Customer loyalty is a continuing positive relationship shared between a business and a customer. It measures how willing a customer is to keep engaging with your brand and buying your products and/or services. When you earn loyalty from shoppers, they’ll be much more likely to prioritize your business over your competitors with similar offerings.
It’s essential to keep in mind that improving customer loyalty isn’t something that you generally achieve overnight. Loyalty and trust are gained over time, after a shopper has experienced multiple positive interactions with your store. Nevertheless, building customer loyalty is worth the effort with the great rewards it can bring to your business.
In this article, we’ll take a look at why customer loyalty is important and supply you with some helpful strategies for cultivating it!
Why is it important to build customer loyalty?
Regardless of what you sell, there are numerous reasons why you’ll want to prioritize building customer loyalty, several of which are described below.
- Retaining customers is less expensive than attracting new customers: Although customer recruitment is important to growing your business, it’s not nearly as cost effective as keeping your current customers happy. Acquiring a new customer for your can cost, on average, five times more than retaining an existing customer.
- Loyal customers tend to have a higher conversion rate: The more positive experiences that shoppers have with your c, the greater the chances that they’ll be convinced to order from you again in the future. While new visitors may be understandably hesitant to buy from your site, devoted customers will be less wary about clicking “Buy now,” earning you more sales along with other types of conversions.
- Customers loyal to your business will shop more consistently: It makes sense that if people have enjoyed purchasing from you in the past, they’re more apt to return to your store on a regular basis. Returning shoppers can provide an even greater benefit to your business during busy holiday periods when the competition for attracting new consumers is often higher.
- Satisfied shoppers will refer your business to others: When your customers have a great experience with your online store, they’re much more inclined to tell others about it. As powerful word-of-mouth marketing, it can do wonders for bringing in new customers, without any extra effort on your part.
- You’ll gather positive feedback on social networks and other platforms: Similar to the previous point, loyal customers will often be happy to share their positive reviews and comments on social networks and/or review sites. This can boost brand trust and attract new shoppers who may have been on the fence about ordering from your site.
- You’ll be able to better understand your customers’ needs: The longer that shoppers stay with your business, the more you’ll learn about their preferences and what they require in a shopping experience. With this knowledge, you’ll be able to improve your offerings and create better targeted marketing campaigns.
How do you measure customer loyalty?
You may have a general idea of how loyal your customers are to your brand, but it can be beneficial to perform a more thorough analysis to obtain a greater understanding of where your customer loyalty currently stands.
Measuring customer loyalty goes beyond simply seeing if a consumer makes a single purchase or returns for additional purchases. It’s also important to determine why people buy repeatedly from your store, the frequency and when shoppers stop buying, where their purchases originate, and their level of satisfaction after each order.
Consider using any or all of the following metrics when measuring customer loyalty for your business.
Customer lifetime value
Customer lifetime value (CLV) indicates how much you can expect to earn from a shopper as long as that person remains a customer of yours. Insights from this metric can aid you in anticipating estimates for future purchases and determining which customer segments are likely to be most valuable to your business.
To calculate your CLV, start by determining your customer value, which entails multiplying your average purchase value by the average number of purchases. Then, simply multiply your customer value by your average customer lifespan.
Repeat purchase rate
Also known as your re-order rate, repeat customer rate, or customer retention, your repeat purchase rate is the percentage of customers who return to make purchases from you. When this rate is high, it indicates that shoppers trust your brand and that you likely have a pretty good level of customer loyalty.
To calculate this rate, you just need to divide your total number of repeat customers by your total number of paying customers.
More applicable if you offer subscriptions, where your customers make regular monthly payments, churn rate is the percentage of your customers who opt to not renew their subscriptions or to cancel your product or service. A high churn rate indicates that people are dissatisfied for one reason or another.
To help improve customer loyalty, it would be a good idea to obtain more information as to why your customers no longer want to continue their payments, perhaps by offering canceling customers an incentive to complete a survey, for example.
When calculating your churn rate, you’ll first take the number of customers churned in a specific time frame and divide it by the total number of customers present at the beginning of the window. Then, simply multiply the result by 100.
Net Promoter Score
Net Promoter Score (NPS) is a widely used metric for examining how customers feel about a brand and predicting business growth. Its popularity with businesses of all kinds is due to its simplicity and tracking ease. You can calculate your NPS by sending a survey to customers after certain events, say after an order or a customer service interaction, to your entire customer base, or to specific groups.
Calculating your NPS generally entails asking participants a key question, such as “On a scale of 1 to 10, how likely are you to recommend [name of brand]?” The participants are then grouped based on their responses:
- Promoters (score of 9 to 10): these are loyal customers who are likely to continue buying your products/services and referring others to your business.
- Passives (score of 7 to 8): this group consists of shoppers who are relatively satisfied with your business but could easily be convinced to switch to one of your competitors.
- Detractors (score of 0 to 6): these customers are not happy with your business and may even cause damage to your brand name by voicing their discontent to others.
In addition to making purchases, there are numerous ways that customers might engage with your business: likes, comments, and shares on social networks; store or product reviews; email click-throughs; loyalty program sign-ups; etc. High customer engagement signals that shoppers are enthusiastic about your brand and its offerings.
Note that while this can be a useful metric, customers can be very loyal without engaging with your business. Perhaps they just don’t like leaving reviews or aren’t active on social media, for instance. It’s therefore beneficial to not make customer engagement the sole metric you use to measure customer loyalty.
How to build customer loyalty
Now that you’ve seen why customer loyalty is so important to the success of your business, you might be wondering what you can do to cultivate it. Here are 9 tips you can begin implementing to build customer loyalty today!
1. Use the right communication channels for your audience
In order for your brand to stay relevant in the minds of your customers, it’ll be essential for you to communicate with them on a regular basis.
However, some communication channels may be more important to your target market than others. Determining which channels are most appreciated by your customers will allow you to optimize your marketing and sales strategies.
- Social media
With the huge number of people on social networks these days, it’s not surprising if your customers enjoy frequenting the various platforms available. Social media has rapidly become one of the top ways consumers like to engage in communication with businesses.
Whether via a DM or a comment, users can quickly and easily reach out to their favorite brands, and brands can then showcase their high-quality customer service by responding to messages in a manner that’s both timely and friendly. Of course, the best social networks for your business to use will depend on your customers’ preferences, but Facebook, Instagram, Twitter, and TikTok are definitely options to consider.
Email is another communication channel that’s much appreciated by many brands and consumers alike. It allows you to supply your subscribers with more detailed information than usually possible on social networks, and it’s generally thought to be relatively nonintrusive—provided you don’t bombard your customers with non-step messages!
As with any of the communication channels you opt to use, prioritize reactivity concerning any customer queries you receive via email. Be sure to inform the customer of any new updates that occur as soon as possible.
While it’s true that many shoppers’ first choice for when they want to get in touch with a business might not be making a phone call, sometimes communicating via phone is the easiest and most direct way to solve a problem. As a consumer yourself, you’ve probably experienced the frustration of not being able to talk to a real human when faced with a customer service issue at some point.
If you’re handling your business’s customer service on your own, using the phone as a communication channel with shoppers may not be as easy to implement as other methods. However, if you have a skilled customer service team on hand, allowing your customers to contact your brand by phone can be helpful for boosting loyalty.
- Web chat
Communicating with customers via a chat service on your online store offers added convenience for both you and your site visitors. Similar to allowing shoppers to contact your business by phone, making it possible for them to reach a real person by web chat will be tricky if you’re managing this part yourself.
One way to work around this is to install a chatbot on your online store. Chatbots are perfect for responding to frequently asked questions and directing users to valuable information in various areas of your site. Keep in mind, though, that chatbot technology, while rapidly advancing, is still best used for relatively simple queries.
Whether it’s to tease a new product, announce an upcoming sale, share company news, ask for feedback, or give assistance, your various communication channels are key components in your strategy for developing customer loyalty.
Whichever channels you choose, be sure to be consistent in your communications with customers. If you use one tone and voice on Instagram, for example, and communicate very differently in your emails, the inconsistency may be confusing for current and potential customers alike.
2. Take the time to get to know your customers
In order for your business to earn and grow customer loyalty, it’s important for you to get to know the consumers buying your products. They need to feel that you view them as more than just paying customers.
Discover their buying habits and preferences and learn their individual stories. All of this will ultimately allow you to more easily anticipate their needs and remedy any issues they’re experiencing. You’ll be able to provide more targeted recommendations, whether for one of the products you sell or a specific service you offer that you believe will be of real benefit to them.
One simple yet effective way to demonstrate to your customers that you care is to acknowledge their special days. You might, for example, send a customer an email on their birthday, featuring a personalized birthday greeting along with a special discount on their next order or even a coupon for a free product. This tactic can be applied to other noteworthy events too, such as to celebrate the anniversary of a customer’s first order on your site.
3. Allow customers to get to know you
While getting to know your shoppers should definitely be a priority when it comes to building customer loyalty, don’t forget to share information about yourself and also your business. Today’s consumers have loads of options for online shopping, and it’s becoming increasingly important to them to buy from brands that share their values.
Show your brand’s human side by giving a behind-the-scenes look at your business in the content you share on your website and/or social networks. This could include introducing yourself or your team, demonstrating how a product is made, telling your story about why you launched your business, and explaining your brand values.
In addition, don’t be afraid to admit when you’ve messed up, say, for example, with a defective product, mishandled customer complaint, or an ad that didn’t go as planned. Consumers appreciate when companies acknowledge their errors and take authentic action to improve. This can further humanize your brand, cultivate additional trust, and help your customers feel more at ease with buying from you in the future.
4. Launch a customer loyalty program
Wondering how to reward loyal customers? Launching a customer loyalty program is an excellent way to thank shoppers for their support and incentivize them to continue purchasing from your store. The great thing about this strategy is that there are numerous ways to structure a rewards program, allowing you to select the option that best suits your business and your audience.
For instance, you might set up a system where customers receive rewards after making a certain number of purchases or spending a certain amount. However you opt to organize the program, ensure that the rewards are enticing enough to be of real benefit to shoppers and encourage them to participate. Free products, a generous discount, exclusive access to items only available to members…anything that shows your appreciation and incites consumers to buy more frequently!
You may want to also consider implementing a tiered loyalty program, offering members increasingly attractive rewards as they reach different levels in the program. Again, while the highest tier should of course give the best benefits to reward your most loyal customers, even the lowest tier should feature appealing rewards that prove that you value all your customers and their business.
Finally, remember to let shoppers know about your loyalty program. No matter how amazing it is and how wonderful its rewards are, people won’t sign up for it if they’re unaware of its existence.
5. Request customer feedback
Another excellent way to build customer loyalty is to show your customers that you care about what they have to say. Being proactive about requesting customer feedback and incorporating that insight into your business decisions demonstrates to shoppers that you’re dedicated to constantly improving so as to better meet their needs.
Aim to ask your customers for their assessments as soon as possible after they’ve experienced any kind of interaction with your company. This could involve, for instance, completing an order or chatting with somebody from your customer service team.
Note that whenever you request feedback from shoppers, you should ensure that the process for providing their comments is easy and free of hassle. Say no to complicated forms and methods that make users go wayyyyyy out of their way to respond!
In addition to asking for an evaluation after a customer interaction, you can also ask your audience for their opinions concerning other areas of your business. Request input on future products or services that you’re considering offering, for example. You could even launch a contest on social networks asking your followers to name a soon-to-be-released product or guess what the item is after giving hints.
6. Make your customer experience better
Although it may seem obvious, if your goal is to build customer loyalty, it’s crucial that you’re always working to improve your ecommerce customer experience to make shopping from your online store more enjoyable. Whether shoppers have a positive or negative encounter with your business, there’s a good chance that they’ll tell others about it, which could lead to either an expansion of your customer base or a significant loss of potential sales.
Keep in mind that while your customers will appreciate and remember when you’ve treated them well, just a single negative interaction or event can be enough to push people away forever. Being willing to constantly work on your business’s improvement and being open to change are key to earning shoppers’ loyalty.
To best determine how to improve your customer experience, it’s helpful to have a good understanding of the complete customer journey. This means examining all the different touchpoints your brand offers, from your marketing strategy and the shopping experience on your website to product reviews and post-sale actions. By taking a close look at each of these elements, you’ll be able to see what’s currently working well and what could be improved.
7. Create a referral program
Referral programs are similar to loyalty programs in that they reward a business’s current customers for their engagement, but they offer the added benefit of bringing in new customers as well. There’s lots of room for creativity for this type of program too, but the main idea is to reward participants every time they recommend your store to somebody else and that person in turn makes a purchase.
Possible setups for your referral program include gifting a free product or a discount or having the customer earn rewards points for every successful referral. You might ask program participants to use a special referral link when referring others to your business or just provide a field during checkout where new customers can enter the name of the person who referred them.
You can also make your referral program a “win-win” for both your current customers and the people they refer to your business. Besides giving your loyal customers a reward for making referrals, incentivize referred shoppers to order from you by offering them a discount off of their first order.
8. Use personalization in your marketing
Personalizing your marketing messages can be a very powerful way to get your brand to stand out from the competition and attract shoppers. It also assists with enhancing the overall customer experience and thus builds customer loyalty.
By staying informed about relevant customer data and availing of personalization, you’ll be able to create better targeted marketing campaigns, on social media, via email, or with paid ads. You’ll also be able to provide product recommendations and promotional offers that are all the more targeted to suit your customers’ individual interests, needs, and preferences.
Consider how much more effective an email would be if the subscriber receives a message that starts with a personal greeting and includes information about product suggestions related to their previous purchases rather than a one-size-fits all message featuring links to items they’ve never shown the slightest bit of interest in.
9. Be flexible
It’s understandably necessary to have policies in place for your online store and communicate them clearly on your website. You won’t be able to run your business successfully if you’re too inconsistent with elements like pricing, product quality, shipping, returns, etc. Nevertheless, you’ll likely need to bend the rules occasionally to accommodate special circumstances and cultivate customer loyalty.
For example, you’ll probably set a deadline that limits the number of days that buyers have to return an order and get their money back. Say that one of your customers, who’s purchased from your store for years, asks to be refunded a day or two after this deadline. If you say no, there’s a chance that this person may cease doing business with you, but allowing the refund will likely bolster their loyalty.
Going the extra mile for shoppers, even for the seemingly little things, can do wonders for encouraging them to stick with your company and continue to make purchases in the future. Furthermore, these customers will be more apt to tell others about their positive experience and write glowing reviews, helping to grow brand awareness and trust.
Focus on the long term to build customer loyalty
Think about how often you see ads offering exciting promotions for new customers. Many businesses put a lot more effort into drawing people in with special introductory offers but do little to show their appreciation for customers who’ve been with them for ages.
The majority of long-time customers leave because they feel like the company’s taking them for granted or no longer cares about them. As ecommerce continues to grow, there will be more and more choices available to consumers, and they’ll become increasingly sensitive to brands’ indifference, not hesitating to switch to the competition.
As you work on building customer loyalty for your ecommerce business, it’s essential to focus on the long term. Put your customers’ needs at the forefront and be proactive making improvements where needed, always with the aim of providing a positive and enjoyable experience!