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Miscellaneous Articles & Tips
The Compounding Customer

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© 2010 DJH Training & Application Solutions Inc.

You've heard the power of compounding interest? The same is true of compounding customer. There is no marketing force more powerful than positive word-of-mouth from a satisfied customer.

Let's face it - many organizations are struggling to provide a high quality of service these days.

What you might not know is that it costs 5 times more on average to obtain a new customer than it does to retain an existing one.

Focusing on the creation and retention of loyal customers is not only a sound economic strategy, but it will separate you from your competition.

You can achieve a competitive distinction by developing a strategy of creating loyal customers. It has been proven that organizations with high levels of loyal customers typically grow revenues at twice the rate of their competition.

Developing loyal customers must become part of your organization's culture. If one is driven by profits only, often times it will be at the expense of the customer. This short-term thinking is an organizational disaster waiting to happen.

We know that a loyal customer will always return to purchase your product or service, which in turn creates a long-term stream of revenue.

The Satisfied Customer versus the Loyal Customer:

So, your customer says they're satisfied. That's great, right? Not so fast. What that means is that they feel you have provided them with a product or service that met their expectations. Will they return to you the next time they require your product or service? Perhaps. But they will just as easily go elsewhere.

What if they were more than satisfied with your product and felt that your service was outstanding? If they didn't feel like they were just another "transaction" or number? If they felt as through their business was truly important to you?

If the focus is on consistently providing an outstanding level of service and building long-term business relationships, the chances of developing a loyal customer base are very high.

What can that mean in revenues? Let's take a look at a "satisfied" customer's total revenue opportunity versus a loyal customer.


Loyal customers always come back and they will tell others. That is the power of compounding customers.

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