Reward clients for their loyalty

Unless you are just starting up your small business, you will already have a number of clients who are happy with their purchases.  These clients have the potential to help you grow your business, provided they remain loyal and make follow-on purchases.  I use the word “potential” because it is very easy to drive them into the clutches of your competitors.

When your existing clients are happy, they will willingly buy more of your products and services.  They may do this without any involvement from you or they may require some gentle nudging.  It will depend on the nature of your business.  Either way, you will be pushing against an open door, so any resistance you get is minimal.  What is important to note is that your costs in securing these follow-on sales will be much lower than the cost of winning the client in the first place.  This is an important point to remember.

Naturally, the more unhappy and dissatisfied your client is with their earlier purchase(s), the more resistance you encounter when trying for follow-on sales.  These clients are likely to demand more concessions from you (in the form of discounts) which will directly impact your profits.  These sales will also take more effort from you, increasing your cost of sales and further reducing your profits.  Follow-on sales from unhappy clients, if they happen at all, carry much lower profit margins.

It is clear you should be doing whatever you can to keep your clients happy.  You want their follow-on purchases to maximise your profitability.  You should be doing whatever you can to keep these clients loyal to your company for as long as possible.  It is a useful exercise to think in terms of the lifetime value of each client.  They may only buy a modest amount in a year, but if this repeats each year for 10 years then you will have realised a significant profit in the end.

One of the most powerful ways to develop loyalty, apart from giving excellent service, is to acknowledge the client’s value to your company.  There are many ways to achieve this from periodic “thank you for your business” messages to special offers, open only to loyal clients.  You could offer special pricing or free gifts or entry into a competition to win a valuable prize.

This approach of showing your appreciation for your most loyal clients and enticing them to remain loyal for longer applies to all suppliers, both small and large.  The prerequisite is delivering excellent service – you can’t expect any loyalty if your service is rubbish.

Although this is a simple concept, not all companies get it right.  Many do the exact opposite of what is described above.  Have you spotted this with the renewal of insurances, broadband services and mobile phone services?

A quick check on the Internet will reveal the prices you are being quoted to renew these services are often higher than a new client would pay.  When you perform some comparisons with other providers, you find it cheaper to switch supplier than renew with your current supplier.

Surely keeping an existing client, one you know well, is a less risky option than winning a new client you don’t know.  If I was running one of these companies, I would ensure my most reliable and profitable clients were retained by offering them the best deals.

Some companies are very sophisticated in rewarding loyalty.  Two of the most obvious are the airline industry and the hotel industry.  Their frequent-flier and frequent-stayer programmes encourage their best clients to come back time after time.  These programmes cost the industry considerable sums of money to administer but the benefits are easily justified.

The traveller benefits by being “looked after” and made to feel special.  Those people who take multiple flights and use hotels extensively will spend significant sums over, say, a 5 year period.  The lifetime value of a frequent flier is what the airlines are measuring, not the revenue from a single flight.  This ignores all the times when your client recommends your airline to other people.  The same applies to hotels.

How good are you at looking after your clients and rewarding their loyalty by taking a long-term view of their value to your business?


  1. Keep in mind the lifetime value of your clients.  Devise low-cost ways that you can reward their continual loyalty to your company.  Aim to retain all your profitable clients forever by ensuring they are highly satisfied with your company.
  2. Study how other industries reward
    client loyalty and investigate how you can implement some of the ideas in your company.
Posted in Customer Care