Factors That Influence Customer Loyalty

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  • 0:03 The Factors of…
  • 0:36 Place and Product
  • 1:58 Promotion
  • 2:51 Price
  • 3:45 People
  • 4:45 Lesson Summary
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Lesson Transcript
Instructor: Tara Schofield

Tara has a PhD in Marketing & Management

Customer loyalty is one of the most critical elements of a successful business. This lesson introduces several vital aspects to consider in developing greater customer loyalty and satisfaction.

The Factors of Customer Loyalty

Customer loyalty is one of the most important and critical factors for a company's success. Customer loyalty happens when customers have a great experience, and it leads to many benefits: loyal customers return for future business, refer friends and family to a business, and spread positive comments about a company through word-of-mouth advertising. With social media and the ease of rating companies, customer loyalty is more important than ever. There are several important factors that can influence customer loyalty.

Place and Product

How easy is it for your customers to access your place of business? What's true in real estate is also true here: location, location, location. It matters. Customers need to be able to find and get to your business easily. This factor becomes even more important if you offer a product or service that is readily available.

Think about the fast food restaurants in your town. Where are they located? You'll find them where the customers are: in the high-traffic areas. Your customers will be more loyal if you make it easy for them to get to your business.

Selecting good products is important for the survival and success of your company as well. If your products are the same as many other businesses, you'll be less likely to grow customer loyalty. However, if you offer products that are difficult to find, specialized, unique, or interesting, your customers will be more inclined to return to purchase from you. But don't get too carried away--if your products are too unusual, customers may not want what you have to offer.

Think of home décor stores or boutiques. The products they offer are exciting and appealing, and they change the product mix on a regular basis. This encourages customers to return regularly to check out what's new. The attractive, new products encourage customer loyalty.


Consider your customers and how sensitive they are to specials and promotions. If your customers like discounts or promotions, create specials that will keep them coming back. There are many, many ways to promote your business, from pricing specials to free gift with purchase. As you learn what your customers like, you can create promotions that excite them and keep them coming back.

If you've shopped at a big department store, you are probably very familiar with the idea of promotions. These stores run continuous sales, and many items in the store are on sale at any given time. But the stores are also hoping you might come in specifically for the sale items and then purchase a few other items, even if they aren't on sale. Successful businesses understand the value of promotions to encourage their customers to return to buy on a regular basis.

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