The importance of building customer loyalty in medtech

In the ever more competitive world of medical technology (medtech), companies are constantly seeking innovative strategies to drive growth and stay ahead of the curve. While advancements in product development and cutting-edge technology are crucial, one often overlooked aspect that can significantly impact a company's ongoing success is customer loyalty. How likely is your customer to purchase from you again, and how readily will they promote you to their peers?

In this article, we'll delve into why customer loyalty is an increasingly significant factor in the medtech industry. We’ll look at the upsides of focusing on customer loyalty as a way to avoid product commoditization and the downward pressure on pricing that comes with it. We’ll also review its role in unlocking additional revenue during the lifetime of your customer’s investment.

Why Customer Loyalty Matters:

Customer loyalty refers to the tendency of clients to consistently choose and maintain a strong relationship with one technology provider over time.

Focusing on customer loyalty as a strategy is not just about retaining existing customers however; it's about cultivating those installed base relationships to help drive more long-term value for your business. This can come in the form of peer referrals, additional revenue generation after the initial investment, and less pressure on price at the time of new purchases.

This incremental business can be significant. According to a study by Bain & Company, increasing customer retention rates by just 5% can lead to a 25% to 95% increase in profits.

Loyal customers - ie customers who are happy with their investment in your technology and who will not look elsewhere for alternatives, tend to invest in add-ons, upgrades, service contracts, and additional products throughout the lifetime of their investment. This not only boosts revenue but also strengthens the overall customer relationship and gives your sales force and clinical teams additional engagement points and reasons to be in front of their accounts.

Loyal customers are also more likely to make repeat purchases without haggling on price. So even if you have not managed to generate an additional revenue stream, ensuring your customer is happy throughout the lifetime of their investment, has the potential to keep your margins and win rates high for any replacement technology acquisitions.

Studies back this up - showing that existing happy customers are 50% more likely to try new products and spend 31% more than new customers and that 80% of a company’s future revenue comes from just 20% of existing customers.

In short, relationships with hospitals, clinics, and governments are built on trust, reliability, and a demonstrated value over time. Loyal customers are more likely to stick with a trusted provider for future purchases and upgrades, driving sustained revenue growth.

Loyal customers are enthusiastic advocates

And it’s not just about the financials. Generating happy and loyal medtech customers makes it easier to leverage them as brand and technology ambassadors, spreading positive word-of-mouth and recommending your products to their peers. In an industry where trust and reliability are paramount, peer to peer referrals are vital.

The implementation of medical technology often has high upfront costs and long lifecycles, meaning the recommendation of enthusiastic advocates as trusted advisors has added significance and can positively impact buying decisions.

Customer loyalty can be a competitive advantage in medtech

As the medtech industry evolves, there is a growing trend towards commoditization, particularly in certain product categories where differentiation based on technology alone becomes increasingly challenging. In such a landscape, customer loyalty becomes a crucial differentiator.

The industry is also facing huge pricing pressure driven by various factors, including healthcare cost containment efforts, reimbursement challenges, and increased competition. In such a price-sensitive environment, customer loyalty can help mitigate the impact of downward price pressures.

In addition, in the face of industry consolidation, with larger companies having acquired some of the smaller players in order to expand their product portfolios, customer loyalty becomes essential for smaller or mid-sized companies to compete effectively against industry giants.

Customer loyalty should always be part of your growth strategy

As you evaluate your company's growth strategy, consider the role that customer loyalty plays in driving sustainable success.

In our next article we’ll look at ways to improve the customer experience, with a specific focus on building customer loyalty. A happy customer is a loyal customer, and ensuring your client is wowed by your technology, your support, and their overall engagement with you throughout the lifetime of their investment is key to driving long-term business value for both partners.

Quite simply, customer loyalty should always be part of your business plan.

For further ideas on how to drive customer loyalty reach out to www.unplainjane.net We’re here to help ensure a positive customer experience becomes the cornerstone of your success.