Businesses can create long-term success when they increase customer loyalty. Why? Because loyalty leads to growth. Arguably, so does customer acquisition. But existing customers are more valuable to your brand.
Let’s take a look why and then we’ll explore 3 ways to increase customer loyalty.
What is Customer Loyalty?
Customer loyalty can be defined as a customer’s willingness to make repeat purchases from a business. Repeat purchases can be a result of customer satisfaction or the value customers find from your product and services.
Why is Customer Loyalty Important?
Research shows that increasing customer retention rates by 5% increases profit by 25% to 95%. Which makes existing customers and their loyalty incredibly valuable.
While new customers are also profitable, acquiring them can be challenging and expensive. Customer acquisition costs have risen 50% in the past five years. And new customers aren’t as likely to purchase compared to existing customers. In fact, the probability of selling to an existing customer is 14 times higher than the probability of selling to a new customer. And loyal customers are likely to spend more money too.
Loyal customers contribute greatly to your success. Not only because of their spending habits, but because they are your most valuable form of marketing. Once shoppers find a brand they love, they tell everyone. Shopper’s friends, family, and colleagues will hear about brand. After all, word of mouth advertising is the most trusted form of marketing.
Loyalty is extremely important to an ecommerce business. But how do you increase customer loyalty?
How to Increase Customer Loyalty
Next to providing quality products and services, there are 3 main categories that contribute to building a loyal customer base:
- Customer Service
- Customer Experience
- Loyalty Programs
To clarify, customer service and customer experience are closely related. They actually work together. But they are separate categories since they both deserve extreme attention to detail. Let’s start with customer service.
Customer service is vital to all online businesses. Every encounter should encompass clear and concise communication, alongside transparency.
According to Hubspot, 93% of customers are likely to make repeat purchases with companies who offer excellent customer service.
First, we must recognize that customer service includes more than representatives at a call center. It includes everyone that interacts with a user pre and post-purchase. It includes a digital marketer responding to a question about sizing on social media. Or a sales associate welcoming a shopper into a brick and mortar store. Every employee is an example of the business’s core values. Which should include providing exceptional customer service.
Although customer service includes more than the support team, the support team is incredibly valuable. Contacting support should be relatively simple, whether users want to do it by phone, email, or chat. Once in contact, the support teams priority should be ensuring customers are satisfied. Support teams should resolve issues as quickly as they can. And if they are unable to, they should update the customer on the status of the issue. There is nothing more frustrating than being left in the dark.
Aside from order issues, customers may have general inquiries or complaints. Either way, it’s important that they feel heard and acknowledged. Especially on social media. Users often turn to the comment section to complain, ask when something will be back in stock, question what items are pictured, or inquire about the brand’s values.
For example, Everlane is a brand made from sustainable materials. Oftentimes consumers will question their techniques or choice of fabrics. Everlane is quick to respond and provide clarity on the topic. When faced with questions regarding additional payment options or including inclusive sizing to their selections, Everlane informs the commenter that their inquiry was passed along to the right team.
User comments are personal insights into what would make them happier to shop with your brand. Whether the comments ignite change or simply elicit a response, you enhance the customer experience by acknowledging the user. Which moves us onto our second category.
Interacting with commenters on social media contributes to an omnichannel strategy. An omnichannel strategy creates an integrated and cohesive customer experience across all channels. When uniting the strengths of all channels, businesses can deliver a better customer experience. This is important to note since customer experience as a loyalty factor is said to be the key brand differentiator.
Alongside an omnichannel approach, personalization greatly contributes to customer experience.
If your brand isn’t personalizing everything from product recommendations to email nurtures, you can expect customers to look elsewhere. That’s not to say that customers won’t purchase. But they are more likely to become loyal customers if their experience is personalized.
Start by moving away from generic marketing messages.
If a shopper in California is receiving your marketing emails for snow boots, it’s apparent your business is focused on sales and not the shoppers’ needs. Although, if that shopper has been browsing snow boots, it makes sense to send them this message. Or maybe recommendations for snow jackets.
When a shopper signs up for your emails, take into consideration their browsing history, past purchases, and their location. Remember, existing customers are likely to spend more. If you are providing them product suggestions or promoting sales for items they might be interested in, they are likely to invest.
Personalization can be as simple as adding a first name to an email or welcoming users back on your homepage. It can be as complex as machine learning algorithms to provide relevant product recommendations or advanced email remarketing campaigns to increase lifetime value.
Whatever the strategy, utilizing the information shoppers are giving you allows you to send the right message, at the right time, to the right audience.
All-in-all, personalization increases customer loyalty because it builds upon foundational emotions such as:
- Trust – Your customers believe you have their best interests in mind
- Commitment – You show customers you value your relationship
- Reciprocity – You recognize and reward customers for their purchases
Speaking of emotions, getting something for “free” is largely emotional. Free shipping is another way to enhance the customer experience to build customer loyalty. 91% of shoppers are likely to become repeat customers if a business offers free shipping. This can be attributed to shoppers loving the concept of “free” or the emotional connection the incentive creates between shoppers and retailers.
According to Motista, an emotional connection to a brand increases lifetime customer value by 306%. Not only do emotionally connected customers buy more, they recommend services at a much higher rate. In fact, 92% of consumers believe suggestions from friends and family more than advertising.
You are in control of the experiences shoppers are sharing. Make sure they’re positive by implementing an omnichannel strategy, adding a touch of personalization, and offering free shipping.
Customer loyalty programs are built around the concept of rewarding customers for repeat purchases. Which taps into the reciprocity emotion mentioned above.
It’s a simple way to build brand loyalty, assuming shoppers sign up without hesitation. According to SproutSocial, consumers say they’re more likely to become brand loyal if they get access to exclusive discounts through a loyalty program.
If you choose to implement a loyalty program, be sure to offer a unique incentive.
For example, Nordstrom members earn “notes,” which are essentially gift cards they can use towards future purchases. Members can access the annual sale weeks before non-cardholders. Nordstrom gives members many other perks, but their program is based around exclusivity and discounts.
Similarly, Madewell offers free shipping and returns for their members. They get access to new products, birthday gifts, and free embroidery on denim.
Madewell doesn’t give gift card incentives like Nordstrom, but they offer plenty of alternatives that make signing up look enticing.
It’s important to note that loyalty programs are usually free to join. Providing users a loyalty program free of charge increases the likelihood of them joining. Of course, there are programs that do require some sort of buy it, but start with free options to gauge your audiences response.
Building Loyalty At A Glance
Customer service, customer experience, and loyalty programs are powerful and cost-effective ways to grow your business. While the building blocks to increase customer loyalty have changed over the years, it’s a vital aspect of brand building in the digital age.
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