4 factors affecting customer loyalty and how you can combat them

Sophie Alexander Williams

This blog post was written by Sophie Alexander-Williams, a Senior Loyalty Analyst here at LoyaltyLion. Add her on LinkedIn

With global ecommerce predicted to rise 20.7% this year, many marketers are making customer loyalty a centrepiece of their marketing strategy. As these customers spend 67% more than new ones, enhancing the loyalty of this group is increasingly important. With the industry rapidly growing, you’ll want to retain your most profitable customers.

Loyal customers aren’t only valuable for their frequent purchasing behaviours, but statistics show that 77% of customers would recommend a company to a friend if they have a positive experience. This shows that customer loyalty can also play a role in the ever-important task of acquisition, a typically difficult and expensive marketing venture.

With so much choice and competition in this landscape, it’s no surprise that customer loyalty can easily wane. In this blog, we’ll outline the internal and external factors affecting customer loyalty, and ways you can combat them to avoid losing out on repeat business and revenue.

Internal factors

1. Your customers have experienced negative customer service with your brand

❗️Problem

A whopping 60% of American customers say they’ll consider switching companies following two to three instances of poor service. This means that a negative experience of your product, services or shipping could cost you your reputation and revenue.

 🙌 Solutions

Encourage customers to leave reviews on your website by rewarding them loyalty points in exchange for their feedback. This will show your existing customers that you value their opinion while wanting to listen and improve. Positive reviews can also provide social proof to show new customers that your products are worth their money.
Zox Integrated Page Copy

If customers have left negative reviews – or have had a customer service dispute – try awarding them with surprise-and-delight style bonus points, or move them up a tier to apologise.

Read our blog on “How important is ecommerce customer service?” for more tips in this area!

2. Your customers feel that their relationship with the brand has been neglected

❗️Problem

In this day and age, most customers will want to be recognised and for their loyalty to be valued by the brands they shop with.

Merchants can easily fall into the trap of maintaining a purely transactional relationship with their customers. Be warned: this approach can cause your customers to drop off, especially if they feel appreciated by other brands in your industry.

🙌 Solutions

Try using a loyalty program to personalise your communications and engage in a way that makes them feel valued.

75% of customers want to be rewarded for actions outside of purchases, so start giving back to your customers for more than just buying. Small tokens of appreciation for actions of engagement, like social media follows, reviews and newsletter signups, will go a long way and will benefit your brand credibility.

You should also send thank you emails when your customers make a purchase to show them the points they have already earned. Make sure you personalise the product recommendations in these emails so they’re related to the customer’s previous purchases.

Farmacy Beauty is an excellent example of a brand who has used rewards and emails synonymously to give back to and engage customers, whilst building a consumer to brand relationship. They display their customers’ personal points and rewards in their emails alongside the benefits they are missing out on if they don’t return.

Farmacy loyalty email

External factors

3. You exist in an incredibly competitive industry

❗️Problem

Co-existing in the same line of business as huge names like Amazon, who accounted for 44% of all US ecommerce sales in 2017, makes it challenging to compete with the low prices your customers have come to expect.

To make matters more complicated, you’ll also be competing with big names in your industry – such as Sephora and ASOS – who already have an established and loyal customer base. This might leave you looking for ways to differentiate and give your customers reasons to stick with you.

🙌 Solution

Give your customers an added bonus for staying loyal to you, by rewarding them for actions and purchases. This will give them that nudge (with the helping hand of email reminders) to come back and spend with you over the competition.

Tiers are also an effective way to give your customers more value for shopping with you.

We particularly love how 100% Pure have used a more personalised approach with the tiers of their “Beauty Insider Program”. They have given their customers rewards that are both exclusive and personal, without being too discount focused. By giving customers in their highest tier rewards – such as early access to newly launched products – they are making them feel like real insiders of the brand (cleverly reflecting the program name).
100% Pure Tiers

4. You might be over-relying on discount periods and sales

❗️Problem

This is especially relevant in the run-up to Black Friday Cyber Monday, a period where customers are expecting hefty promotions – leaving merchants under pressure to slash prices.

Cutting prices is important to competing in these kinds of holidays, but an overreliance on ad-hoc discounts and promotions can damage your brand by quickly devaluing your products. At the same time, customers may hold off from re-purchasing until you lower your prices again.

🙌 Solution

When the noise has died down after BFCM and Christmas, offering rewards (such as discounted products, free shipping and vouchers) in return for engagements are going to give your customers the desire to repurchase and become a loyal follower of your brand after these busy periods.

Top tip for LoyaltyLion members: make sure you have an Increase Sign-ups Post-Purchase Campaign turned on to convert your holiday traffic – guest checkouts reduce the likelihood of retention.

Key takeaways

Customer loyalty can easily dwindle in such a saturated space. Although investing in loyalty is one of the most profitable forms of marketing, merchants can easily fall into the trap of ignoring ways to encourage repeat purchases.

Start by taking small steps to make your customers feel valued outside of purchases and take action on their feedback by rewarding and acknowledging them. Prioritise those who show you the most love, and work to engage and incentivise those who aren’t quite there yet.

If you want to learn more about customer loyalty and how to get the ball rolling, read our Stress-free guide to getting started or book in a call with a member of our team.
Getting Started In Customer Loyalty

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