Why Customer Retention and Customer Loyalty Aren’t the Same

by Chris Arringdale Client Loyalty

Almost every company has loyal customers and retained customers, but do they know the difference? There’s a good chance they don’t. Even with some similarities, retention and loyalty aren’t interchangeable. Retained customers may renew your product or service or they may not. Odds are they just haven’t shopped anywhere else or are too invested to switch. Loyal customers love your company and have no plans to leave as long as they are getting value. In fact, they’re more likely to refer your product or service to others.

So, let’s take a closer look at why customer retention and customer loyalty aren’t the same.

What are Retained Customers?

Retained customers are current organizations or individuals using your product or service. However, this in no way means they’ll refer your product to others, sign on for more services, or even renew for the next cycle.

You can determine who fits this bill by the way they interact with your business and product or service. If you notice they’re unengaged and only using the bare minimum of your product or service, they’re most likely just a retained customer and a good chance they won’t even renew.

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What are Loyal Customers?

A loyal customer is someone who will buy from your company again and is enthusiastic about what you do. Their engagement often results in quality referrals and positive word-of-mouth reviews. Loyalty is more than just spending money. Loyal customers will vouch for you and serve as advocates for your business.

How to Determine if They’re a Loyal Customer

One way to determine the difference between customer retention and customer loyalty is by viewing their Net Promoter Score (NPS). This score is created from on feedback provided by NPS surveys. Organizations use the NPS to help gauge the loyalty of your clients and their satisfaction. While it may seem a majority of your customers are falling in the mid to high range, this doesn’t necessarily mean those customers are unhappy or thrilled. This is where the difference between customer retention and customer loyalty is prevalent.

Customers with a higher NPS can be considered advocates or loyal customers. These users willingly recommend and refer your company without being asked or enticed to do so. On the flip side, customers scoring in the mid to low range aren’t finding enough value in your product or service. However, surveying them can give you a wealth of feedback which can be used to make improvements.

How to Turn a Customer into a Loyal Customer

One downfall of a simple NPS survey is that it doesn’t allow for elaboration on their feelings. Learning the “why” behind a customer’s reaction is more important than ever in today’s market. With countless other service options available, businesses need to know where they’re falling short and how they can improve.

Through different marketing options or customer success platforms, you can gather further insight into the “why.” With the information provided from additional efforts, you have what you need to determine who your loyal customers.

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How to Keep a Loyal Customer Loyal

When you discover who your loyal customers are, it’s crucial to keep them. These businesses or individuals are advocating on your behalf without being prompted. Start by thanking them for their referrals. Whether this is through a small gift or a referral program set up, they will appreciate your acknowledgment.

Also, take into account their feedback and work to incorporate changes that are viable for both them and you. Providing additional value to loyal customers is a great way to ensure they keep doing what they’ve been doing – advocating for your business.

Loyal customers make a difference to your bottom line. The referrals they provide could be what you need to take your business to the next level. Now, this can be easier said than done, but many customer success platforms have the tools you need to get the information you need.

worker taking notes on different customer metrics

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