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Loyalty pays

According to a recent report, alcoholic drinks producers are losing out on over £27,000 a year by failing to secure repeat sales.

The report, which focused on small and medium-sized producers (manufacturers, wholesalers and distributors) across the alcoholic drinks sector, found that they could unlock an average of £27,575 in repeat sales by building customer loyalty.

The report is based on the findings of a research project – between Oxford Brookes Business School and ProspectSoft (a leading CRM company) – which concluded that there is a strong correlation between customer loyalty and revenue growth.

Researchers reviewed 15.8 million sales from firms trading with more than two million businesses, over a period of six months, to understand the opportunities available to SME firms supplying products in the business-to-business.

Using sales data and average order value across five vertical sectors, the researchers calculated how much revenue is lost on potential repeat sales.

The report also concluded that loyal customers spend more overall and that repeat orders can accelerate the sales cycle and ease cash flow concerns. The main issue to overcome was that many producers reported that their customers switch to competitors after just the third order.

These findings reinforce the established marketing theory, which argues that it is much more economical to retain existing customers compared to the cost of acquiring new clients, as Saravana Kumar wrote in an article on Forbes.com in 2022: “Statistics show an increase in customer retention by 5% can lead to a company’s profits growing by 25% to around 95%, over a period of time.”

Commenting on the findings, Andrew Ardron, founder of ProspectSoft (part of The Access Group) said: “Business-to-business sales trended upwards by 7.6% in the second quarter of this year [2024], according to our data. However, with tough trading conditions continuing, including high costs, firms will need to make the most of every opportunity.

“While it’s always great to win new customers, securing more orders from existing ones, and building trust and loyalty with them, is generally more cost-effective and offers cash flow certainty.

“Customers who go on to make a fourth purchase can be classed as loyal – so it’s important to drill into the data to see where [and why] they’re dropping off and then develop strategies to retain them. Our work with Oxford Brookes Business School suggests that businesses are not yet making full use of this data to increase loyalty and drive growth.”

To read the full report, “Sales Growth Strategies in the B2B Sector” follow this link: www.prospectsoft.com/crm/the-growth-engine.


Research Methodology

Analysis was based on 2,000 CRM users trading with 2 million businesses and processing 15.8 million orders. The report included:

  • Industry benchmarking: The scope for revenue growth by sector
  • Quantifying the value of repeat business: Potential sales revenue
  • Measuring loyalty: Average Interpurchase Time (AIT) and what the metrics of repeat business show