What Makes Customer Loyalty So Important

What is customer loyalty?

Customer loyalty is when customers consistently — and eagerly — choose a specific company’s services over their competitors. A great customer experience is the foundation of true customer loyalty. 

Customer loyalty represents the enduring relationship between satisfied customers and the businesses they regularly support. It encompasses both behavioral and attitudinal dimensions that work together to drive long-term business success. 

• Behavioral loyalty refers to the actions customers take, such as making repeat purchases, visiting regularly and choosing one brand over competitors. 
• Attitudinal loyalty represents the emotional connection and psychological commitment customers feel toward a brand, including trust, preference and advocacy.

While superfan brand ambassadors can help promote a business, true customer loyalty requires routine, repeat customers who swear by a business and its offerings. Customers who unfailingly visit a specific ice cream shop monthly or diners with a standing weekly reservation at a local eatery are examples of truly loyal customers. According to SAP Emarsys research, 69 percent of consumers remained loyal to specific brands in 2024, though this represents a decline from 77 percent in 2022.

Why is customer loyalty important?

Customer loyalty directly impacts business growth by reducing acquisition costs, generating valuable referrals and increasing customer lifetime value (CLV). CLV measures the total amount of revenue that a business can expect from a single customer during their entire relationship. Loyal customers exhibit higher CLV because they make more frequent purchases, spend more per transaction and maintain longer relationships with brands. This metric is essential for understanding the long-term profitability of customer relationships and justifying investments in retention strategies.

Here are several reasons why it’s essential for businesses to ensure customer loyalty.

Loyal customers become ambassadors for your company.

Customer loyalty begets word-of-mouth marketing and true brand advocacy. Customers who are loyal to your company won’t hesitate to share their favorable experiences with others. According to SAP Emarsys data, 47 percent of consumers show their loyalty to a brand by recommending it to friends and family. This advocacy is highly effective for businesses because people tend to trust recommendations from their family and friends. Even strangers’ opinions matter; shoppers often rely on negative and positive customer feedback and other forms of user-generated content to inform their purchasing choices. 

“Loyal customers drive more business than you think,” Christina Garnett, chief customer and communications officer at neuemotion, told us. “Word of mouth is the one thing that will outlast any trend or ad budget. They will share their positive experience earnestly and passionately, which simply can’t be bought.”

For example, say someone relocates and needs a competent and affordable landscaper to maintain their yard. They’d likely ask their neighbors for recommendations, gather opinions via community-focused social platforms (e.g., Nextdoor), and read Google and Yelp reviews. In all of these cases, loyal customers will point them toward landscaping businesses that have provided excellent customer experiences. 

“Your customers and how they show up online and in person to share their experience are more trusted than any campaign,” said Garnett. “People will search reviews and believe complete strangers over an ad. Take care of your customers and they will be your ad engine.”

Recommendations fueled by customer loyalty are a powerful and inexpensive way to reach new customers and build your business. 

Customer loyalty cultivates regular patronage.

Customer loyalty often leads to repeat business and ongoing sales, particularly if a business implements a customer loyalty program that incentivizes regular purchases.

For example, say a customer buys fresh-baked bread weekly from their favorite bakery, which awards a free item after four purchases. The customer is incentivized to keep returning to the bakery whenever they need bread and will likely purchase other items — such as cookies, rolls and doughnuts — to earn more free items and rewards.

Loyal customers provide valuable feedback.

When you seek customer feedback via your social media posts, your loyal customers are usually the ones who respond. These customers have a relationship with your business and are comfortable sharing their opinions, particularly if the feedback will enhance your business. Loyal customers are fond of your business and want it to succeed.

When seeking customer feedback, it’s also valuable to respond to users. Reacting to both positive and negative feedback can help you connect with your audience. 

“Brands tend to have escalation procedures for negative feedback from customers, but they should also have one when people love a brand,” said Garnett. “Imagine tagging a brand you love online and then their team comments back, or better yet, the CEO or founder gives them a personal thank you. That just made that person’s day.”

The key benefits of customer loyalty

Customer loyalty delivers measurable advantages across financial, operational and marketing dimensions that contribute to sustainable business growth.

Financial benefits

Acquiring a new customer can cost significantly more than retaining an existing one. In fact, customer acquisition costs have increased nearly 60 percent over the last several years, with merchants now losing an average of $29 for every new customer acquired. Investing in customer loyalty minimizes the risk of losing customers and avoids the costs of recruiting new ones.

Returning loyal customers also spend significantly more than new customers, with Invesp data showing that positive customer experiences lead to 140 percent more spending over time versus those with unfavorable experiences. When customers have done business with you multiple times, they trust you to provide great products or services at a reasonable price, along with excellent customer service. They have a propensity to spend more with your business and may explore your premium products or make larger purchases of regularly priced items, further solidifying their loyalty. They are also more likely to spend more over a longer period of time.

“Customer loyalty is the ultimate moat,” said Garnett. “A loyal customer will pay more or go through additional inconvenience to stay a customer. They aren’t swayed by viral marketing or trends, but instead become a dependable source of revenue and engagement.”

Operational benefits

Loyal customers provide operational stability through predictable revenue streams and lower churn rates. When businesses maintain strong customer loyalty, they experience more consistent cash flow and can better forecast future performance. This predictability enables more strategic planning and resource allocation, reducing the operational stress associated with constantly replacing lost customers.

Marketing benefits

Maintaining loyal customers simplifies and amplifies your advertising efforts. According to the widely touted marketing “rule of seven,” potential customers typically require exposure to your messaging seven times before they take action. But loyal customers already trust your business. They tend to absorb and welcome new offerings, sales events and other promotions more quickly than new customers.

Because loyal customers are already receptive to your marketing, they’ll view your ads with immediate interest; you won’t have to rely on repetitive exposure for your ads to resonate. Additionally, loyal customers generate authentic social proof through reviews, testimonials and recommendations that influence other prospective buyers more effectively than paid advertising.

How businesses build and maintain loyalty

Consider these proven strategies for nurturing and maintaining customer loyalty.

Implement a customer loyalty rewards program.

Implementing a loyalty rewards program can help you attract new customers while strengthening bonds with your existing ones. Loyalty programs incentivize consistent purchases by offering discounts, freebies and exclusive deals. By rewarding customers for their ongoing engagement, these programs boost repeat business while showing your customers you value them, thereby encouraging long-term loyalty.

Additionally, well-designed loyalty programs can enhance customer satisfaction and foster positive word-of-mouth advertising, further expanding your customer base. Notably, 73 percent of consumers will adjust their spending to maximize benefits from loyalty programs, demonstrating how effective incentives can influence purchasing behavior.

According to SAP Emarsys research, loyalty program usage increased by 28 percent in 2024, representing a 40 percent jump from 2023.

Start a referral program.

Have you ever been contacted by a business you regularly visit and told you’ll earn a reward for sending customers its way? This is a referral program in action. 

Sophie Musumeci, founder of Real Entrepreneur Women, said loyal customers become brand ambassadors who are highly likely to refer others who are a perfect fit for your business. 

“We foster loyalty through programs like our ambassador initiative, where we reward clients with special gifts and bonuses for bringing new clients to us,” Musumeci explained. “It’s not only the quickest way to attract new clients but also helps us retain and upgrade them into longer-term programs, turning a 90-day client into a 12-month-plus client for deeper transformation and ongoing results.”

Loyal customers who are willing to refer others to your business are essential pillars of your customer loyalty framework. Nurturing referrals with rewards reinforces their loyalty while creating a cycle of new and repeat business. Referral programs can bring in new customers while deepening your connections with existing ones, helping them feel appreciated for contributing to your business’s growth.

Bolster your customer service.

Excellent customer service plays a key role in fostering customer loyalty by sustaining and growing customer relationships. Customers must trust your products and services and know you’ll be there to answer their questions and resolve their issues.

Consider the following ways to enhance your customer service, foster customer loyalty, and reinforce how much you value your customers: 

• Personally engage customers by using their names (in person and via email).
• Customize upselling and cross-selling suggestions to align with previous purchases. 
• Make customer support readily accessible (for example, with dedicated email addresses, phone numbers and live chat).
• Ensure that customer inquiries are answered within a committed time frame.

Personalize customer experiences.

Personalization has become essential for building and maintaining customer loyalty in today’s competitive marketplace, and this extends to customer loyalty programs. Businesses can leverage customer data to deliver tailored product recommendations, customized communications and targeted offers that resonate with individual preferences and purchase history.

Mobile app users show particularly strong responsiveness to personalization, with SAP Emarsys data revealing that they are driven by discounts and incentives 40 percent more than non-app users. This highlights the importance of developing mobile-first engagement strategies that deliver personalized rewards and experiences directly to customers’ devices.

Leverage customer data.

Data analytics are essential for optimizing your customer loyalty strategy. For example, if you implement a rewards program and don’t observe a substantial increase in online sales, you can analyze your customer data to determine what went wrong.

Similarly, if your customer loyalty program’s members are making only a marginal increase in purchases compared with their prior behavior — or their purchase patterns remain consistent with previous trends — you might need to fine-tune the program. 

To drive better results, use customer data to identify areas for improvement. For example, you could adjust the rewards, personalize your offers or enhance your engagement strategies.

Foster community engagement.

Creating communities around your brand strengthens emotional connections and enhances customer loyalty. When customers feel they belong to a community of like-minded individuals who share their values and interests, they develop stronger attachments to the brand. Community engagement can take many forms, including social media groups, exclusive events, user forums and brand-sponsored gatherings that bring customers together.

Brands that emphasize ethical practices particularly benefit from community engagement, as SAP Emarsys data shows that ethical loyalty rose to 30 percent in 2024, representing a 25 percent increase since 2021. This demonstrates that customers increasingly want to align with brands that reflect their values and provide opportunities for meaningful engagement beyond transactions.

Maintain consistently high quality.

Even if your products or services have been available for a while, their quality should not wane over time; a dip in product quality can significantly reduce loyalty. According to SAP Emarsys, more than half of customers consider high-quality products to be a primary driver of their brand loyalty.

In your quest to solidify customer loyalty, consistently uphold high-quality standards for your offerings. Don’t let your company be associated with declining standards. For example, you don’t want online reviews to indicate a new, lower-quality formula or increased product malfunctions. Such detrimental shifts can alienate loyal customers and deter potential new ones.

Onboard team members who prioritize customer loyalty.

Your employees represent your business and are on the front lines of maintaining and improving customer loyalty. Here are some tips to ensure your staff works to create and enhance customer loyalty: 

• Create a hiring process that values candidates with high-level customer service skills. 
• Focus on hiring for a cultural fit to find people who will care for your customers as much as you do.
• Establish a workplace culture of caring for customers.
• Communicate your customer-care values to employees, and reward them when they meet and exceed expectations.

Differentiate your company from the competition.

Customers will be less loyal to your company and your products if they consider you a commodity. If you don’t have a truly unique product, it’s important to stand out from the competition with an outstanding warranty, stellar customer service or another differentiating factor. 

Examples of customer loyalty in action

Leading brands across industries have built highly successful loyalty programs that demonstrate the power of strategic customer engagement and retention.

Starbucks Rewards

Starbucks Rewards represents one of the most successful loyalty programs, with over 75 million active members worldwide as of 2024, according to Stamp Me research. The program accounts for 57 percent of Starbucks’s U.S. revenue, with rewards members spending three times more per visit than non-members and visiting more frequently. The program’s success stems from its mobile-first approach, personalized offers, gamification mechanics and seamless omnichannel integration that makes earning and redeeming rewards effortless.

Starbucks has leveraged its loyalty program to create exceptional cash flow, with over $22 billion loaded onto Starbucks cards and the app—more customer cash than some banks hold.

Amazon Prime

Amazon Prime has fundamentally transformed customer loyalty in e-commerce, boasting over 200 million members globally and 184 million in the United States as of 2024. Prime membership goes beyond traditional loyalty programs by bundling free shipping, streaming entertainment and exclusive deals into a comprehensive subscription service. The program generates substantial recurring revenue for Amazon, with subscription services contributing over $40 billion annually, while driving significantly higher purchase frequency and basket sizes among members.

Sephora Beauty Insider

Sephora’s Beauty Insider program has become a gold standard in retail loyalty, with over 40 million members across the United States and Canada, according to Free Yourself research. The tiered program drives 80 percent of Sephora’s North American sales and has generated a 22 percent increase in cross-sell revenue and up to 51 percent more in upsell revenue. Sephora’s success comes from combining tangible rewards with experiential benefits, including exclusive product access, beauty classes and VIP events that create emotional connections beyond transactions.

Customer loyalty in the age of experience

Modern customer loyalty increasingly depends on delivering exceptional, personalized experiences across all touchpoints rather than relying solely on transactional rewards. According to SAP Emarsys research, 54 percent of customer-obsessed companies that implement effective omnichannel strategies experience better customer loyalty and improved retention, with 62 percent reporting higher profit margins. 

Artificial intelligence (AI) and machine learning are transforming how businesses personalize customer interactions at scale. AI-driven engagement enables companies to analyze vast amounts of customer data to predict preferences, recommend relevant products, deliver targeted communications and optimize loyalty program offerings in real time. 

The shift toward experience-based loyalty reflects broader trends, as true loyalty driven by emotional connections increased by 26 percent between 2021 and 2024.

Quick reference table: customer loyalty benefits

Skye Schooley and Jennifer Dublino contributed to this article. Some source interviews were conducted for a previous version of this article.