Despite their initial costs and ongoing overheads, customer loyalty initiatives really do pay off in the long term, according to a survey of business-to-consumer (B2C) small business owners and marketers conducted by engagement marketing firm Constant Contact. This article is copyright 2013 The Best Customer Guide.

In the survey, a resounding 82% of small business owners said that loyal customers were the main way that they grow their business, followed by online marketing tools (66%), a stronger economy (50%), and skilled employees (47%).

When asked how they earn customer loyalty, 90% said they did so by offering a great product or service, while 60% cited sustained customer communications through email, and 49% said it was through social media channels.

So loyal customers are a top driver of business growth, but what exactly does "growth" mean to small businesses? Well, not every small business has grand plans to expand beyond their flagship location. In fact, 57% defined business growth as "more revenue". More customers (40%) was the second most-cited definition of growth, while expanded inventory came a distant third at only 1.5%. Other definitions included "more employees", "expanded space in our current location", and "more locations".

Roadblocks to growth
Growth is the goal, but it is not easy to achieve. Almost 30% of respondents said finding new customers is the biggest hurdle to achieving growth, with lack of time (23%), the lagging economy (16%), and a lack of funds to invest in growth (10%) also causing difficulties.

"82% of small businesses reported new customers find them through referrals, meaning satisfied customers are one of the most important drivers of new customer acquisition," noted Gail Goodman, CEO for Constant Contact. "Creating meaningful customer engagement, from attracting new customers to keeping loyal ones happy, remains a top priority."

The survey also found the second half of the year to be particularly critical for revenue growth, with 31% citing fall and 31% citing winter as their busiest season. How critical? Fifty-nine percent of the B2C businesses surveyed said between a quarter and a half of their overall annual profits come during their single busiest season.

Holiday bonus
For small businesses, the holiday season is a hectic but rewarding time. Fifty-two percent of survey respondents said that new customers attained during the holidays become repeat, loyal customers. While 31% of those surveyed start planning for the holidays between two and three months in advance, it is surprising to find that, with all that's at stake, 28% do no advanced planning for the holidays.

In-house marketing is the primary focus for small business holiday preparations, with 41% of respondents increasing such activities. Thirty-five percent increase online and in-store promotions and 21% order advance inventory.