rewards such as discounts, point rewards, gift cards or cash commissions. Referral programs can also be integrated with other types of programs including rewards and ambassador programs. When building a referral program, it’s important to make it easy for customers to receive their rewards.

61% of consumers who use loyalty programs say they would do so more often if rewards were automatically applied.

The Value of Customer Loyalty

The value of customer loyalty is undeniable given the changing needs of the consumer and steep increases in cost of new customer acquisition. Whether you’re a small business or well-established, keeping your customers happy and speaking positively about your brand is critical for success. By creating loyalty programs and managing them well, you can increase profits much more easily than with traditional forms of marketing.