If you’re anything like us, you’ve spent the past month or two alternating between wanting to consume every single ecommerce stat to hit the headlines, to feeling overwhelmed by the amount of – often contradictory – information coming your way.
We have no desire to add to a Coronavirus information overload, so we’ll keep this short and sweet. But we did want to share some insights that might help you focus your marketing efforts as you adapt to a new normal in ecommerce.
We’ve looked at the loyalty data for March from over 600 of our stores – here’s what we’ve found:
As you might know from previous LoyaltyLion research, your loyal shoppers are your most valuable, with 50% of revenue for stores of all sizes typically coming from just the top 20% of customers.
The good news? That hasn’t changed.
Loyalty program engagement also remained positive:
Despite a knock to consumer confidence, loyalty program members continued to repeat purchase and make the most of their points balances.
This highlights the importance of focusing on the customers you already have, as they continue to be the most valuable and have the most immediate impact on your bottom line.
When we asked LoyaltyLion merchants what their biggest challenge was back in 2019, an overwhelming number said increasing lifetime value. And it looks as though this has never been more true.
With the landscape changing so quickly, it’s difficult to say whether the time between purchases will increase or decrease in coming weeks. However, if there is the slightest chance it may decrease, then a drop in average order value becomes a greater headache.
Loyal customers who are engaged with your brand continue to have significantly higher average order values than non-members. This makes it even more important to use customer lifetime value to segment your customer base, so that you can focus your marketing efforts on those customers that will bring you the greatest ROI, fastest.
In an earlier blog post, we spoke about the fact that with more consumers socially distancing or self-isolating, there was an opportunity to encourage more advocacy.
As it happens, your loyal customers are still helping you to acquire new customers more cost-effectively.
It turns out that your existing customers are still willing to act as advocates and remain one of your most cost-effective acquisition channels – great news for anyone that has been impacted by fluctuations in ad cost and effectiveness and is concerned with cash flow.
Worth noting however, is that UK stores saw a far bigger uptick in review and referral activity in the latter half of the month than US stores, which suggests that US shoppers may need a little more encouragement.
The lifetime value of customers referred to a brand is proven to be higher than those who reach a store via other channels so it’s good to see that this is an acquisition channel that continues to work hard for brands at the moment. However, it’s important to step up referral and review activity as soon as possible, so that you can benefit from increased browsing activity now, rather than in a few months.
We know from industry insights that consumers have strong feelings about the way brands have communicated and acted in recent weeks. However, we’re happy to report that shoppers are currently no less likely to strike up a new brand relationship than they were before.
However, the key data point to look at here, is the number of customers who have not become members. This is where brands are missing big opportunities to connect longer-term.
The fact that customers are just as happy to create accounts and enter into longer-term interactions with brands is hugely encouraging at this point in time. It’s also good to see that orders are increasing again.
However stores who do not act quickly and encourage guest checkouts to create accounts will miss out in the near-term when they are unable to keep up communication and draw those customers back for their first repeat purchase. Remember, if a customer joins your loyalty program, the chance of them purchasing for a second time is 47% higher than if they don’t join your loyalty program.
So there you have it – a quick glimpse into the impact that COVID-19 has had on customer loyalty to date.
TLDR? Firstly, your loyal customers remain your most reliable source of income and should be the focus of your marketing. Secondly they are still willing to act as advocates and could be a key acquisition channel for you. And finally, stores must prioritise converting guests into members in order to build good relationships, quickly.
Do you have questions on your own loyalty data or how to adapt your existing retention strategy? We’re here to help – just book a time to chat with one of our team. Or check out how other stores are using loyalty programs to respond positively to the pandemic.
Research methodology:
In order to provide the most useful observation of the ongoing impact of Covid-19 on customer behaviors, this dataset features the same cohort of 634 stores being tracked across a timeframe of six weeks which began on February 24th (week 0). This is a trend analysis comparing each week of March with the final week of February rather than a year-on-year comparison, using means with 5% of outliers excluded for each metric. All data has been converted to USD, using the March 1st 2020 exchange rate.
