Your company’s reputation is not merely a reflection of your public image, but a tangible asset with measurable impact on the most essential aspects of your operations. This ReputationUs five-part series delves into the key areas where the concrete value of managing your reputation has clear business benefits.
In Part 4, we consider the value of customer retention on your organization’s reputation.
THE REPUTATIONAL VALUE OF CUSTOMER RETENTION
Lately, when it comes to retail purchases, U.S. consumers are choosing less expensive options, delaying purchases, and focusing on saving rather than spending, according to McKinsey reports. As a result, customer loyalty and retention has been top-of-mind for many companies.
While retention is a metric that defines a customer’s lifetime value, loyalty is what customers feel toward brands. Both impact your company’s reputation and support your long-term success.
Having a strong reputation is crucial for companies to thrive in today’s competitive landscape. Not only do consumers engage more with brands whose reputations they trust; research shows brands with a great reputation are often perceived as providing more value. A trusted reputation allows you to charge a premium, increase customer lifetime value, reduce costs of capital, and deliver sustained earnings and growth. (See our first article in this series on the financial benefits of managing your reputation.)
Loyal Champions
By putting an emphasis on customer experience and personalization, and by focusing more on emotional loyalty, companies can create a strong bond with their customers and inspire them to continue coming back, according to Avanto, a provider of loyalty technology.
The company’s 2023 loyalty statistics overview show that, beyond simple transactions, loyal customers form emotional connections with brands and become advocates who champion their favorite products or services to friends, family and acquaintances.
The value of customer loyalty in shaping a company’s reputation in social media and online reviews is more important than ever. Consider that:
- “A positive Internet reputation” is the most important factor when considering a business, according to a TrustPilot consumer survey on The Value of a Trustworthy Brand Reputation, published in July 2019. Consumers listed having the “best quality product or service offering” as the fourth most important factor when choosing a business, emphasizing the growing significance of reputation in our digital world. Moreover, 90 percent of consumers reported not frequenting a business with a bad reputation.
- According to a 2023 ReviewTrackers report, 28 percent of customers will leave positive reviews of a business after a positive experience, while 94 percent of customer said a negative review convinced them to avoid a business.
Business Value of Customer Retention
Research from the recent State of Customer Loyalty and Retention 2023 survey published by the ecommerce marketing company Yotpo, found that customer reward and service play a huge role in keeping customers loyal to a brand.
More than being easier or cheaper to sell to an existing customer than a new one, loyal customers making repeat purchases impact the sales of a business more than one-off new customers. Loyal customers are likely to spend 67 percent more on a product than new consumers of that same commodity, according to TechReport.
According to research done by Boston Consulting, 82 percent of businesses say maintaining existing customers is cheaper and easier than acquiring new ones. This is because a product or brand appeals more to prospective customers who are offered an incentive at the purchase point. The research shows that these reminders of product quality and incentives cost up to $34 for each customer experience in marketing alone. This contrasts with an existing customer who knows the product’s quality and simply needs a reminder of the brand’s loyalty bonuses, which could cost as little as $7.
When it comes to managing your company’s reputation, consider customer retention as the bedrock of a sustainable business. It represents the culmination of positive experiences, consistent quality and effective communication between a brand and its customers—all essential elements of a sound reputation management plan.
By conducting a reputation audit of your company in the marketplace, ReputationUs can help ensure you are actively listening to, managing, and responding to customer feedback. This can help support the best long-term view of your business, and your overall business success.
- To review Part One of our “Value of Reputation Management” series, highlighting the financial benefits of managing your reputation, click here.
- To review Part Two of our series discussing the value of mitigating risk to your corporate reputation, click here.
- To review Part Three of our series exploring the valuable connection between social media influencers and the reputation of your brand, click here.
