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I recently walked around my city center and noticed a new store with a familiar name — Astrid & Miyu. I kept thinking about where I’d seen the brand before and later remembered that it has a great LoyaltyLion case study.
I thought to myself, “Well, they must be doing pretty well to have opened up a physical store in an expensive part of town.” And I wasn’t wrong.
Astrid & Miyu knew that to grow their business to new heights, such as opening up physical locations, they needed to drive loyal behaviors and reward customers at the right time to incentivize future purchases.
The solution they decided to invest in was to rebuild their loyalty program to keep customers coming back year-round, not just during peak sales periods.
They revamped their customer loyalty program with four on-brand tiers that each unlock once customers reach specific spending thresholds. On top of that, they leaned more on experiential rewards as opposed to discounts. They created a jewelry recycling program that rewards customers 1000 points when they send in any jewelry (even other brands) for recycling.
So what did all these changes lead to?
– Over 50k signups within nine months.
– A 220% increase in purchases from program members compared to non-program members.
– Redeeming loyalty program members are six times more likely to repeat purchases than non-members.
– A 40% increase in overall revenue.
When you see these results, it’s unsurprising that Astrid & Miyu are thriving and able to grow their business beyond the web.
Investing in your customer loyalty strategy is one of the best ways to help grow your ecommerce brand. So, in this comprehensive guide, we’ll help you understand the following key areas:
– The drivers of customer loyalty
– Effective customer loyalty management strategies
– Enhancing customer engagement and loyalty
Customer loyalty is a positive and ongoing relationship between a business and its customers — where customers will consistently choose a particular brand over its competitors.
Having a strong base of loyal customers has a clear impact on business growth and profitability. You get repeat purchases from your loyal customers, and it also becomes more likely that your customers will recommend your brand to friends and family, growing your overall customer base.What’s more, it’s cost-effective. According to Antavo, 80% of companies who measure the ROI of their loyalty programs report a positive ROI of 4.9x more revenue than average spend.
So, what turns one-time customers into loyal ones? In this section, we’ll cover five key customer loyalty drivers to help you understand what areas to focus on for building a high-performing loyalty program for your Shopify store.
Having great quality products sounds like a no-brainer, right? When you buy a product from a brand that turns out to be poor quality, you’re unlikely to buy from that brand again — what’s more, you might even complain about it to your friends, family, or other people online.
So, one of the most important drivers of customer loyalty is having products that your customers would want to buy again (or products they would want to pick from another category).
This isn’t just common sense either; it’s backed up by research — two separate industry reports found that product quality was one of the highest drivers of brand loyalty. NCSolutions found that 59% of customers cited quality as a top driver among Gen Z customers, while Marigold found that 77% of customers worldwide (not just Gen Z) cited product quality as a top driver.
Customer experience is another key driver of loyalty because just one negative experience with a brand is enough to turn lots of people away (29% of them, according to research from Genesys).
A large portion of customer experience comes from interactions with customer support. From personal experience, I remember being on the edge of becoming a churned customer. The customer support team brought me back into the fold, and I’m not alone.
The report from Marigold also found that good customer service was equally important as product quality (77% of customers cited it as a loyalty driver).
From this information, we can infer that good customer experiences lead to greater customer loyalty and reduced churn.
With good quality products and great customer experiences, it doesn’t take much more for the word about your brand to spread — leading to more loyal customers.
Word-of-mouth recommendations have the greatest impact on purchase decisions for 68% of US adults. And while “word-of-mouth” is largely out of the control of brands, there is a way to help boost it — a loyalty program with integrated referrals rewards this behavior and incentivizes your customers to do it.
We’ll dive a little deeper into this tactic in the next section.
The final driver of loyalty we’ll discuss here has more to do with your brand’s overall marketing strategy. A solid and clear customer value proposition (CVP) means you deeply understand your customers’ wants, needs, and struggles.
CVPs are unique to each brand and its market and communicate why a buyer should choose your product over a competitor’s. When your product serves a clear purpose in your customers’ lives (better than a competitor), research from the Journal of Contemporary Issues in Business and Government suggests it leads to greater success in customer loyalty.
It’s important to know that these loyalty drivers don’t work in isolation — in fact, most of the time, one won’t work without one or more of the others. Even if a customer thinks the product is of great quality, they can still get turned off by a bad customer experience, for example.
So, be sure to include each of them holistically in your loyalty marketing strategies.
So now you know what factors drive customer loyalty, you’ll better understand what makes customer loyalty management strategies effective — and we’ll go over a few in detail here.
Customers become loyal to a brand when they develop a positive ongoing relationship with the brand — but a relationship swings both ways.
Marigold’s survey found that over half (57%) of customers cited “brand’s effort to build a relationship” as a key driver for loyalty. So, as a brand, you must put in the effort to build a strong customer relationship base.
One of the best strategies for developing relationships with customers is using proactive communication. In this case, data is your best friend. For example, let’s say your brand is coming out with a new product in a category only a particular segment of your audience regularly purchases. You can use your CRM data to target this audience segment with news about a new product they’re more likely to be interested in than other customers.
Another example I’ve seen in my experience is telling customers when (and why) a product is delayed while shipping before they reach out for help.
If a customer feels like you’re speaking directly to them, chances are they’re more likely to listen to what you’re offering. More specifically, over half (56%) of customers say they would become repeat buyers after a personalized online shopping experience.
This is another customer loyalty management strategy that needs you to collect and maintain as much data as you can about your customers and their behavior. Personalization using zero and first-party data is especially important now that Google has said they plan to phase out third-party cookies by the end of 2024.
But what do you do with all the data you collect? Some examples of personalization strategy tactics include using a customer’s product purchase history to recommend new and complementary products relevant to them. Another tactic is offering date-related experiences, like a free product or points rewards on birthdays and sign-up anniversaries.
Remember when I mentioned the loyalty program tactic? Well, here’s the low-down. A loyalty program makes it super easy to reward customers for engaging with your brand and can easily be the cornerstone of an effective customer loyalty management strategy.
It’s not just theory either. In the US, 70% of consumers say loyalty programs keep them loyal to a brand. Even building a basic loyalty program can significantly impact customer retention, not to mention how helpful it is for loyalty management.
What’s more, you can tailor a loyalty program to suit your business and make sense for customers. For example, you can have a simple points-based system for rewarding various engagements (following the brand on social media, points per $1 spent, etc.). Or you can create a tier-based program that offers more exclusive rewards the more customers spend in the store (like the brand in the intro Astrid & Miyu).
What’s important here is to research what types of rewards your customers would appreciate the most and be open to tweaking based on the data you gather as your program grows.
Speaking of data, being able to personalize your communications and offers means you need to regularly track and monitor the analytics of your store and marketing tools (e.g., email, loyalty program, etc.)
Why? Tracking the data means you can identify customer preferences and measure the effectiveness of your loyalty program (and other marketing tools) efforts. Both of these will help you make data-driven decisions for growing your brand.
For example, LoyaltyLion offers a Customer Value Snapshot analytics tool for real-time access to customer buying behavior, letting you get to know your customer segments more effectively and helping you evaluate A/B tests for campaigns.
You can look towards your Email Service Provider (ESP) for a more holistic approach to customer loyalty management strategies. Shopify doesn’t have a built-in email tool, so you’ll need to find one that works well with you and integrates with your Shopify store (such as Klaviyo).
The reason for this is simple: an ESP is essential for streamlining customer communications, and it’s often the tool you’ll use as a source for automation — for example, automating loyalty program emails and triggering date-based events.
While a loyalty program can help you manage the data of customers who sign up for your loyalty program, you’ll still want to know about the behavior of all of your customers, including those who seem to churn early or check out as guests.
With customer loyalty management strategies in place, what can you do to improve customer engagement and loyalty further? In this section, we’ll cover some important extras to consider as you build your loyalty strategy.
Creating a seamless customer journey not only helps your brand with its overall marketing strategy but also helps enhance your customer engagement and loyalty. How?
The more friction your customer experiences during their purchasing journey and ongoing relationship, the more chances you give them to churn. For Shopify store owners, the most important aspect to consider is usability — that’s because, according to research in the Journal of Retailing and Consumer Services, website-reliant customers most value usability, especially during search.
To help your brand create seamless customer journeys, you’ll need to look at User Experience (UX) research. Some common tests you can do on your store include heat maps, first-click testing, and card sorting. Conducting these tests will help you uncover areas of friction in your existing usability to improve.
Another area that boosts your brand reputation and customer loyalty is customer service, particularly responding to customer feedback and concerns quickly.
Take a moment to think about it: the last time you reached out to a brand about a complaint, how quickly did you expect them to respond to you? Within a few hours on the same day, the next day, within a week? If you’re in the last group, you’d be an outlier (with the patience of a Saint, apparently!)
The truth is almost three-quarters (70%) of customers expect a customer service response the same day, according to data from Latana.
As a result, over half (56%) of customer service leaders in Deloitte’s 2023 Customer Service Excellence report said they’ll be prioritizing reducing customer service response times in 2024.
With quicker response times (and time-to-resolution), you give your brand the best chance of winning back customers on the brink of churning — which is part of the key loyalty driver of good customer experiences we covered earlier.
You can also connect your loyalty program to customer support tools such as Gorgias, and empower your representatives to use loyalty points in order to manage difficult situations and appease disappointed customers.
While researching for my PhD in consumer behavior, I’ve covered multitudes of studies that support the idea of brand communities having a positive impact on customer loyalty.
For example, a study in the Journal of Brand Management found that brand community identification (i.e., when a customer sees themselves as belonging to a brand community like “Adult Fans of Lego”) significantly impacts “attitudinal loyalty,” or in other words, how customers feel about your brand and building an emotional connection with it.
I can show a great example of this in action when I fairly recently joined a Facebook group for a product called Füm, called FümFamily, where customers talk about the product, primarily their success and struggles with it:
However, it’s critical to consider that building and fostering a brand community is a long-term goal, with long-term effort needed. However, creating positive feelings about your brand with a community of like-minded loyal customers can greatly contribute to your brand reputation.
Another tactic you’ll want to consider for engaging with your customers is taking advantage of user-generated content (UGC). Some data from Tint in 2023 suggests that consumers rank authentic UGC as the most trustworthy type of content.
Ultimately, people trust people. And you can use your loyalty program to generate more UGC by offering points in exchange for written, photo or video reviews.
However, you don’t have to rely solely on reviews or social media for your UGC — other great places to harvest are your customer reviews, forum sites like Reddit or Quora, and YouTube.
These are places people go to find out more about your brand and products. Data from Statista’s Consumer Insights Global Survey 2023 suggests that 34% of US adults in 2023 got product information from customer reviews, while 27% said social media websites and apps, and 26% said video websites and apps like YouTube.
You can use UGC to produce customer stories for content, or you can use it to help inform and enhance future loyalty strategies by highlighting what other customers love about your products (encouraging new customers to try them out themselves).
Another element that UGC contributes to is social proof — and it’s great to have the UGC live on external sites like Instagram or Facebook, but what can you do to truly harness its power?
You can try creating a dedicated “wall of love” section/page on your Shopify store. Going back to our Füm example, the brand highlights personal notes in the reviews that left a good impression on me, as well as the number of reviews providing solid social proof:
However, partnering with influencers in your niche is another way to help create social proof. While not as persuasive as friend and family recommendations, authentic influencer marketing still influences initial purchase decisions (31% of YouGov survey respondents suggested they were influenced to purchase either often or somewhat often).
You can take this strategy further for loyalty enhancement by integrating a loyalty program into your influencer campaigns. For example, combining your influencer recommendation with a double-point promotion can really grab your customers’ attention.
Retention is the cornerstone of a long-term sustainable business — and to build it, you need to understand what drives customer loyalty and implement customer loyalty management and engagement strategies.
Let’s remember, the core drivers of customer loyalty are: product quality, good customer experiences, a great brand reputation, and clear customer proposition values.
With those factors of loyalty in mind, strategies for you to consider for your Shopify store include:
– Building a strong customer relationship base
– Personalizing customer experiences
– Rewarding loyal customers
– Using analytics for data-driven decisions
– Taking advantage of ESP solutions
You can use a tool like LoyaltyLion to help you build these strategies and implement the recommendations outlined in this guide.
However, if you want to do a little more research and learning, dive into the research linked throughout the guide or check out the LoyaltyLion Academy. It’s free to sign up, and tutorials will help take you from being a loyalty rookie to being the go-to loyalty expert in your business.