Customer Loyalty & Your E-commerce Business

Customer loyalty is the cornerstone of any successful business. But with so many competitors in the digital marketplace, it can be hard to not only get a customer’s attention, but also to keep it.

 

The internet provides a nearly infinite number of potential buyers, so you may be tempted to overlook the significance of repeat, loyal customers. Why work to retain a previous customer when there are so many other prospects out there?

 

There are many reasons to try to foster customer loyalty, including a significant increase in your sales numbers. In fact, the revenue per visit (RPV) from returning customers is up to three times higher than the RPV from first-time buyers. It makes sense when you think about it. Because they have bought from you before, they know the value of your products and services and feel comfortable buying in larger quantities.

 

Most businesses devote huge portions of their advertising budgets towards going after cold traffic and new visitors. But here’s the thing, you only have a 5%-20% chance of converting a sale from new traffic compared to a 60%-70% chance of converting a returning customer. A study by Adobe found that while returning customers make up only 8% of a site’s traffic, they account for 41% of revenues.

 

These numbers make it clear that you cannot afford to ignore returning customers.

 

In order to continue to find success in your e-commerce business, it is critical that you find ways to foster loyalty in your customers and keep them coming back.

 

Loyalty programs are a perfect way to do this.

 

Customer Loyalty & Your E-commerce Business customer focused concept

 

Types of Loyalty Programs

There are a variety of loyalty programs you can use to reward customers for choosing your brand. Here are a few types of programs that are worth considering.

 

A Points Program

Points systems are the most popular type of rewards program. In this instance, purchases earn customers points that provide them with an opportunity to redeem a reward once they reach a certain threshold. This reward can be a free product, a discount, or some other type of benefit.

 

This type of system is best used by businesses that encourage frequent purchases over a short period of time. People love getting something back and may even end up spending more just to earn more.

 

Unfortunately, most businesses over complicate this program. If the rewards are too difficult to earn and too difficult to redeem, all you have done is waste your time and effort. Try to keep your conversions as intuitive as possible and make sure the rewards are actually worth the effort. Customers are savvy but they do not want to enroll in a points program that requires an advanced calculus degree in order to understand the conversions. Make it simple to understand and customers will be more excited to participate. Similarly, if you can demonstrate that the rewards are worth the effort, you might be able to entice customers to make extra purchases. You obviously do not want to offer a reward so big that it messes up your margins, but it cannot be so small that it is not worth their time.

 

Find a reward and system that speaks to the interest of your ideal customer. By offering them a reward that they actually want, you show that you are aligned with their values, creating a sense of trust that solidifies the loyalty you are trying to cultivate while encouraging additional purchases.

 

"In order for any loyalty program to work, it needs to suit the needs  and purchasing habits and preferences of your customers."   Click to Tweet

 

VIP Programs or Clubs

Sometimes it makes sense to add a little exclusivity to the mix. VIP programs or clubs can remove many of the frustrations that lead customers to abandon their carts and walk away from your brand.

 

By paying an upfront fee, customers will then be given access to a range of perks and benefits, most of which ease the purchase process. Removing the little barriers that stand between your customer and their purchase will boost your sales and improve your reputation.

 

Amazon Prime is the perfect example of the ways in which a paid VIP program can work. Prime users pay $99 a year and in return, they get free, guaranteed 2-day shipping on millions of products and several other benefits. Many online retailers have found that high shipping costs often result in abandoned carts and Amazon found a way to avoid this problem and reward the people who use their platform for frequent purchases.

 

This program is best for businesses that are based on frequent and repeated purchases. Once again, when you remove barriers, you encourage customers to not only purchase from you but to purchase more from you.

 

If this program does not fit into your business model, it will not work. Customers will not shell out the money to join your program if it does not offer them a clear benefit.

 

Create a Tiered System

Like a points system, a tiered loyalty program directly rewards frequent purchases. It rewards the first purchase with a base level reward and each subsequent purchase works towards a bigger, more valuable reward.

 

This system is best for businesses that sell expensive products and services that require a high level of commitment over a period of time. Frequent flyer programs offered by airlines are an example of this type of loyalty program. Customers start at the base level and then as they hit certain markers, they are moved up to the next level.

 

If you are going to enact this type of program, you need to be clear about the rewards and what is required to move up the ladder. Just like with a points system, if the benefits are not clear to the customer, they will walk away from you and the program.

 

Customer Loyalty & Your E-commerce Business customer retention concept

 

Further Thoughts

In order for any loyalty program to work, it needs to suit the needs and purchasing habits and preferences of your customers. If the bulk of your business comes from your website, create your program to encourage continued purchases through your website. There is no sense in getting fancy and reinventing the wheel, meet your customers where they are and reward them for the things they are already doing.

 

This will help you build a real relationship between your brand and your customer. The more that you can show them that you understand their interests, values, and needs, the more likely they are to choose you above the competition. At the end of the day, all customers want to feel like they matter, and paying attention to them and their habits is one way to show you care.

 

Never forget customer service. Excellent customer service should be at the heart of everything that you do. While it is obviously not a loyalty program, customer service that goes above and beyond can produce loyalty in an organic way.

 

Customer service creates the trust that is necessary for people to want to continue to give you their business. If you are able to excel in this department, you will not only create loyal customers, you will create the best advertising tool imaginable. One of the strongest influences on future customers is the experience of past customers. Good word of mouth can pay dividends for years to come.

 

While most advertising dollars are spent trying to gain new customers, it is crucial to your success that you do not ignore the customers you already have. These customers spend more per visit and if you can make it worth their while through a loyalty program, they will continue to spend their money with you. New customers are important, but customers who are loyal to your brand are more than worth the investment. 

 

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