Customer Loyalty In Today's Economy

Posted: April 21, 2009

Topics: Strategy

Everyone knows that the two ways to increase sales are to (1) obtain new customers, and (2) tap into the existing customer base. As the recession continues, companies are cutting advertising and marketing budgets to solicit new customers; and thus, are relying on loyalty from their existing customer base to provide needed sales and revenue.

The problems arising from this strategy are that customer loyalty cannot be depended on in this economy when everyone's decisions are made almost entirely on financial factors - not necessarily on quality and relationships. In addition, overall sales volumes are declining, and studies have shown that there is greater potential ROI from soliciting new customers as opposed to striving for higher purchase frequency from existing customers.

The previous adage "This is the way it's always been done" has diminished in the current economy and everything is up for grabs - so instead of relying on existing customers to help "make it through," keep in mind that targeted marketing efforts to obtain new clients may be a better investment in the long-run.