The importance of brand loyalty
The benefits of securing a loyal and dedicated customer base are plenty. Not only do your existing customers spend more, but they also tell others about you:
53% of an e-commerce store’s revenue comes from the top 20% of their customers
Referred customers are between 16% and 24% more loyal
The average basket size of a customer who uses a loyalty reward in a purchase is 39% higher than the basket size of a customer that doesn’t
An oft-quoted statistic states that it costs five times more to attract a new customer than to keep an existing one. Not to mention customers loyal to your brand will spend 39% more on average with you. They’re also much more likely to refer other customers to you through word of mouth, social media and online reviews.
More accurate sales forecasting
Once customers become loyal to your brand and place repeat orders with you, forecasting sales becomes a whole lot easier. Your customers’ purchasing behavior will be more reliable and you’ll gain access to detailed order history data with which to base decisions on.
Improved search engine visibility
Search engines are starting to consider social network influence when determining website credibility and authority, which means if you have a strong social following (and loyal brand advocates), then you may start to see improvements in your search engine rankings, potentially resulting in increased revenue, sales and profit.
But the journey to securing a loyal customer is far from smooth. There are more and more brands launching daily (with latest estimates predicting there are currently between 12-24 million e-commerce sites worldwide).
Plus, digital channels, coupled with the emergence of increasingly informed shoppers, has meant that it’s necessary to engage and excite customers across multiple touchpoints.
Clearly, a more sophisticated approach is needed.
If you’re wondering what makes customers loyal to a brand, then keep reading as we’ll share methods you can implement today to build brand loyalty at every stage of the customer lifecycle. We’ll also touch on real-life examples of what other businesses have done to improve customer loyalty – both online and in store.
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How to retain customers and build brand loyalty across the customer lifecycle
Pre-purchase: the first touchpoint
The initial consideration stage is an untapped opportunity that marketers should be using. 85% of customers research online to find the best deals to suit their needs.
To hook customers early on, you need to appeal to your customers on an emotional level and pay attention to how they perceive your brand. You want to show them that you’ll treat them well and that you care about their needs. In other words, that you are worth being loyal to in the long run.
Harness a loyalty program to show your customers the value of your brand before they’ve even made a purchase.
Do this by appealing to the culture of instant gratification and give customers value right away. This could be by giving points for visiting your site for the first time or signing up for your newsletter. Be sure to display these instant perks sitewide – either in popups or in your homepage banner – so customers know that they can start earning right away.
You could also take this moment to show your customers that you’re emotionally aligned with them. This way, they’ll feel confident that you’re a brand worth buying into.
Stay Wildish center their loyalty program on their community. Customers can connect with fellow shoppers in their local area and give back to environmental and social causes. As a result, new customers see that their community is friendly, proactive and interested in similar causes.
Engaging customers pre-purchase is incredibly important as it’s the first opportunity to pique interest and encourage spend.
Our research even shows that a customer who joins a loyalty program when purchasing for the first time spends 40% more than a first-purchaser who doesn’t.
Transform one-time shoppers into repeat customers
So your customer has bagged their first purchase. But your mission doesn’t end there – you still need to keep the brand-to-customer relationship hot so they keep returning to you over the competition.
Encouraging a repeat purchase is incredibly valuable. Research shows that the likelihood of a customer making a second purchase is as little as 30%. However, that number jumps to over 50% in between their second and third purchases. Once you’ve secured a second purchase, you’re increasing the likelihood that they’ll return to you long-term.
To get repeat customers, you need to keep front of mind and make these potential loyalists feel special.
Remind them that you exist by sending loyalty emails between purchases. These could be points update reminders telling your customers they have points waiting for them or notifications of one-off, double-point events. Whatever it is, make sure it’s engaging and worth clicking.
The post-purchase experience
The post-purchase stage is vital to securing customer loyalty. It defines the likelihood that your customer will purchase from you again. Plus, if you secure loyal advocates at this stage, they can be used as a cost-effective way to acquire new customers.
What’s worrying, however, is that only around half of UK customers would give their last experience of online shopping the highest rating by the end of the journey. And, in the US, it drops way down to just 38%.
Use the post-purchase experience as a time to educate your customers on some of the other ways that they can earn loyalty points beyond purchases. Show them the points they could earn for leaving a review in follow-up emails. Or, show them that they’ll earn a discount for referring a friend to your site. Not only will these perks benefit your existing advocates, but you’ll also acquire more social proof that will make new and curious shoppers convert faster.
Left customers aren’t lost customers
There’s a common misconception that if you’ve lost your customers to the competition that they’re gone for good.
But, remember: the opportunity to convert a customer doesn’t just arise at the start of your customers’ journey. It pops up time and time again throughout the whole customer lifecycle – even when it appears they’ve lapsed altogether.
Use your loyalty program to show lapsed customers that you haven’t forgotten about them with personalized points and rewards. If they see that you’re taking a moment to offer them something they really value, they’ll appreciate the effort you’re putting in.
This stage of the customer journey is also the perfect time to surprise and delight shoppers.
For example, show them that you care by moving them up into a more exclusive tier with exciting and experiential perks. When they see they have more opportunities to engage with you, they’ll return to spend.
Using e-commerce loyalty programs on your website
Now that you know how to build brand loyalty across the customer lifecycle, read on for Brightpearl’s follow-up tips on getting creative with digital technology, mobile apps and email to excite customers with your own e-commerce loyalty programs.
Capturing contact information is a prerequisite to any successful loyalty program irrespective of the channels the customer came to you from. So you should ensure that your e-commerce loyalty program is capturing this information successfully before adopting the following best practices.
1. Understand what motivates your customers
What motivates shoppers to join loyalty programs?
As can be expected, motivations differ across target audiences. Some customers are cost-conscious so are looking for discounts on purchases they wouldn’t ordinarily make. Whilst others are already loyal customers, excited to receive discounts for purchases they frequently make.
For your e-commerce loyalty programs to be truly successful in this highly competitive industry, your program needs to be more than just a standalone advertising or marketing program. It needs to help you build a relationship with customers far beyond what your competitors are doing, so you need to know what makes them tick.
2. Define your program goals
When launching any type of sales promotion, your goals should always be defined and understood perfectly.
Do you want your loyalty program to increase average order values, improve repeat custom or decrease customer churn rates? Knowing things like this will help you to establish which type of e-commerce loyalty program is best for you and your customers.
3. Set and measure return on investment objectives
Loyalty programs should not only motivate your target audience to spend more with you, they should also ensure you receive a positive return on investment (ROI).
When measuring your loyalty program ROI, you need to subtract your incremental revenue from your incremental costs.
Incremental revenue (i.e. additional revenue and benefits from increased sales) can include membership fees, sales of premium products, higher referral rates, lower customer churn rates and increased purchase frequencies and/or order totals.
Whereas incremental costs (i.e. those additional costs that occur from selling more products) can include perks, member events, IT investment, marketing costs, business overheads and actual rewards redemption totals.
4. Aim for something unique that sets your program apart from all others
With so many different types of loyalty programs out there, from retailers of all sizes, you should try to stand out from the crowd with unique offers.
This includes the program itself and how you choose to reward customers.
Loyalty programs are rarely one-size-fits-all so your unique selling point should always be based on extensive persona profiling and market research.
Find out what your customers really want and work with them to find something to suit both their needs and the intended growth of your business.
5. Promote your program on the right channels
Social media, email marketing and mobile marketing are all good starting points for promoting your e-commerce loyalty program. But target audiences will differ in which channels they use, how they use them and when they use them.
Thus your promotional efforts of your program should find the right balance for your ideal customer profile.
As an example, 88% of Facebook users are aged 18-29, while 84% of adults who use Facebook make less than $30,000 per year. If your brand is recognized as a youthful, good value brand then Facebook could be a good platform for you to use.
If, however, you have a luxury brand that targets the over sixties, in person marketing may be better suited instead.
Whether you craft short and snappy social media posts, personalized marketing emails or spread the word in store, you should always be willing to promote your program.
6. Reward successful customer referrals
Whether your goal is to gain a new customer or tap into a highly qualified potential lead, rewarding your existing customers for an introduction can be a great way to do it.
You’ll gain new customers, whilst your existing customers will be more likely to spread the word about your brand, knowing they will be rewarded for it.
7. Be prepared to mix things up and adapt
If you find your reward redemptions drying up a little, consider mixing things up.
Have customers grown tired of discount codes? Why not offer a free gift with a qualifying purchase instead? Have those free gifts lost their sparkle? Consider launching a competition to allow customers to win exclusive and exciting new products.
8. Measure the success of your e-commerce loyalty program
Depending on your own goals, target audience and business, there are a number of different metrics to consider when evaluating the success of your loyalty program.
Try some of these to start with:
What’s your average order value (AOV) before and after creating the loyalty program?
How does your AOV compare between loyalty members versus non-loyalty customers?
What is your repeat purchase rate of non-members versus members?
How often do your loyalty members redeem points, offers or discounts?
What are the engagement rates on offers, competitions and prizes that you’re offering?
Which segments of customers are the most engaged? Should you focus your efforts on them more than others?
Although the road to loyalty isn’t always smooth – there’s a lot you can do to make the journey less turbulent.
Most of all, remember that the opportunities are there, you just have to think of new and creative ways to unearth and communicate them.
Want to learn more ways to target customers at different stages of the loyalty lifecycle?
Check out the LoyaltyLion Academy – a free, educational resource that will transform you into your company’s go-to loyalty expert.