Select Page

Right now, many small business owners are worried about keeping in touch with their customers when they can’t connect in person. It’s more important than ever to use every resource you have to maintain and grow your book of business. Loyal customers are perhaps your most valuable resource — but only if you can activate them.

What’s the difference between customer retention and customer loyalty?

The difference between customer retention and customer loyalty is more than a difference in vocabulary. While they share some similarities, retention and loyalty cannot be used interchangeably when describing customers.

A retained customer may buy from you again, or they might not. They may go with someone else once the time comes. They are retained simply by the fact that they haven’t shopped anywhere else yet.

A loyal customer will buy from you again and encourage others to do the same. This often results in quality referrals and positive word-of-mouth reviews. Loyalty goes beyond spending money. Loyal customers will vouch for you and serve as advocates for your business.

One study showed extremely happy customers are more than five times as likely to repurchase. In addition to a high return purchase rate, they are also almost seven times as likely to forgive a business. Those are pretty incredible stats!

As every small (or medium or big) business owner knows, the backbone of their success is people working hard to make customers happy. A customer that sticks by your business through positive and less than positive experiences is a truly loyal customer.

How do you find out if you’ve got a loyal customer on your hands?

One way to find out the difference between customer retention and customer loyalty is to use something all consumers have seen at one point or another. Look familiar?

the difference between customer retention and customer loyalty

Image courtesy of QuestionPro

This survey is an example of the simple but effective Net Promoter Score (NPS). Companies and businesses use the NPS to see how customers perceive their business.

While it may seem like getting a majority of people rating you around 7/8 would be a good thing, those customers are neither unhappy or thrilled. The difference between customer retention and customer loyalty lies right here. The customers ranking your company a 9/10 are the “promoters,” aka, loyal customers. Those loyal buyers will be serving as advocates for your business without you asking.

the difference between customer retention and customer loyalty

Image courtesy of QuestionPro

Those that rank your company between a 0-6 can provide valuable feedback. For most people, constructive criticism can be difficult to hear, but for a business, this information can make a big difference to your bottom line. What could you have done better to help serve them? That information may not mean these customers will ever go from a 0 to 10, but it could help push a customer who ranks you a 7 or 8 move into the loyal customer category.

How do you take a customer and turn them into a loyal customer?

One downside to the simplicity of the NPS survey is that it doesn’t allow customers to elaborate on why they voted the way they did. Learning the “why” is more important than ever with countless options at the fingertips of every unsatisfied buyer.

What can help the unhappy customer think twice before searching Google for another business is excellent customer service and a positive buying experience.

The “why” is more difficult to find out, but worth the effort. Your customers may say they wish your marketing emails were more helpful and less about selling, and that is something you can fix. If they thought you called too much or not enough, you can work with that.

With the answers to these questions and other information like whether these clients have provided you testimonials, sent you referrals, and engaged with your marketing communications, you’ll have a list of your loyal customers.

How do I get loyal customers to help my referral business?

This final question may be the most relevant to business owners. If a loyal customer shouts your business from the rooftops, there isn’t much for you to do but thank them.

But that often doesn’t happen without a little prompting. Keep in mind that even loyal customers do not always realize the impact that referrals have on your business. In most cases, the best way to get help with your referral business is to ask. Yes, it sounds simple, but it does take a little effort on your part, and it’s worth it to your business.

Check out the posts found here and here for more detail on how to activate those loyal customers and get referrals from them the right way.

Bottom line: be sure you are tapping into your network of happy customers for referrals.

Use the Power of Your Network

Knowing the difference between customer retention and customer loyalty means you won’t miss opportunities within your existing network. Customers that already know your value and can give a personal account of how great you are to work with allows you to instantly stand out from the crowd.

For many businesses or marketers, this all is easier said than done. If you need help with your marketing automation or want to learn more about how it keeps you top of mind with your network, we’re here to help.


Almost There!
Get the latest Email Marketing Roadmap now.

Read Next

We write great emails

Sign up for our newsletter and get the best of our blog, tailored for you.