Author: Kat Sarmiento | Editor: Cristi Jayo | 🎧 Listen to this article on our podcast

For many small businesses, customer retention is key to success. It's easy to overlook, but retaining customers is extremely valuable. Not only does it cost up to five times less than acquiring a new one, but it also boosts your profits—just a 5% bump in your retention stats can increase your profits by up to 25%!

One of the easiest and most effective ways of ensuring customer retention is by establishing and maintaining a strong brand.

A brand is both an identity and a promise— from the products you sell to how your brand handles customer escalations—all of it contributes to your brand’s perception.

Here are the top five ways a strong brand identity can help improve customer retention:

1. Helps Customers Remember You

Developing a strategic brand identity, can help increase your brand recognition. In other words, using the same enticing brand logo, fonts, colors and graphics consistently across all your materials makes it easy for customers to remember you. When your brand is strong, customers will not only remember your name, but will also think of you when they need the products or services you offer.

It might not seem like much, but being at the top of your customers’ minds is essential to maintaining a good relationship with them. The more people know and remember your brand, the easier it is to get new customers and keep the ones you have.

Word-of-mouth advertising is also more effective when customers can easily remember your brand. If they can’t remember your name or what you do, they are less likely to tell their friends and family about you – no matter how great your product or service is.

2. Makes Your Business Stand Out

Just having potential customers remember your brand isn't enough, of course. You want them to have a positive association with it as well. After all, there are plenty of big companies out there with great name recognition that still manage to have terrible reputations.

When customers have a good experience with your brand, they're much more likely to remember it positively and recommend it to others. On the other hand, if they have a bad experience, they'll remember that as well.

Cultivating a strong brand identity isn't a magic pill. Rather, it's an amazing opportunity for you to show off how your business is different from all the rest. But remember – Branding makes it easier for customers to remember your wins as well as losses.

For example, let's say you're known for having the best customer service in your industry. When you do make a rare mistake, customers will be more likely to forgive you because they know that you usually provide great service. Conversely, if you have a terrible reputation, customers will be quick to jump ship even if you make a minor misstep.

This added responsibility might seem like a lot of pressure, but it's actually good news. It just means that you have another way to set your business apart from the competition.

3. Builds Trust

Brand recognition is all about trust. If your customers trust you, they are more likely to continue doing business with you. Of course, that's common sense. But how does branding build trust? I can think of so many ways! For starters, here are three ways branding can improve brand trust:

• Consistency- Customers trust companies that are consistent. If you're constantly changing your prices, products, or services, it's going to be hard for customers to trust you. On the other hand, if they can count on you to always be there when they need you, they'll start to develop a trusting relationship with your brand.

• Credibility- If other people -- especially people your customers respect -- vouch for you, that builds trust.

• Competence- If you can demonstrate that you know what you're doing and that you're good at it, customers will trust you more.

A brand identity built on these three pillars will inspire confidence in your customers and make them more likely to do business with you.

4. Engages Your Customers

A strong brand identity draws customers in, and keeps them hooked.

Think about how you interact with the brands that you love. You probably have a positive emotional reaction when you see their logo or think about their products. This is because you have been engaged by their brand identities in some way, whether it’s through great customer service, excellent product quality, or an interesting marketing campaign.

A brand offers more than just a product or service. It’s an experience that customers have with your business, and how you make them feel is a huge part of how loyal they will be to your brand.

5. Increases Customer Loyalty

A strong brand identity can lead to customer loyalty, which is one of the most important goals for any business. Loyal customers are more likely to:

• Keep doing business with you

• Refer friends and family

• Give you honest feedback

Investing in a solid branding strategy can help you create a loyal customer base that will stick with you through thick and thin. Think about how Coca-Cola or Nike’s customers feel about those brands, two companies that have built their reputations on customer loyalty. Safe to say that many of their die-hard fans would never dream of switching to, say, Adidas or Pepsi. That's the power of customer loyalty, and it all starts with a strong brand identity.

Brand recognition is important for businesses of all sizes. It helps create repeat customers and can turn one-time buyers into lifelong fans. That’s why developing a strong brand identity is a wise investment for any growing business.

Recognizable brands are also more likely to weather economic downturns and emerge stronger than brands that are less well-known. So if customer retention is a goal for your business, start working on building a strong brand identity—it just might be the key to your success!