The Connection Between Sales Trends and Customer Loyalty

Stop tracking revenue and start tracking repeat customers. Yesterday, I reviewed a business with 50% year-over-year growth but declining customer retention. Here's why that's a massive red flag for buyers... The Truth Behind Declining Customer Retention When impressive growth hides serious problems buyers need to know. What's Really Happening • Customers aren't staying after their first purchase • Marketing costs keep rising to maintain growth • New customer acquisition is masking customer losses • Growth numbers look good but loyalty is dropping Hidden Problems for Buyers • Each new customer costs more to acquire • Yesterday's happy customers aren't coming back • Strong sales hide weakening customer relationships • Marketing spend increases while profits shrink Key Warning Signs • High percentage of one-time buyers • Rising costs to maintain revenue growth • Customer feedback getting worse over time • Increasing gap between new and repeat customers What Buyers Should Check • How many customers made repeat purchases? • What's the trend in customer satisfaction? • Are marketing costs growing faster than sales? • Do older customers still buy as much? Why This Matters • Loyal customers mean reliable future income • Repeat buyers cost less than new ones • Strong retention shows real business health • Happy customers bring referral business Growing revenue means nothing if your customers aren't coming back. Smart buyers know retention tells the real story. Found this helpful? Follow Kay Azmat for more insights! 💡

I spend a lot of time thinking and working on projects that enable not just customer loyalty but raving customers. And there's one ugly trend that is rearing its head - discounting. I'm guessing, as I am totally unencumbered by any data here, that because the economy is constricting a little - inflation hasn't dropped as much as we'd hoped, big companies are doing some significant layoffs, AI is going to be our new overlord - companies are freaking out. Specifically marketing departments responsible for GTM and CROs are freaking out. And so what are they doing? They're turning on the juice - the discounting juice. And by juice, I mean drug. Because that's what discounting is. From the moment you present discounting, you're priming a customer to respond to discounting. And after the first time you present a discount, they will wait until the next time you provide a discount, so then you offer discounts more frequently. And there the cycle begins and never ends. This is the difference between having behaviorally loyal customers and emotionally loyal customers. Behaviorally loyal customers love you for your discounts. They are low margin customers. They will happily lead you in the race to the bottom. Emotionally loyal customers are hooked on what you stand for, they believe in your mission, they aren't as price sensitive and they are highly profitable (Patagonia, Zappos). What to do? First of all, don't have your app automatically open to a discount offer. For all you know, that customer would have been more than happy to shop at full price, so all you did was throw money away (Thrivemarket Ltd, I'm looking at you). Secondly, don't celebrate the email campaign that's structured around discounting when you're conducting your email testing. Better yet, don't even test a discounting email. It will always win. In the short term. But for long term wins - meaning higher margins, including lower CAC - focus on creating an emotionally engaged customer. I'll share more on how to do that in my next post.