Members' Insights

Why Build Customer Relationships: 4 Winning Reasons

Dmitry Dragilev
Last Updated: Apr. 24, 2024

Building positive customer relationships increases sales, reduces customer attrition, delivers invaluable marketing, boosts employee morale, and turns customers into your R&D department.

When you view yourself in a long-term relationship with your customers, all kinds of positive results follow. The customer knows they’re being seen as more than just an avenue to profits. This high-touch approach may seem costly upfront, but you’re likely to make that money back (and more) as a result of building genuine relationships with your customers.

In this piece, we examine why healthy customer relationships are important and the costs that arise when a company ignores customers or fails to offer positive experiences. By the end, you’ll learn how to be a Long Term Thinking Company (i.e. one that values building relationships and maintaining loyal customers.)

What are customer relationships?

Customer relationships are the ways in which your business and your customers interact with each other. Customer relationships start with brand awareness and expand long after the customer makes a purchase decision. If all goes well, this relationship is mutually beneficial, where customers appreciate the products and services they receive from you, and you appreciate their return business.

But what happens when a company ignores customers or fails to offer positive experiences?

Let’s answer this question through the lens of two imaginary companies:

One is Short Term Thinking Company. This company is merely transactional and doesn’t care about long term relationships with its customers, it’s just trying to make a quick buck and loses interest after the sale is made. The attitude is “love ‘em and leave ‘em.”

The other is Long Term Thinking Company. This company values building strong customer relationships and wants to maintain customer loyalty. It’s willing to sacrifice in the short term to keep customers happy over the long haul.

Let’s explore what happens to each company’s customer relationships over time.

Customer relationship impacts on sales

Increase sales

George Farris, professor emeritus of Rutgers Business School, says, “Conversation with customers will increase sales, even if the product or service is never mentioned.” 

When you keep customer relationships alive, you stay on their radar and become the first option they seek once they’re ready to ask about pricing and make a purchase decision.

Short Term Thinking Company fails to make contact with customers, so customers forget about it and its products.

Long Term Thinking Company stays top-of-mind with customers and sees repeat business as a result.

According to the book Marketing Metrics, businesses have a 60 to 70% chance of selling to an existing customer while the probability of selling to a new prospect is only 5% to 20%. It’s easier to retain customers and increase their customer lifetime value than to get new ones. When it comes to your time and the company’s time, it’s better to engage existing customers first. (source)

Reduce attrition

The easiest way to grow your business is to not lose business. Otherwise, you’re constantly trying to bail water out of a leaky boat. When you retain customers, you can double or triple your growth rate. After all, the average business loses between 20-80% of its customers annually simply because of poor relations with its existing customer base.

“Understanding your customers’ needs and exceeding their expectations is fundamental in reducing attrition,” suggests Leigh McKenzie, a B2B SEO Consultant. “Building strong relationships through quality service and consistent engagement is key. This approach not only retains customers but also turns them into advocates for your business, fueling sustainable growth.”

Short Term Thinking Company invests lots of time and effort into making that first sale but fails to follow up adequately and lets relationships go unattended. As a result, it loses customers over time and has to spend more to acquire new ones.

Long Term Thinking Company follows up after a sale in order to retain and increase satisfied customers. As a result, it sees continual growth. Plus, it saves money since it doesn’t have to constantly find new customers to replace lost ones.

There’s a vast difference between the one-off profit you might make on an average sale, which ignores the bigger picture and the total aggregate profit your average customer represents over the lifetime of their business relationship with you. Once you recognize how much combined profit a customer represents to your business when they purchase from you again and again, over the months, years, or decades, you’ll realize the critical importance of taking good care of your customers.

Customer relationship impacts on marketing

Positive word of mouth

When you maintain positive customer relationships, they recommend your company to others—and word of mouth is the best form of advertising. When you treat people right, they become repeat customers and your biggest brand advocates. In fact, they’ll become invested in your success. Conversely, if you let them down, beware! Hell hath no fury like a customer scorned – especially one who decides to tweet about it so everyone knows how they feel.

Short Term Thinking Company’s customers don’t have an ongoing, positive relationship with the company, so they never speak about it to anyone else (and if they do, it’s probably to say something negative). The company doesn’t meet customer expectations leaving them irritated and the company’s reputation damaged.

Long Term Thinking Company keeps its customers happy, and as a result, customers tout it to friends, leave positive reviews online, and mention it on social media. All this saves the company money on marketing. The company underpromises and over-delivers, so customers wind up pleased and its reputation is strong.

According to experts, an unhappy customer could tell around 13 people about a terrible service he got from your business. Therefore, you must take great care to monitor customer satisfaction to avoid having a bad reputation on the streets. (source)

Reduced customer acquisition costs

Many companies spend tons of money to bring new customers into the fold. But acquiring a new customer can cost five times more than retaining an existing customer. In fact, increasing customer retention rates by 5% increases profits by 25%, according to research done by Bain & Company. It’s wise to focus efforts on nurturing existing customers who are already spending their money on your goods or services.

Short Term Thinking Company is constantly spending money to acquire new customers to replace ones it’s lost.

Long Term Thinking Company saves money by getting repeat business from existing customers. It also benefits from referrals as happy customers spread the word to others.

The first rule of any business is to retain customers and build a loyal relationship with them, thereby avoiding customer acquisition costs. It’s a well-established fact that 44% of companies have a greater focus on customer acquisition vs. 18% that focus on retention. It’s also true that only 40% of companies and 30% of agencies have an equal focus on acquisition and retention. (source)

Permission to stay in touch

When you take care of customers and build trust, they give you permission to keep reaching out to them. They have confidence in you and the ongoing relationship. Instead of rejecting a cold call, they’ll feel like you’re doing them a favor by contacting them and are more apt to pay attention to your outreach efforts.

Short Term Thinking Company interactions with customers only occur when it’s trying to sell them. As a result, customers start to feel like they’re just a commodity and the company winds up in people’s spam folders.

Long Term Thinking Company genuinely cares about being helpful and developing strong relationships. Therefore, people are excited to interact with the company and hear what it has to say. Instead of the Spam folder, the company winds up in the inbox and its emails get opened (or its calls get answered).

Customers view salespeople as helpful professionals interested in the success of others. Their goal is to be of service and help prospects make the right decisions for their organizations. Even if a potential buyer doesn’t sign on the dotted line, the salesperson has earned the respect of the prospect and permission to stay in touch.

From this perspective, sales and marketing have ongoing roles in building long-lasting customer relationships and furthering the customer journey. (source)

Establish a consistent experience

Every touchpoint matters, and each time a representative of your company speaks to (or advertises to) a customer has an impact. When you give customers mixed messages, they’ll assume you’re unreliable and inconsistent. When they know you can be counted on, you set customer expectations and build trust to create a foundation for a long-term relationship.

Short Term Thinking Company has different people speaking with different messages to customers. As a result, its audience winds up confused and unsure of the company’s voice and what it represents.

Long Term Thinking Company speaks with a consistent voice in a consistent way. Customers develop a sense of trust from this unchanging identity and perceive it as authenticity.

It’s important to ensure that the messages you send out, from your marketing collateral down to how your customer care and sales teams speak to people, are right for your brand.

Because if a brand can’t build a consistent identity, customers may assume that the brand itself isn’t consistent, and therefore, not reliable. (source)

Build an emotional connection

Do you feel an emotional connection with generic online retailers like Amazon or Walmart? Probably not. Now, think about how you feel about the local “mom and pop” shop in your hometown. It’s most likely a completely different feeling. That kind of emotional connection is what happens when you develop a long-term customer relationship. It may be easier for small businesses, but large companies like Patagonia and Nike also excel at this.

Short Term Thinking Company is perceived as a faceless megacorp that simply wants to maximize profits at all costs. There’s zero emotional connection; it’s just where one goes to “do business.”

Long Term Thinking Company is perceived as personal and caring. To this company, customers are actual human beings who deserve respect. As a result, an emotional bond is forged.

79% of customers say that they want brands to show that they understand and care about them before they buy anything. Businesses that perceive the importance of building customer relationships develop an emotional connection towards them and stay with them for a long time. (source)

Customer relationship impacts on R&D

Gain insights from customers

Ongoing relationships enable you to really get to know your customers’ pain points, and that’s the best R&D department you can have. When customers know you and communicate with you, they reveal their desires, goals, and preferences. That will help you develop new products and allow you to customize marketing messages to reach the right audience.

Short Term Thinking Company sells once to customers and then ignores them, missing out on potentially valuable feedback.

Long Term Thinking Company keeps in touch, sends surveys to customers, and tracks their preferences in a Customer Relationship Management (CRM) tool. As a result, it knows exactly what customers want to see in their products and the right way to promote them.

As the people who purchase and use your product or service, your customers will have a valuable insight and will often see things that can be overlooked by the company’s own team.

This unique insight enables them to be incredible when it comes to feedback, and by utilizing that you not only get tailored advice to your product or service, but you’ll find that your customers will become more invested in your company’s success. (source)

Turn negative experiences to positive ones

The best way to anger customers is to leave them feeling dismissed. A lackadaisical response can turn a small complaint into a major problem and make customers feel ignored. On the other hand, coming to the rescue can turn a customer with a negative experience into a lifelong evangelist for your brand.

Short Term Thinking Company makes a profit off of customers and forgets about them. It doesn’t invest in customer support and would rather lose a customer than put in the effort to make them happy. These upset customers wind up leaving negative reviews online and saying bad things to friends about the company.

Long Term Thinking Company strives to keep customers satisfied but realizes they’ll occasionally have a negative experience. The company strives to address these concerns and give them a reason to come back again. Customers are blown away by the care and attention and tell friends/social media all about it.

No matter how hard you work to keep your customers satisfied, you’re bound to come up against one or two who have a negative experience with your product or service. It may not necessarily be your fault, but it’s your job to address the customer’s concerns and give them a reason to come back to your brand.

The key is to provide above-and-beyond customer service. It’s important to listen to and empathize with the individual to show them that your company is committed to keeping their business. (source)

Improve customer support

An ongoing dialogue with customers will lead to improved support satisfaction. Using a CRM tool will help you track previous problems a customer has communicated and help you act preemptively. When you listen, reflect, validate, and empathize with your customers, you keep the conversation going and increase the odds that you’ll make things right and keep customers in the fold.

Short Term Thinking Company doesn’t track customers and is thus incapable of learning from past mistakes. Each time a customer contacts them, it’s like they’re starting from scratch all over again.

Long Term Thinking Company tracks previous support queries and takes proactive steps to keep customers happy. That can mean issuing a refund, offering a free month of service, or researching solutions to issues so customers don’t have to do that work. The end goal is to have customers raving about the quality of support.

96 percent of dissatisfied customers don’t complain. They just walk away, and you’ll never know why. That’s because they often don’t know how to complain, can’t be bothered, are too frightened, or don’t believe it’ll make any difference. Whilst they may not tell you what’s wrong, they will certainly tell plenty of others. 

A system for unearthing complaints can therefore be the lifeblood of your business because customers who complain are giving you a gift. They’re still talking to you; giving you another opportunity to return them to a state of satisfaction. The way you respond gives you another chance to show what you’re made of and create even greater customer loyalty. (source)

Customer relationship impacts on morale

When you have great relationships with customers, you also have great relationships with employees. People love to work in an environment of good vibes where customers are treated well. There’s less stress on employees when they know the company they work for has their back, and they’re empowered to do whatever it takes to keep customers happy.

Companies that excel at customer experience have 1.5 times more engaged employees than less customer-focused companies.

Short Term Thinking Company makes employees deliver bad news to customers or, even worse, ignore their queries. As a result, employees wind up disenchanted and turnover is high.

Long Term Thinking Company lets employees take their time with customers, reply patiently to their queries, and solve problems. As a result, employees feel like their workplace is a positive one and that everyone (customers and employees) is truly valued.

Feeling part of the goals that are bigger than themselves (and their job) contributes significantly to positive employee morale. Many employees want to feel as if they are part of something important and contributing to success for the greater good is a real morale booster. A deep focus on serving the needs of customers also promotes positive employee morale. (source)

Proof that customer relationship management works

Still not convinced? Check out some of these stats that reveal the importance of building quality relationships with customers:

  • 96% of customers say customer service is important in their choice of loyalty to a brand.
  • Customer-centric companies are 60% more profitable than companies that don’t focus on customers.
  • Customers switching companies due to poor service costs U.S. companies a total of $1.6 trillion per year.
  • Loyal customers are five times more likely to purchase again and four times more likely to refer a friend to the company.
  • The top reason customers switch brands is because they feel unappreciated.
  • 77% of consumers view brands more favorably if they seek out and apply customer feedback.
  • Customers tell an average of nine people about a positive experience with a brand, but they tell 16 people about a negative experience.
  • A 2% increase in customer retention is the same to profits as cutting costs by 10%.
  • 80% of customers say they are more likely to do business with a company if it offers personalized experiences.

Seven tips & tools to manage customer relations

Now that you’ve realized the importance of maintaining customer relationships, you’re probably asking, “What’s the best way to do it?” Check out our companion piece on how to successfully turn every customer into your best customer. Below are seven tips (along with seven related tools) to get you started…

Make customers feel appreciated

Making the other person feel special and appreciated is the key to any relationship. Set up a customer service system, even if you’re a small business. If it’s your company, you may need to man the front lines of support queries. What may seem like a pain is actually a great way to gather feedback about what’s right and wrong with your product. Get personal with your customers. Call them by their names, track their interests, and be proactive about making sure they’re happy. Many companies use virtual assistants to do the research, allowing your customer service team to reach out to the right customers with the right message at the right time.

Tool Tip

Groove makes support, sales, and customer engagement software for everyone. It’s quick to implement, easy to use, and scales to fit your needs. 

Use customer support software

Online tools help support teams understand their customers’ needs and monitor customer satisfaction based on factors like number of open tickets and average resolution time. This keeps everyone on your team informed so clients aren’t frustrated by mixed signals and poor internal communication. You should also monitor social media, Amazon, Yelp, and industry forums to find and interact with unhappy customers. Always be calm and courteous and work to repair any damage done.

Tool Tip

Freshdesk is feature-rich but bulky for small or midsize businesses who just need a good ticket system, self-service knowledge base, and community forums. There are several Freshdesk alternatives that are less bulky, cheaper, and easier to use.

Use a CRM system

A customer relationship management (CRM) system will help you track all your customer conversations in one place and streamline your communications. At the very least, you should be keeping a record of your clients and when you last checked in with them. Or lean in and record customers’ product likes and dislikes, spending patterns, location, age, gender, tastes, needs, and buying habits. Don’t be shy; ask if there are problems you can solve for them or anything else you can do to keep them happy. Even if it doesn’t result in a sale immediately, you’ll be first in mind when customers need to purchase again.

Tool Tip

HubSpot CRM has everything you need to organize, track, and build better relationships with leads and customers.

Collect customer feedback

Understanding and valuing customer interactions is key to business growth. Encourage your team to actively seek feedback after every customer interaction. This could be through follow-up emails, surveys, or direct calls. Collecting this feedback provides invaluable insights into what your customers like and what can be improved. Regularly analyze this feedback to make informed decisions that enhance your customer service and product offerings.

Tool Tip

SurveyMonkey is great for gathering customer feedback efficiently. It offers customizable surveys that can be easily integrated into various customer interaction points. Its user-friendly platform and robust analytics help you understand customer needs and preferences effectively.

Set up loyalty programs

Establishing loyalty programs is a fantastic way to strengthen positive customer relations and enhance brand loyalty. Reward your customers for their recurring business with discounts, exclusive offers, or early access to new products. These programs not only incentivize repeat purchases but also help turn regular customers into brand ambassadors.

Tool Tip

LoyaltyLion allows you to design customized rewards schemes that resonate with your customer base, boosting engagement and long-term loyalty. LoyaltyLion also provides detailed insights into customer behavior, helping you fine-tune your programs for maximum effectiveness.

Empower employees to do the right thing

Make sure your employees know that keeping customers satisfied is a top priority. Tell them to follow up regularly to make sure customer needs are met. Encourage them to reply to voicemails, emails, and support queries ASAP. Add customer success initiatives to your onboarding process for new employees. Work to improve your team’s active listening and communication style via ongoing training. The result will be a more consistent customer experience.

Tool Tip

Seismic (formerly Lessonly) helps customer service leaders take their teams from good to great with tools for training, coaching, and continuous learning for your support team.

Be proactive with communication

Don’t wait for customers to reach out to you. Instead, keep them notified about the products you offer, new releases, articles/links of topic-specific interest, and anything else that might entertain them. Email newsletters allow you to land directly in customers’ inboxes. Posting on social media enables 1:1 communication and helps you reach new customers. Replying to comments on your blog helps establish a brand voice and shows that you’re open to conversation. And you can never go wrong with an old-fashioned thank you note.

Tool Tip

Mailchimp enables you to bring your customer data, marketing channels, and insights together, so you can reach your goals faster—all from a single platform.