advice Growave

Get Free Advice on improving your store

Blog Home
Article post Growave

What are the Benefits of Customer Loyalty in Ecommerce?

Jan 9, 2023

,

in

eCommerce Expert Workshop

11

min read

How to Improve Customer Loyalty and Retention

The customer is the foundation of any business. The first step in creating a loyal customer base is to focus on your existing one. In this article, you'll learn how to retain customers and boost loyalty.

How to Improve Customer Loyalty and Retention

According to the US Bureau of Labor Statistics, the percentage of start-up businesses that fail within the first two years is 20%.

Due to strong competition and the large number of companies selling the same goods and services, it’s getting harder to get customer attention and keep them coming back for more. Keeping your customers around can prove to be beneficial for increasing revenue. Therefore, it should be obvious that you should focus on your customers. Customers are the reason why you started your business in the first place as there’s no business without customers. They are the most-priced asset in your online business. So it makes sense to reward the most loyal ones. Every time you reward customers, you’ll appeal to their emotional side. By rewarding them for repeated purchases, you make them feel loved and cared for. And when they feel that way, they are more likely to recommend your business to their family members and friends. Consumers trust word-of-mouth recommendations from friends and family more than advertisements. Building a loyal customer base that spreads the word about your eCommerce business and keeps coming back for more is the secret to higher sales and the company’s growth.

Customer loyalty doesn’t happen naturally, as it requires deliberate effort. Loyalty is rare nowadays and it is such a hot topic that singers can’t stop singing about it. As I’m writing this article my brain is just like “All we ask is trust - Loyalty, Loyalty, Loyalty”. Kendrick Lamar and Rihanna never fail to amaze us. Their song should be an anthem for all people who seek loyalty and trust including friends, couples, and eCommerce business owners. To ensure your customers’ support and satisfaction you should continually pay attention to them.

To help you increase customer loyalty and retain customers in 2023, we’ve prepared this blog post for you.

Here is what this article will cover:

  • What is the definition of customer loyalty and retention?
  • How to improve customer loyalty and increase retention?

What is the Definition of Customer Loyalty and Retention?

Let’s quickly go through the definitions of customer loyalty and retention.

Customer loyalty is a long-lasting positive relationship between a customer and your business.

Customer retention is a metric that measures customer loyalty in a given period of time.

Both customer retention and customer loyalty are vital to the growth, longevity, and success of your eCommerce business but these terms cannot be used interchangeably when describing customers.

Loyal customers are happy customers who will return to your company to make more purchases from you and persuade others to do the same. They will interact with you through a variety of different channels. They aren’t easily influenced by the price or availability. Having frequent customers might keep you afloat through difficult or hard times.

Retained customers may or may not purchase your products or services again. They might be buying from you just because they haven’t found an alternative yet.

These definitions show us that you can measure customer loyalty, and your eCommerce customers may have different levels of customer loyalty. What’s more, not every customer you retain ends up being a loyal one. Customer loyalty is crucial to track since it reveals how happy your customers are with their shopping experience. And by measuring customer retention you can also get a clearer picture of client satisfaction. Loyalty means growth and retention means fighting decline and avoiding churn. Increasing customer loyalty also results in increased customer retention.

Now that we know what these two terms mean, let’s see how you can improve customer loyalty and retention.

Showing Gratitude to your Customers with Loyalty Programs

We live in a world where we all want to feel loved and valued. Sometimes the smallest act of gratitude can completely transform someone’s day. This holds true both in real life and in business. Unfortunately, you don’t hear the words “gratitude” and “business” in the same sentence that often. Gratitude is a powerful thing and it plays a big role in building a healthy workplace culture and long-term relationships with your customers. It might create a bond that serves as the cornerstone of a strong relationship you never imagined. Therefore, it makes sense to express gratitude to customers, making them feel heard and appreciated. Customer appreciation is an amazing method of humanizing your brand, increasing customer retention, and inspiring brand loyalty for your business. How can you thank your customers?

  • Create a customer loyalty program

With a loyalty program, you can recognize and thank your most devoted clients. Customer loyalty programs are built to reward your customers. These programs have certain requirements for rewards so make it easier for customers to get rewards whenever they purchase from you. The simplest of loyalty programs are the most efficient ones.

Ecommerce loyalty programs usually offer:

  • Tiered Programs
  • Points-based Programs
  • Referral Programs

With loyalty programs, there are a lot of options from which you can choose. Many eCommerce businesses use a points system because it is the most common one and works for any business. Repeat customers win points that translate into rewards. They can redeem rewards points for cashback, discounts, free products, etc. Some online businesses use a tiered-based system. Once a customer spends a certain amount of money, he unlocks a new tier. It might be a “bronze”, “silver”, or “gold” membership, or it might look like a regular versus VIP membership. Other online businesses use referral programs. The main idea behind this points-based program is to reward customers for referring your business to their friends, family members, and co-workers.

These programs can boost loyalty even more and have a measurable and significant impact on your sales and retention by decreasing the value of purchases made through e-commerce competitors. You can identify your most valuable customers. What all these programs have in common is that they all aim to get clients to spend more money on your products and services. Repeat buyers are more profitable because they trust you. By rewarding your customers, you let them know that they matter to you. When they feel appreciated and important every time they buy your products and services, they’re more likely to stay with you. Thanking customers is a great way to build meaningful relationships.

So, what are the benefits of loyalty programs?

  • They improve customer retention. By providing customers with a good reason to do business with you again, these programs serve as a strategy for customer retention. Customers now base their purchases not only on pricing, but also on engagement, shared values, and their overall perception of your company. That’s why it makes sense to provide the best products and services possible.
  • They are less costly. Compared to customer retention customer acquisition costs are far higher. So, there’s no denying it, customer loyalty programs work and they can save you some money. Plus, it’s an effective way to reduce marketing spending.  
  • They increase customer referrals. If your customer loyalty program is effective and easy to understand, your customers are more likely to recommend your online business to their friends, family members, and colleagues. You don’t only attract new customers but you encourage repeat business from them. And customers trust recommendations from people they know.
  • They help you collect valuable customer data. As soon as your customers sign up for your loyalty program you can collect your data on them such as demographic information and location. You will get the full picture of customer behavior, purchasing habits, and preferences. You can use this information to improve your marketing strategy. Plus, you may discover more about your target audience using the data you collect. In addition to that you can increase loyalty and basket value.

Whether it’s a points-based, tiered, or referral program, they are all important and valuable for your business. With these programs, you can increase your customer base, customer knowledge, total sales, and brand recognition. What’s more, you can improve your marketing strategy. To retain customers or convert new buyers into loyal ones, you need a loyalty program.

If you are a Shopify store owner and want to know what’s the best app for your eCommerce business, we’ve got you covered.

The following article will outline some of the best loyalty apps on the e-commerce market: "Best Shopify Loyalty App for Retention Marketing"

Make Great Customer Service a Priority

“Good customer service costs less than bad customer service”

Sally Gronow

Sally Gronow, Head of Customer Service at Dŵr Cymru Welsh Water is right. There are statistics to support her point of view. 81% of customers have a higher chance of making another purchase after a positive customer service experience. A repeat customer already knows you and your business. So, you don’t need to spend tons of money to convince him or her to visit your e-commerce site again and buy your products and services. Acquiring a new customer is seven times more expensive than retaining an old one. Many companies aim to provide good service, but some forget that the world of customer service has evolved over the past few years. We live in a constantly changing digital world, where communication is key to success, and great customer service matters more than good customer service. The main difference between great service and good service is that in the first case, you show you care with the above and beyond customer service. Knowing when and how to deliver excellent service is the key to gaining and retaining loyal customers. In addition to that, you can turn your frequent customers into brand advocates. But in another case, good customer service means a medium point. Simply offering quality products at a competitive price just isn’t enough.

It needs no mention that people love attention. You need to be always attentive to your customers’ needs and if you manage to deliver personalized, proactive, and professional service you are more likely to stand out from the crowd. It sounds obvious, but you need to exceed your customers’ expectations. Treating your repeat customers as your most valuable asset can make your business more profitable in the long run.

Consistent customer service affects customer loyalty in several ways:

  • Fast support. To understand the customers’ problems, you must effectively communicate with them. Answer the questions they have, and respond to their comments promptly. You will boost customer satisfaction levels and service.
  • Minimize touch points. The number of encounters necessary to address a problem can be significantly decreased with excellent communication.
  • Maximize sales conversions. Real-time assistance helps clients close deals more quickly and boosts sales conversions. Customer service may pay out handsomely when done right.

Bad customer service can hurt marketing and retention. And what’s more dangerous than an unhappy customer? An unhappy customer. He or she won’t hesitate to tell other people about their bad experiences.

Great customer service plays a major role in any business. When you are consistent with impeccable service, your customers will have enough reasons to buy from you. The sales team would be able to accomplish their objectives using the knowledge they get from customer service or support. This in turn will help you retain your customers and increase loyalty. This ultimately leads to fewer issues and increased satisfaction - says Harry Johns White, Marketing Specialist at NBAblast

If you want to know what are the main principles of great customer service, you should read the following article: 5 Key Pillars of Customer Service

Ask for Feedback

Girl giving feedback

No eCommerce business owner wants to watch their customers leave their website. So, when stay and make another purchase you should be proud of yourself because you are meeting their expectations and satisfying their needs. But how do you keep your customers satisfied and happy? How do you know if they want to continue to do business with you? By asking for customer feedback. Feel free to ask your customers. They are the target market for every product and service you offer. When you ask them questions you show them an appreciation for staying with you. You also demonstrate your commitment to improving the service you provide. Today’s customers demand convenient, fast and personalized solutions to their problems. Customer feedback helps you have a pulse on what your customers think about your products and services.

“I think it’s important for brands, especially brands [that] are really consumer-centric, to stay connected. Customers tell you so much from their behavior and how they shop with you.”

Jessica Alba, founder of the Honest Company and Honest Beauty, actress, advocate, and New York bestselling author believes brands can gain valuable insights for their business and products by staying connected and listening to their customers. She is absolutely right. You cannot underestimate the power of information. You can improve their customer experience based on customer behavior and feedback. Send out surveys, ask for email reviews, use website feedback boxes and be receptive to the comments you get.

From the moment they first visit your website, until the moment they place an order and receive their order, you can see what you are doing wrong or right. Your first-time visitors can turn into loyal customers. Then you can transform them into your powerful brand advocates. But that’s not all you can also improve your old products and new ones. In addition to that, you can reduce customer acquisition costs. When you understand your customers’ needs and wants, you can make their experience enjoyable and memorable. Knowing your target audience can help you choose the best marketing strategy. The result won’t leave you disappointed. You will gain more customers while spending less.

Thus, it’s important to listen to your customers and value their opinions. You show that you want to build long-term relationships. It also shows your human side and it can help you stay competitive for a very long time. And to top it off, you will retain more customers and increase their loyalty.

Conclusion

Knowing the difference between customer retention and loyalty ensures you won't pass up any opportunities to expand your e-commerce business. By increasing loyalty, you also increase retention. Businesses should combine loyalty programs with retention strategies to achieve the best results. Customer loyalty and customer retention help you build strong profitable relationships. That’s why you should know how to improve customer loyalty and retention.

demo call icon Growave

Book a Demo Call

article icon Growave

Similar Articles

shopify logo Growave

Growave for Shopify

Growth Starts Here

Join 13 000 Shopify merchants who use Growave for marketing

Try Growave free for 30 days, no credit card required.