The importance of customer loyalty and retention cannot be overstated, especially in a saturated economy where everyone and their grandmother seems to have a business, know what they’re doing, and provide an awesome product or service at bunker-busting prices.

Why is customer loyalty important? Why do we have to worry so much about retaining customers?

One word—the numbers.

The importance of customer loyalty and customer retention cannot be overstated — two blue hands shaking surrounded by three orange arrows

The math behind this is pretty clear: keeping a customer is infinitely more profitable, even in the short term, than having to go out and get a new customer. Here are some interesting numbers from an article in the Journal of Marketing and Consumer Research about customer retention for the mobile phone industry:

  • “The cost of acquiring each new mobile subscriber was estimated at between $600 and $800, which encompasses many costs such as advertising, marketing, sales and commissions (2002)”
  • “The average annual revenue from each mobile user is $439.00 (2009)”

So, if these numbers are correct, the revenue that new customer generates in the first year is only going to cover half (approximately) of what it cost to get that customer in the first place. And note the discrepancy in the dates—that’s 7 years between the two cited studies. That $600–$800 figure is even higher by the time the second survey is taken.

So, once you’ve acquired that new customer, they have to stick around for 2 years (in this example) to make up for what it costs to get them.

Obviously, this example is specific to this particular industry, but the general principle remains broadly applicable. Depending on who you ask, getting a new customer might cost you from 3 to 30 times what it costs you to hang on to that existing customer.

And then, depending on your business, it might be a long time before the cost to get that new customer is outweighed by the revenue they’ve generated.

Now, it does cost a bit to maintain that customer loyalty, but you can see why maintaining that customer loyalty in the first place is so important—losing a customer is basically digging a giant hole that it might take forever to crawl out of.

Keeping your existing customers around is starting to look like a lot less of a pain in the butt.

There’s an Answer to This Problem, and It’s Also the Answer to Bringing New Customers In—It’s Amazing Customer Service

Customer service that exceeds expectations is the key to keeping customers loyal, to retaining the people who are, truly, the foundation of your business.

But it goes beyond that. Products, services, and prices tend to be really, really similar within the confines of industry and product or service category.

It’s hard to stand out from the crowd.

The thing that really makes the difference is customer service. One bad customer experience can drive a loyal customer of 20 years into the arms of the competition.

So, if you’ve got excellent customer service, if you’re known for being friendly, fun, easy to work with, and a brand that really gives a darn about its customers, the second the competition is rude or condescending to their customers, those customers will flock to you in droves.


Because when someone kicks butt and takes names at customer service, customers don’t keep it to themselves—they spread the word.

They rave about it. To their friends. To their coworkers. To their family.

And when the time comes to make a change (usually because of poor customer service), guess who’s going to be top-of-mind for the customer who suddenly needs a new provider of your product or service?

Basically, offering excellent customer service and an unparalleled customer experience is the easiest way to differentiate yourself from the competition.

Competing on Quality or Price Is Tough—Competing on Customer Service Is Easy

Competing on customer service (and not price or quality) is easy because:

  1. Most brands don’t value, and therefore suck at, customer service (because they just don’t understand the critical importance of customer loyalty)
  2. It’s not complicated or difficult to provide excellent customer service
  3. It just costs less than trying to produce ever-more-impressive or ever-cheaper products and services.

You see, you’ve basically got three broad areas in which you can compete with the other brands who do what you do:

  • Quality of your product/service
  • Cost of your product/service
  • Quality of your customer service

That’s really about it. And when it comes to the first two, customer loyalty is extremely fickle.

A cost difference of a few dollars can siphon customers away at rates you wouldn’t believe.

A product that performs slightly better than the competition, a service that provides just a bit more value than what you can provide, draws once-loyal customers like bees to spring flowers.

And both of those games are difficult to win (not to mention expensive). The game of creating ever-more-advanced products requires ever-greater injections of cash, time, and other resources to improve a product or service only slightly.

The game of dropping your price through the floor is about as much fun as seeing who can lose the most weight by slicing off body parts—eventually, someone dies, and the one who’s left is a bloody mess stuck with razor-thin margins.

Which Leaves You One Option on Which to Compete, One Option That Just so Happens to Work Wonders When It Comes to Creating (and Maintaining) Customer Loyalty

And that’s customer service (or maybe I should say customer experience).

Look, no one with half a brain in their head is going to dispute the importance of customer loyalty. If your customers are running for the hills, you’ve got a serious problem looming on the horizon.

Revenue comes from customers. No customers—no revenue.

I think this is clear to everyone.

What’s perhaps unclear is that excellent customer service (or, more broadly, crafting a superior customer experience) isn’t just an excellent way to set yourself apart from the competition (it is).

It isn’t just a way to retain customers, keep them happy, and encourage them to keep paying you week after week and to buy new products and services (it is).

It’s a way to make yourself look more attractive than the competition. Words mean little. Actions speak louder.

Customer service is an action, and it has far, far more meaning than an advertisement, than a pamphlet or brochure, than a website, than any form of marketing could ever hope to have in its wildest dreams.

Just think about it—look at your own experience. Have you ever had a single customer service experience that made you more loyal to a brand than any product or service they provided?

When you finally made a human connection with a brand, when you felt like they gave a damn about you, when you saw that they were willing to do something a little bit beyond what’s expected just because it’s the right thing to do, how did that make you feel?

I’d guess it made you feel pretty darn good—not to mention loyal.

Generally speaking, it’s a lot cheaper to just be a decent human being to your customers and go above and beyond every now and then than it is to spend thousands and tens of thousands and hundreds of thousands and millions of dollars on marketing, advertising, and sales, only to have the customer you spent so much dang money to get walk away because they had a poor customer service experience.

And, providing continued quality customer service to your existing customers keeps them pleased with your product or service and open to any suggestions you might have for how they could give you more money.

Everybody wins.

Customer Loyalty Is Critical—And, If You Know What You’re Doing, You Can Create Raving Fans Who Will Spread the Word About Your Business

It’s one of the topics we cover in our upcoming marketing e-course, Level Up to Awesome.

Because all the marketing in the world can’t create incredibly loyal fans—but, if you know what you’re doing, you can set them on the right path with a combination of marketing and excellent customer service.

Learn more about the course (which opens in just a few days) here:

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