Integrating Spending With Customer Loyalty

In an earlier post, it was mentioned that one of the most valuable pieces of information you can gather is the amount that an individual spends regularly in your industry, and compare that to the amount they spend at your business. If there is a serious disconnect, then it may be time to figure out why they are not spending more money with your business, and find a way to improve that number. There are other potential benefits as well. One example is matching the amount they spend and the differences with loyalty.

Experts often disagree about the value of loyalty/satisfied. Some people claim that loyalty doesn't match with revenue. Others claim that loyalty is the most important part of revenue.

The answer lies somewhere in between. Loyalty is vital for the success of your business, but only if the loyal customers are also the customers that are spending money. The customers that spend very little money but come back to your store regularly, as well as the customers that feel entitled (overusing your services and/or asking for discounts often), are not nearly as valuable.

You want loyalty, but you want loyalty from the customers that are consistently spending money at your company. You can do a similar check to see if your company is meeting the needs of the customers that have the most money to spend. It's possible that your only frequent recurring customers are those that have less to spend or spend less with you than others.

Ideally, you want the loyal customers to be the ones that are spending money regularly and spending all of their money with you.

By combining these two metrics to discover what someone's value really is to your company, you can potentially target the right customers or improve the way you attract loyalty to gather the customers that are most valuable to your company. In addition, if you find that the customers that spend the least or feel entitled to your services are the only loyal ones, perhaps it is time to change the way you earn money from those customers, or allocate resources to attracting new customers rather than focusing as much on loyalty; knowing that you lose less than most companies would with a lost customer. Each individual business will need to decide how to handle this themselves, but it's clear that the differences in both the types of loyalty and how people spend their money can make a difference in where you take your company, so tracking both of these qualities can be useful.