The value of customer loyalty: By the numbers

Customer loyalty directly impacts growth and profitability. But how much does it really move the needle on key metrics? Let's dig into the data.

Loyalty's revenue impact

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Loyalty is not just about repeat purchases, but also attracting new customers through word-of-mouth referrals from satisfied, loyal customers. 

• 84% of companies that work to improve their customer experience report an increase in their revenue. (Source: Dimension Data)
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• A mere 5% increase in customer retention can increase profits by 25% to 95%. (Source: Bain & Company)
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• Repeat customers spend 67% more than new customers. This stat is cited often by Inc., Business.com and Fit Small Business, incorrectly. There's no original source for the stat on their pages. That's right – the Inc article links to the Business article and vice versa. Where on earth did this statistic actually come from? After some research, we found that it actually comes from a 2014 study by Manta and BIA/Kelsey called “Achieving Big Customer Loyalty in a Small Business World".

Loyalty versus acquisition

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While new customer acquisition is crucial for growth, repeat customers tend to have a higher lifetime value and are more cost-effective to entice into another purchase, often for a higher amount.

A la:

• According to Gartner, 80% of a company’s future revenues will come from just 20% of its existing customers.
• The probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is only 5-20%. (Marketing Metrics book)
• Referrals have a 50-70% close rate, while cold leads convert at 10-30% on average. (Hubspot)
• Acquiring a new customer is 6 to 7 times more expensive than keeping an existing one. (HubSpot)
  

Loyalty programs

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Consider these insights from research by Bond on how loyalty programs can impact retention:

• 77% of consumers say they are likely to stay with a brand that has a loyalty program.
• 70% of consumers are more likely to recommend a brand with a good loyalty program.
• 63% of consumers say they're prepared to modify their spending habits in order to maximize the benefits of a loyalty program.
  

Customer experience (CX)

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The customer experience will be shared

Customers will amplify their experience, whether negative or positive. As a company, you get to decide how important customer delight is to your loyalty program. Ignore it at your peril.

• A 5% increase in customer retention produces 25% to as much as 95% increase in profit. (Bain & Company)
• 25% of Americans in 2023 think the government delivers great customer service (compared to 28% in 2022, and dropping from 38% in 2021) – according to the "State of Customer Service in 2023, Achieving Customer Amazement" study, researched and compiled by Shep Hyken.
• 86% of customers are willing to switch brands after a negative customer service experience. (Hyken)

The numbers tell a powerful story – loyal customers lead directly to growth, year after year. Companies doubling down on world-class customer experiences reap the rewards. Keep these numbers in mind as you continue to strive for loyal, satisfied customers.

Need help creating some loyalty strategies? Review our guide to customer gratitude for a few easy ideas to get you started.

Check out our customer engagement stats to see where to place your efforts.