Customer Loyalty is the tendency of an individual to favor a particular product, brand or service while buying anything from the market. In a straightforward way, it means repeat customers for your business.
With increasing competition in the online marketplace, you need to make sure you retain the loyalty of your existing customers. Therefore, you must keep in mind, the fundamental goal for all eCommerce businesses is to attract new customers and eventually retain them or keep them coming back. The key to customer retention is Customer loyalty.
What is a Customer Loyalty Program?
A Customer Loyalty Program is a reward system that a company offers to their most frequent customers to create loyalty by offering — coupons, free merchandise, discount and rewards, free products and even early access to sales and unreleased products.
Research shows that all other things being equal, 72% of consumers will buy from a retailer with a loyalty program over one without.
Why do you need a Customer Loyalty Program for your eCommerce business? And why you should invest in a loyalty program software
Loyal customers have a higher lifetime value and often spend more money with brands they like. In fact 78% of repeat customers will have no objection to spreading the word about your brand to their friends and family also. It costs 5x less to keep customers than gain new ones, and loyal customers spend up to 67% more than new customers.
The biggest advantage of a customer loyalty software is that it has the potential to align your entire business toward the most profitable customer segment, catering more to customers who purchase repeatedly or have average order value, depending on what type of customer loyalty program is implemented.
Some other benefits of setting up a solid customer loyalty program for your e-commerce store include:
- Ensuring existing customer retention: As mentioned earlier, customer retention cost is 5x cheaper than new acquisition. With a solid loyalty program, you can surely provide a reason for customers to keep coming back.
- Gaining new customers: Although the major purpose of a loyalty program is to keep existing customers and increase repeat orders, it can work well to attract new customers for your brand.
- Reduce Churn rate or Win back lost customers: Certain percentage of existing customers will stop doing business with the company, which is known as customer churn. Churn rate is the percentage of existing customers who stop making purchases within a given time period. Loyalty programs can reduce churn rates greatly by helping you to identify, target, and bring back lost customers.
- Identify your best customers: Identifying high-value customers is one of the first steps to boosting your business because it helps to observe customer buying behaviour, which is used afterward to better merchandise, advertise and provide customer service.
- Increase lifetime value of customer: It is a proven fact that loyalty programs increase repeat purchases. When you increase the frequency of customer buying from you, automatically the customer lifetime value also increases proportionally.
- Reducing advertising costs: Once you learn who your ideal customers are, you can more accurately target your advertising to gain more new customers who fit the profile of the best customer. New customers gained through customer loyalty programs are more likely to convert into repeat customers. Thus, the data acquired by loyalty programs can cut down advertising costs by eliminating advertising in mediums that attract deal-seekers or one time shoppers.
- Staying ahead of the competition: With a loyalty program in place, your competitors will have a harder time peeling away your customers. A special discount or extra points for every purchase will differentiate you from the competition. It can make a world of difference to a customer who is facing a dilemma between two brands.
- Identifying new brand ambassadors: Who can be a better brand ambassador than a customer who is buying repeatedly because they love what you are doing. Customer loyalty programs help you identify the potential brand ambassadors who love your services the most.
- Build better product offerings by researching need gaps and ways to improve your offering with regular users of a brand. Being able to identify desired changes in the current offering to what can be added to strengthen the offering through new products and services are both possible through feedback from your loyal customers.
How can you keep customers loyal, increase retention and customer lifetime loyalty?
Over the last few years, eCommerce store owners are starting to recognise the influence of a customer’s feelings on how they interact with a brand. Accordingly, Customer Loyalty Programs have evolved to go beyond passive ‘Reward & Retain’ techniques to being a major component of the engagement cycle to create extraordinary customer experiences and in turn loyalty.
In modern retail, loyal customers cannot be solely determined by spending behaviour and their loyalty can’t be assessed based on sales volume. As a brand, you should actively build profitable and emotional relationships through a Customer Life-time Value approach, not a single transaction or touch point led approach. This need for time to build loyalty, has given rise to Customer Loyalty Programs today actually becoming Omnichannel Loyalty Programs.
Omnichannel Loyalty Software is developed to focus on the best shopping experience for a customer across all channels.
Traditional Loyalty Programs are restricted to the redemption of points to a single channel only. On the other hand Omnichannel Loyalty Softwares are important for building a profitable Sales and Retention Strategy because it encourages your customers to earn and burn points across multiple channels -app, web, in-store etc., wherever the brand is present. They not only improve opinions of customers about your business, but also bring new sales benefits.
Being a brand with an omnichannel reward system seems simple at best, but retailers find it difficult to create a seamless experience across all their channels. Can you guess what it feels like to customers when discounts are stuck in individual channels? Just imagine the impact of having a more complex loyalty program becoming instead truly seamless across channels.
In reality, a loyalty program can be the core to the marketing strategy and both unify data and bridge the gap between each channel.
The few things you should look at when you’re building your own seamless omnichannel loyalty program are:
- Unify Your Customer Profiles : In today’s competitive retail, business growth is impossible without getting data, and being able to use it. Tapping into a customer’s life is the best way possible to gain such precious knowledge. A unified profile that is connected with your other marketing tools, will equip you with the right information to recognise your customers, know what they like, and be able to talk to them wherever they are. Integrated Retail offers one of the best omni channel retailing solutions, a retail business management system that can provide you with tools and deliver a complete and real time view of your best customers.
- Learn About existing Customers: Consider what you know and don’t know about customers who visit your stores. Many of our business owners know little about them beyond purchase data. Enrol customers into the loyalty program, so you can begin building customer profiles and keep in touch. It doesn’t take much information to get started – a name and phone number or email address is enough to create a new line of communication with a customer.
- Stay Connected Online: Once enrolled, notify customers about loyalty offers via SMS or email, and bring them to the landing page, where customers can learn more about the membership program and how they benefit from the participation. Also encourage online and offline purchases with various offers which can be availed via the ecommerce platform or omni channel POS software..
- Connect to the Customer Lifestyle: Lifestyle extends to ethics and beliefs. So take the loyalty program even farther by connecting with customers when shopping isn’t even on their mind.
- Your Omnichannel Loyalty Checklist:
- Identify where your customers prefer to browse and shop the most. Focus on creating a smooth ambience across those core channels first and build from there.
- Map out your data. Where does your customer data come from and where does it live? What could you do better if it were unified?
- Consider your current offers and promotions by evaluating how you are making it easier for customers to engage wherever they want to shop?
- Understand how your customers love spending their time. How can you reward them for it?
- Also, ask customers what they care about. Whatever it is, it’s another opportunity to build actual relationships.
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