There Is no such thing as loyal investors, only loyal customers

By Samson Williams, Anthropologist-in-Residence, MWE

In the world of economics and entrepreneurship, there is one universal truth: loyalty is earned, not given. Yet, loyalty manifests differently in the spheres of investment and consumer behavior. The adage "There is no such thing as loyal investors, only loyal customers" encapsulates a critical lesson for entrepreneurs and business leaders. Investors follow returns, but customers follow values, experiences, relationships, habits and traditions. Understanding this distinction could be the difference between building a fleeting venture and creating an enduring legacy.

The Investor’s Dilemma: A Relationship Defined by ROI

Investors are by nature transactional. They allocate capital to enterprises with the expectation of a return. Their "loyalty" extends only as far as your ability to meet or exceed their financial benchmarks. If a competitor promises better returns, faster growth, or a more attractive exit strategy, investor’s incentive to shift their capital with little hesitation is easily quantifiable and quantitatively defensible.

This isn’t a moral failing on their part—it’s their role in the economic ecosystem. Investors are not designed to stay loyal or even consider loyalty as a concept; they are designed to maximize their personal value. It is why startups often see funding dry up during economic downturns or when new trends emerge, leaving ventures without the lifeline and relationships they thought they had. Investors are fair-weather friends at best, and their commitment is tied to their confidence in your performance or fair winds of the market, rather than any emotional connection to your mission.

The Customer’s Loyalty: A Relationship Built on Trust

In contrast, customers have the potential to be fiercely loyal. When customers find a brand that aligns with their values, solves their problems, and treats them with respect, they form a bond that transcends price points and competitors’ promises. Customer loyalty is rooted in trust and shared values, not just in the utility of the product or service.

Consider companies like Apple or Nike—brands that inspire loyalty not because they are the cheapest or even necessarily the best, but because they resonate deeply with their customers’ identities. Loyal customers become advocates, evangelists, and even defenders of the brand. They provide not only recurring revenue but also the intangible value of word-of-mouth marketing and brand credibility.

Why Loyal Customers Matter More Than Loyal Investors

Investors might fund your growth, but customers sustain your existence. Investors provide capital; customers provide revenue. Investors want to see your metrics improve; customers want their lives to improve. The loyalty of customers can weather downturns, economic uncertainty, and even the occasional misstep, provided that trust is maintained.

Moreover, a strong base of loyal customers attracts new investors. When investors see a business with recurring revenue, high customer retention rates, and a passionate community, they see a lower-risk opportunity. Ironically, the best way to "win" loyal investors is to focus entirely on cultivating loyal customers.

Building Customer Loyalty as a Strategy for Long-Term Success

To thrive, businesses must prioritize the people who pay the bills, not the people who fund the bills. Here are a few strategies:

  1. Deliver Value Beyond the Product: Customers don’t just buy what you sell; they buy why you sell it. Invest in creating an experience and a story that resonates with them.
  2. Be Consistent and Reliable: Trust is built through repeated positive experiences. Consistency in quality, service, and messaging reinforces loyalty.
  3. Engage with Your Customers: Loyalty comes from relationships. Engage authentically with your customers, listen to their feedback, and make them feel heard.
  4. Align with Their Values: Modern customers are increasingly driven by values. Sustainability, equity, and authenticity matter. Align your brand with what your customers care about.

The Bottom Line

At the end of the day, businesses must recognize that investors are a temporary necessity, but customers are the foundation of permanence. A venture backed by investors alone will crumble when the winds of market sentiment change. However, a business built on the loyalty of its customers can weather storms, expand sustainably, and attract investors who see the long-term value in what you’ve created.

So the next time you’re faced with the choice of prioritizing an investor’s demands or a customer’s needs, remember this: Investors may walk away, but loyal customers will stay, grow, and bring others with them. Build for the customer, and the investors will follow.

Samson

PS - This article is about investment crowdfunding. Because customers have more money than investors.