How to Build Customer Loyalty for Your Online Store?

Finding highly reviewed competitive products online is easy, learn how to build customer loyalty to keep customers coming back to your store.

In this competitive and dynamic marketplace, it is more and more costly to acquire new customers. And for eCommerce, competition is even more severe. Customers have plenty of choices. They can buy their desired items so easily with some swipes and taps on their smartphones. Switching from one well reviewed brand to another happens in an instance. 

So how can you make sure that your business isn’t the one that gets abandoned? The answer is implementing strategic approaches to retain your existing customers and to create long-lasting relationships with them. 

Loyal customers are profitable ones as they are willing to purchase frequently, leave positive reviews, recommend your products to others, etc. 

Regardless of the industry your business is operating in, you should always invest time and effort to build customer loyalty. 

What is customer loyalty?

Simply put, customer loyalty defines a positive and lucrative relationship between a customer and a business. Customer loyalty reflects an existing customer’s willingness to repeat purchases and choosing one company’s offerings continuously over other competitors. 

Customer loyalty results from consistently high-quality products, excellent customer service, positive customer experience, and eventually, customer satisfaction. 

Your devoted customers are your most valuable ones. Their first purchase may not be prominent; however, their lifetime value is much more significant. Much research has shown that 80% of your future profits are generated from 20% of your current customers. 

When customers are loyal to your brand, they do not easily switch to your competitors because of pricing or availability. They do not actively search for different providers. They are probably open for your cross-sell/upsell products. 

Loyal customers also tend to leave good reviews as well as valuable feedback. They are willing to refer your products to others. And they are easier to sympathize with when issues appear and believe in your business ability to fix any problems. 

Why is customer loyalty important?

Regardless of your business’s size and industry, customer loyalty is always critical. A small percentage of your returning customers can contribute a large portion of your revenue.

To be successful, especially in the eCommerce space, you should strive for customer loyalty from the first transaction. 

Here are some reasons why customer loyalty can grow your business. 

Retaining existing customers cuts down your acquisition cost

Several studies have proven that it costs approximately five times as much to acquire new customers than to keep loyal ones. A 2% increase in retention rate can generate profit as much as a 10% decrease in operating costs. 

First-time customers are always harder to convert because they do not have much experience with your products or services. To convert a potential consumer into a buyer, you probably incur several costs such as advertising expenses, selling expenses, the salary of your marketers and salespeople, etc.

However, existing customers are much more accessible to sell as they have their own expectations. You do not have to spend much marketing effort on these customers. If they are satisfied with their very first orders, they are likely to come back and make more transactions. 

Repeat customers generate more revenue

A study by Adobe shows that repeat customers are nine times more likely to convert than first-time customers. New potential customers typically convert from 5% to 20%. Meanwhile, after the first purchase, existing customers have a 27% chance of returning. After the second purchase, this figure is 45%. And after the third purchase, the number increases to 54%.

Loyal customers also spend more per order than first-time buyers. The top 10% of your customers can pay three times more per order than the rest. The top 1% can spend five times more each purchase. 

A 5% increase in customer retention can boost business profits by 25% to 95%. 

Loyal customers spread positive word-of-mouth

Delighted customers are willing to write positive reviews and comments about your products and services. These testimonials can effectively motivate other shoppers to make a purchase. 

Loyal customers are also likely to refer your online store to their family and friends. According to Referral Sasquatch, a new referral customer has a 16% lifetime value higher than a non-referral one. Companies that carry out formalized referral programs can achieve 86% more revenue growth than those who do not. 

In general, customer loyalty benefits your business in every aspect. Loyal customers not only purchase frequently, spend more but also recommend your brand to others. To gain better profits and overall success, your business obviously has to foster customer loyalty. 

5 Practices to build customer loyalty for your online store

Customer loyalty is essential for the sustainable growth of the business. However, customer loyalty is earned, not given. 

As an online business operating in a competitive and dynamic environment, you should have specific strategies to create and enforce customer loyalty over time. 

Exceed customer expectations

In fact, the quality of products and services is a primary determining factor for customers to come back or not. 88% of consumers agree that product quality is the most important reason for them to stay loyal to a brand. 

Buying online, customers cannot hold and see the product directly; thus, they cannot be sure of the product quality. Customers rely merely on product images and descriptions presented on the website. Therefore, you have to make sure that your products’ pictures and descriptions are both appealing and realistic enough. Customers will continue buying from your store if their first purchase is delivered as promised and expected. 

Besides product quality, you should deliver excellent customer service. 75% of customers return because of your excellent customer service. 51% of customers leave if they are unsatisfied with the service they receive. 

For an eCommerce business, the user experience is also equally important. Your site should be well organized and designed for customers to navigate and find their desired items easily. Your online store should be mobile-friendly and be integrated with multiple payment and shipping methods. The checkout process would be simplified with minimal steps. 

The above ideas are just a foundation for building customer loyalty. In today’s marketplace, to make customers satisfied and loyal to your brand, you have to exceed their expectations. 

To do this, you have to set expectations first and communicate with your customers clearly from the beginning. Then you should deliver added value to delight customers. Instead of promising something you cannot do, you must perform beyond what your customers expect.

Engage with customers on social media channels

In the eCommerce space, you have less physical interactions with your customers.  Therefore, you should leverage multiple channels to connect with your shoppers to make them feel like they are truly involved in your business. 

These days, every business needs an active social media presence. Popular social platforms such as Facebook, Twitter, and Instagram, where people choose to share and connect, can effectively support you in communicating and engaging with your customers at every touchpoint. 

You should encourage your customers to follow your pages, share their experiences, and motivate various social activities like liking, commenting, sharing with incentives. 

You should listen to your followers’ feedback, answer their questions and concerns, create engaging posts like warm-hearted content or gaming. Interacting with your customers on a frequent basis helps you ensure customer satisfaction and loyalty. 

Create personalized experiences

Delivering personalized shopping experience to your customers makes them feel more special and like they belong to your company. Customers will become more passionate, devoted, and stick to your brand. 

Buyers are willing to pay more to receive personalized offerings. 57% of buyers are ready to leave their personal information to get a personalized experience. 86% of buyers report that personalization influences their buying decisions. 

Welcoming your website visitors by name, using insights about customers’ tastes and preferences to show them tailored product selections or recommendations, sending them relevant product details, reviews, and ratings are common tactics to deliver personalization. In this way, you can convince your customers that you care about their interests. Customers will be more likely to trust and repurchase from you. 

Sending customized messages and small gifts on special occasions is also a great idea. 75 % of customers appreciate a company that sends them birthday messages. 88% of those people tend to increase brand loyalty. 

Every message you deliver to your customers should be personalized. From newsletters to thank-you emails, every email sent should be based on customers’ on-site activities, age, gender, and other characteristics. With these things, you show your customers how much you value them and strengthen their attachment to your brand. 

Reward loyal customers

As we have discussed above, loyal customers are obviously the most valuable customers. Highly-engaged customers probably generate four times higher lifetime value than the average customers. These customers deserve to be rewarded. 

For Magento 2  stores, a well-designed Reward Points system is one of the most effective retention strategies. It is reported that 52% of repeat customers would like to join a loyalty program. 

With almost every shopper, a real reward expresses your appreciation to your valuable customers. When you spend a few dollars on your loyal customers, it seems like a sincere “thank you for your purchase”. 

In addition, you should also add a Loyalty Program extension to Magento 2 site to offer your customers exclusive discounts based on their purchase history. With this program, you can motivate loyal customers to shop more frequently. 

You can integrate the loyalty program into your website, social media pages, and email marketing to deliver comprehensive engagement with your customers. 

An excellent points reward system should allow customers to earn points not only from repurchasing, but also from other behaviors such as writing reviews, subscribing to newsletters, following social media pages, and referring your products. 

You should also give your customers points as small gifts on special days. Shoppers will be more encouraged and engaged to commit to your online store. 

Your loyalty program should be developed on a long-term basis. Avoid using it as a quick method to grab sales. You should plan multiple tiers to give exclusive benefits according to customer contributions. 

Besides, your reward system should be easy to understand. Avoid complicated rules as they do not help to persuade buyers to make more purchases. Besides, the system should be transparent. Customers can quickly check their transactions and balances. Any frustration in a reward program can expose negative impacts on customer trust and loyalty. 

Empower loyal customers to refer

Nielsen’s report indicates that 77% of online shoppers are influenced by recommendations from family and friends when considering a new product. 

Happy customers are also likely to share their positive experiences with the people around them. 

Implementing a referral system allows you to both build customer loyalty and new customer acquisition. 

As a store owner, you have to find ways to encourage your devoted customers to share more, not only with their relatives but also on social channels. Rewarding your loyal customers with loyalty points, coupon codes, and gifts is a great idea.  

Don’t forget your packaging

eCommerce sales are predicted to grow by 16.1% in 2022.  With that said, considerations on the design and approach to packaging can be beneficial for differentiating between competition among other eCommerce products.

When it comes to creating customer loyalty, online businesses can’t afford to leave any stone unturned from order experience to package in hand. Check out this infographic from Chicagotag.com, to help you personalize your packaging to improve customer loyalty:

Conclusion

Customer loyalty is the most significant determining factor for customers to return. Building customer trust and loyalty is essential for your eCommerce business to gain sustainable success. 

Loyal customers are those who contribute significant revenue and minimize your expense to acquire new ones. 

You should devote attention and effort into satisfying your customers, providing them added values, connecting with them closely, building special loyalty programs, etc. Implementing strategic tactics frequently and consistently allows you to gain and strengthen your customer loyalty.