Why Are Customers Important to a Company?

Customers are the lifeblood of a business, as a company cannot generate revenue and earn a profit without customers. In addition to attracting customers through marketing, companies place emphasis on retaining core customers and garnering customer loyalty in competitive industries. Loyal customers create stability in business operations.

The stronger the relationship a customer has with a business, the greater the potential for that business to increase the level of revenue from that customer over time. Also, satisfied customers help recruit new customers through positive word-of-mouth communication. The most effective marketing strategy for a business is often to satisfy current customers who become strong voices in the marketplace.

A customer's lifetime value is one measurement of the financial impact a customer has on a business. By projecting the potential economic value of a customer, a company is able to target strong customers with compelling marketing messages. On the other side, customer churn is a measure of the rate of customer loss. When a company has a high rate of churn, it must often invest significantly in advertising to attract new customers.

New companies often start out with low or modest price points and invest heavily in marketing to grow a customer base, even though it may take months or years to achieve a profit.