Customer loyalty as a Growth factor for Startups
For a Startup, How to grow is probably the most important question. The early days of startup are very tough. There are a lot of constraints in their way towards growth. Strong rivals and scarcity of resources being a few. So, what should a startup do to grow? Can a startup leverage Customer Loyalty as a growth factor?
Before answering this question, let’s first understand what customer loyalty is?
Business Dictionary defines Customer Loyalty as “the likelihood of previous customers to continue to buy from a specific organization”. This definition portrays a very narrow meaning of customer loyalty.
Customer loyalty as a broader term can be defined as the following. “Customer loyalty is both an attitudinal and behavioural tendency to favour one brand over all others, whether due to satisfaction with the product or service, its convenience or performance, or simply familiarity and comfort with the brand”- prloyaltymarketing.com
Whether we take the narrow definition of customer loyalty or the broader definition, the results are same. Customer loyalty results in repeated purchases from the same brand. Customer loyalty is that stage of your relationship with the customer where he/she is committed to purchase from you.
Customer Loyalty as a Growth Factor for your Startup
You are new in the market. You have just started to carve a niche for yourself. Not many people know you and your brand. You have only a few customers. And customer acquisition costs are very high.
Being in the early days of your startup, you would obviously want to spend more on product development rather than marketing and advertising. So, instead of spending a great amount of money and efforts on acquiring new customers, you can work on retaining the old ones.
Customer loyalty doesn’t only help you in increasing customer retention. It also contributes to customer acquisition. Wondering how? Let me tell you. The answer is Word of Mouth Marketing or WOM.
Word of Mouth Marketing
You must have heard this term a thousand times. But, what is Word of Mouth Marketing exactly. The most important thing is, this is the kind of marketing where you don’t need to spend even a penny. Exciting!!! Isn’t it?
How does it work then? WOM is the kind of marketing that your loyal customers would do for you by spreading the word. When a customer is extremely happy with you and your service, he will not only repurchase from you but will also recommend you to his friends and family.
There, your existing customers are marketing your brand on your behalf. And they are doing this without being prompted by you. And given that we live in an era of social sharing, words spread like fire.
If someone has become your fan, they will definitely praise you on social media where hundreds of their friends will see the post. If not all but at least 5% or 10% of those friends would think of giving you a shot. What can be better than this for a startup?
Customer Retention and Customer Loyalty is the mantra for Startup success
As a startup, you should concentrate on your early customers as they can become your lifelong customers. Not just that, your loyal customers can also become your brand advocates. They will prompt others to become your customers and the chain can go on.
If a startup is successful in creating customer loyalty, growth is a given. No competition or harsh market conditions can stop you from growing as long as you enjoy your customer’s loyalty. But, be careful. Don’t take them for granted. Like every relation, this relation can also end if not nurtured properly.