6 Customer Loyalty Strategy For E-commerce Businesses

According to statistics, businesses are focusing more on acquiring new customers than improving existing customer relationships. In this article, we’ll list steps that can be taken to get more loyal customers.

We aim to create a mini guide that especially retail e-commerce businesses can benefit from. By following the topics below, you can learn 6 customer loyalty strategies that you can implement immediately.

There will be 4 main subject to follow: 

• Why is customer loyalty important?
• What is customer loyalty?
• How to measure customer loyalty?
• How to create customer loyalty?

Why Is Customer Loyalty Important?

Clearly customer loyalty is the key to profitability for e-commerce retailers. But the majority of retailers don’t make enough effort to keep existing customers and turn them into loyal ones. Research shows that everyone focuses all of their time and resources to generating new leads and buyers.

Because most of the retailers think that if a customer tries their product for once, they will start buying their products  repeatedly without any extra effort. But this is not true at all. In this competitive era we live in, there is more than product’s quality in order to maintain customer satisfaction.

It can be summarized with only 4 statistics that building and maintaining customer loyalty should be the number one priority for e-commerce retailers in order to grow. 

💙 There is a great competitive advantage since most of the companies aren’t aware of the importance of loyalty: Check this research says %82 of companies focus on new customers, they are using all of the sources for it. 

💙 Loyal customers spend more: According to Marketing Week’s podcast episode, 40% of online shopping revenue comes from repeat customers, who make up only 8% of site visitors.

💙 Loyal customers have better ROAS if you target them: That means all you have to do is collect accurate data and use it for retargeting, it’s great when you think attracting new customers are 5 times more expensive than keeping existing ones. 

💙 Loyal customers are worth it to invest: According to Reichheld’s research, if customer retention increases only %5, the profit increases 25% to 95%. 

There is always more! A well designed loyalty strategy can make users come back after buying once, can make users spend more each time and can make users give insights and feedback for optimization processes. 

What Is Customer Loyalty?

Customer loyalty is the willingness of a customer to be connected to a brand. Loyal customers tend to spend more money and try new products than new customers. Customer loyalty means that the person will come back to your shop again and again, and spend more every time. 

It’s slightly different from customer satisfaction, generally customer satisfaction is the reason for customer loyalty but not necessarily. It’s also possible to gain customer loyalty with promotions, loyalty programs, referral campaigns, and remarketing. 

There is 6 possible stage of loyalty of a customer:

1. Awareness

2. Researching

3. Purchasing

4. Using

5. Repeating

6. Referring

An e-commerce business’s main goal should always be to keep most of the customers in the last stages we mentioned above. And all you need is a loyalty program. You may make your brand even more memorable for your customers by integrating your loyalty program with a referral program. You can make the purchasing process a win-win situation for both you and your customers.

How To Measure Customer Loyalty?

Customer Lifetime Value

Customer lifetime value is a simple measure of what value a single customer brings a business over time. Customer loyalty contributes to a higher customer lifetime value. Higher customer lifetime value means consistently growing for an ecommerce business. 

Churn Rate

Churn rate is a metric you should give importance to in order to evaluate customer loyalty. It stands for number of lost customers. If most of the users are new ones, you should take actions to gain your old users back. 

Retention Rate

Retention rate is another metric that stands for returning customers. The formula of retention rate is (total number of customers in chosen period) – (new customers in chosen period) / customers at the start of chosen period. 

With  customer satisfaction, well-designed customer experience and the right before and after sale services, customer loyalty can be provided easily. Loyal marketing, on the other hand, is a set of strategies to gain more loyal customers. 

How To Create Customer Loyalty for Your E-commerce Business?

It’s important to see customer loyalty as a result of customer satisfaction. By designing digital experiences you can take a big step toward loyal customers. Retailers around the world design different experiences to reach and maintain loyalty. You can try a loyalty program that suits  you and your audiences, work on your customer service system or create an email marketing campaign to drive faster results. Offers that are designed to reward high-value customers can increase customer loyalty over time as well as cart-volumes. 

Depending on the industry, product, location, and company, loyalty programs can take many various shapes. In order for loyalty programs to be effective, they must be simple and easy to use.

To create long-term relations with your existing customers here are 6 ways to increase customer loyalty:

1. Think about your customer services again.

Even an additional simple thank you card in a delivery pack is worth a lot! Just sit and think about how to make your customers happy. If you know your audience, you already know what makes them feel valuable. 

2. Create a reason to become a social media follower.

Use social media to maintain your relationship with customers. One of the first things to do is give them a reason to follow you. Maybe you can announce a time limited discount from social or give follower-only coupons etc. Social media offers a different way of connection between brands and individuals.

It’s possible to connect on a more personal level if you can make your customers and potential customers your social media followers. You can offer rewards or deals special to your social media followers. You can offer free-knowledge based content in your niche.

Driving an a/b test is an effective and guaranteed way to find out which way is working on your audience.   

3. Run a data driven email marketing campaign.

Email marketing still works! There are 4 billion email users around the world. You can simply create an email campaign for your valuable customers. With e-mail marketing it’s possible to boost interaction between existing customers. The important point is to design your audience’s  experience based on data you have. 

4. Point based loyalty programs are a proven method.

You can simply create a system which allows your customers to collect points when they purchase. This is also a kind of gamification that people want to win. It’ll increase cart volumes and repeated orders, and finally loyalty. 

5. Create better user experience.

According to research, %33 of customers consider changing the brand after only one bad experience. CX is more important than any other thing for today’s customers. If you think about your CX deeply, there is no need to consider any other trend. You are probably already doing everything that needs to satisfy your customers. 

6. Use social proofs to increase trust and generate sales.

There are a variety of social proof types to show your potential customers. Reviews and testimonials are one of them. Collect your customer’s thankful moments as proof and show them. You can also ask for user-generated photos and videos. That can create the sense of fear of missing out (FOMO) as well as trust. Either way it will increase your sales and customer’s loyalty.