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With new brands entering the market every day, customer loyalty has never been more important – here's where things could be headed.
With thousands of e-commerce businesses popping up every day, customer loyalty has never been more important. With more and more options to spend their money, customers have a greater opportunity to support companies that align more with their beliefs, morals, and values, or choose not to support a company for the same reasons.
A core customer base is crucial to driving the growth of any business. It is estimated that 35 percent of an e-commerce store's revenue Customer retention is vital to success and one of the most effective retention strategies for eCommerce businesses may be the adoption of loyalty and rewards programs.
As customers have more options for spending their money, customer loyalty becomes increasingly difficult to earn and maintain. But it’s worth the effort. To effectively foster customer loyalty, you need to go back to the basics: improving the end-to-end shopping experience, whether customers shop online or in-store. Some proven tactics include offering a well-optimized loyalty and rewards program, using omnichannel strategies, and delighting customers on their terms—on any channel, platform, or location.
In the pre-e-commerce era, customer loyalty was easier to achieve because customers were more limited in their choices of where and when to buy. There was less competition in the market and fewer places to buy a product, which by default meant fewer options. This made customers more likely to stick with brands they found comfortable or familiar, allowing companies to earn customer loyalty without any additional effort.
The evolution of customer loyalty
As more e-commerce stores enter the market across all industries, brands face increased competition in customer acquisition, retention, and market share. To take just one common e-commerce category as an example, new beauty brands have emerged every year in a sector with a Market growth rate of 3.3 percentWith this growth comes the need to build customer loyalty, and this is best achieved with a loyalty program.
According State of loyalty in retail reportRepeat customer rates are increasing year-over-year across all industries. Apparel and jewelry brands have the most repeat shoppers spending to make a repeat purchase, followed by beauty and cosmetics brands. And companies are generating revenue from their retention efforts: Apparel and jewelry brands saw a 478 percent ROI thanks to loyalty platforms.
Customers who participate in loyalty programs also tend to spend more per purchase and return more frequently. Data on customer loyalty programs shows that those who redeem loyalty and reward points spend more per order compared to those who do not redeem rewards. According to dataShoppers who use loyalty-generated reward coupons have a 16 percent higher average order value (AOV) compared to shoppers who use non-loyalty-generated coupons.
E-commerce companies that delay offering a loyalty program are losing money. In addition to increasing ROI, implementing a well-optimized loyalty program builds a brand community and offers additional value to customers.
The future of customer loyalty
The future of customer engagement is about reaching customers where they are. This includes using omnichannel and point-of-sale strategies, offering a customer-centric loyalty program, and creating a brand community that transcends physical boundaries.
Generating a sale doesn’t always happen through a single channel – consumers have unique preferences for how they shop. Retailers should adopt omnichannel commerce strategies, where each channel is connected and offers the same level of experience.
And knowing where your customers are can help you shape your omnichannel strategy. A successful strategy doesn’t mean you have to be present on every channel, but it means focusing on the ones that are relevant to your customers. Here are some examples of real omnichannel strategies that can build customer loyalty:
- A customer earns points on their first online order and redeems them on their next in-store purchase.
- A customer sees a product in a store and decides to go home and buy it online at a discount.
- A customer shopping on a smartphone app has left an item in the cart. He purchases it again later and decides to purchase it from his laptop.
Today’s retailers are expanding into new international markets and selling to customers in many countries at once. Retention strategies will become increasingly important to deliver comparable value to shoppers across markets.
The ultimate goal is to create an experience that motivates customers to want to shop at your store again. Design your loyalty program based on what your customers really value. Listen to what your customers say and look for in a loyalty program. This may involve optimizing your rewards and VIP structure, or implementing gamification techniques. Customer loyalty can be difficult to achieve, but it is not impossible.
Check out the complete guide to customer loyalty data in The State of Commerce Loyalty report. To learn more about Smile.io, a loyalty and rewards program, get in touch with us at Smile.io.
