The Value of Investing in Loyal Customers for F&B Businesses

As businesses embark on their digitalisation journey, the unprecedented importance of building an online presence and an army of loyal customers to the survival of F&B restaurants has become extremely evident. These loyal customers are the ones who will consistently choose your brand over your competitors’, and who will visit your business repeatedly without any incentive.

Want to learn more about how these loyal customers can add value to your restaurant’s post-pandemic recovery and benefit your business? Read on!

Loyal customers increase profitability in the long run

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The concepts of customer retention versus customer acquisition has long since been researched by businesses. Customer acquisition is the act of attracting new customers - ones who have never been to or even heard of your business before,while customer retention is the act of holding onto the attracted customers - those who have already visited your store, and know your business well. While both are essential to a business’s survival, it has been found that a mere 5% increase in customer retention can lead to a substantial 25-95% increase in profits, thus highlighting the importance of nurturing the relationships with your existing customers.

Why is this so? One likely reason is that first-time customers will usually be more hesitant to spend a significant amount on their first purchase due to uncertainty about your business. Compared to new customers, loyal customers are 50% more likely to try new products and spend 31% more on average due to the trust they have in your product, given their prior experiences with your business. They will thus be more comfortable with making larger orders each visit and even with trying new seasonal items.

This combination of lowered costs and increased revenue makes it clear to see why loyal customers are more profitable in the long run.

Loyal customers can lower customer acquisition costs

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Loyal customers have the ability to become brand advocates for your business. The appeal of having an existing customer act as a brand ambassador comes from the fact that 77% of customers would recommend a brand to a friend after a single positive experience. This means that they are more likely to promote your business through positive word-of-mouth and recommend it to their friends and family.

These loyal customers can thus help to complement your business’s marketing efforts and bring in new customers by improving your brand image, eliminating a few steps in the customer acquisition process as a result. In fact, research shows that retaining an existing customer costs 5x less than acquiring a new one. Thus, investing in customer loyalty can greatly reduce your customer acquisition costs.

By generating referrals from your loyal customers, you can also save costs on marketing campaigns or even from reducing in-store discounts. Hence, a better strategy would be to spread awareness to those who don’t know your brand by encouraging your existing customers to promote your brand for you!

Loyal customers allow you to better understand your customer base

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The importance of brand loyalty was demonstrated during last year’s Circuit Breaker, where it was shown that people were likely to visit the same places recurrently. With this close proximity to repeated customers, you will be able to familiarise yourself with your customers’ preferences and spending patterns once you build up an army of loyal customers. This will make your business more in tune with what your customers are looking for and hence give you opportunities to increase customer satisfaction.

These customers can also act as a focus group and allow you to gather valuable insights on how you can improve your business when they provide useful feedback. This allows you to create your own customer database and reap the benefits of such.

Firstly, owning a reliable customer database allows you to better align your marketing and sales initiatives with what your customers want. You can hence reach your customers in a more targeted fashion and ensure that customer satisfaction is at the forefront of your business operations.

Owning your own customer database also allows you to build better and lasting relationships with your customers. It gives you opportunities to reach out to your customers directly and extend exclusive offers to them to keep them coming back.

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Here at Aimazing, we believe a fundamental building block to every successful business is building a loyal customer base and reaching out to customers directly. The rewards of such strategies were seen by one of our merchants, Ichiho, who went through their toughest months in April and May 2020 due to the Circuit Breaker. Fortunately, they were able to build a loyal customer base which helped them increase their revenue drastically in the following months. Hear more from their founder, Jack Pua, about the solutions they implemented to achieve this success in the video below!

Want to know more about building a loyal customer base?

Stay tuned to our upcoming blog article that will give you all the insights your business needs to attract and retain loyal customers. Visit our website to stay updated!