Using customer loyalty to compete in the age of Amazon

Worldwide ecommerce sales topped $3.5 trillion in 2019, an increase of approximately 18% from the year before. But too often, when we hear about ecommerce growth we also hear intimidating statistics about the biggest players in the market.

Yes, Amazon might have hit 310 million active customers and sell more than 353 million products, but let’s not forget that as of 2018 Shopify powers over 600,000 stores. Add customers of Magento, BigCommerce and all the other ecommerce platforms out there and we’re talking a lot of stores who – though they may not be Amazon who has their customers’ loyalty from Amazon Prime – are just as well placed to make the most out of the ecommerce opportunity.

In this post, we look at how fast-growth ecommerce retailers can use loyalty and reward programs to compete with the bigger players, like Amazon Prime, in the market. We will focus on these points:

  • Loyalty is data, and it helps you focus your marketing efforts
  • Your future success depends on your existing customers – secure their loyalty
  • Use loyal advocates to acquire new customers more cost-effectively

Loyalty is data, and it helps you focus your marketing efforts

According to a recent BRP study, 80% of a retailer’s business comes from 20% of its customers. However, only 13% say they can accurately identify their most profitable customers. Loyalty programs are built on data, and with the right analytics, you can identify and segment your most loyal customers. While you’re there, you can also pick out those who are most at risk of churning and heading to the competition.

This valuable data will help you focus your marketing efforts on increasing the average order values and repeat purchase rates of your loyal customers. It is also key to running re-engagement campaigns for those who haven’t bought from you for a while. We’d put money on you seeing a far greater ROI from these customers than from the acquisition of new ones.

Key takeaway: spot which customers’ loyalty is at risk BEFORE you lose them to the larger players like Amazon Prime.

Your future success depends on your existing customers – secure their loyalty before Amazon Prime does

Traditionally, loyalty programs have awarded points purely for spend, but there are so many other opportunities to use rewards to keep customers coming back and prevent them from being distracted by other, more established stores.

Consider which onsite activities you could reward. From signups and social shares to referrals and reviews, there are many ways to engage existing customers between purchases. How you communicate those rewards is also key. Tools like instant reward notifications and loyalty point notification emails act as great motivators for more frequent repeat purchases and higher average order values.

Lastly, segmentation and loyalty tiers are a good way of encouraging your existing shoppers to engage and purchase more in order to achieve higher statuses.

Key takeaway: use rewards to keep customer attention so they don’t get distracted by someone who makes more noise

Use loyal advocates to acquire new customers more cost-effectively

Research shows that people are four times more likely to buy when they are referred by a friend. This stat is just as true for less established merchants as for the Amazon’s of this world. Encouraging your loyal customers to act as advocates helps you build your reputation so that you stand out from the competition. It’s also a far more cost-effective way of acquiring new customers.

Members of your loyalty program are the most likely to act as advocates. Make it as easy as possible for members to refer friends and family across multiple channels, and reward them for doing so.  Offering points and rewards for posting reviews is also hugely beneficial. A positive review could be the difference between a customer choosing you or going with the competition.

100% Pure is just one business using referrals as an integrated part of their marketing campaigns – visit Purist Perks to see this in action.


Key takeaway: give customers a reason to make you part of their conversations

We can’t promise that any of the above will turn you into an ecommerce giant overnight. What we can promise is that building the loyalty and lifetime value of your existing customers will have a positive impact on your ability to remain competitive.

Want to know more about how to use loyalty and other tactics to scale your ecommerce business? Take a look at our Look forward ebook and webinar series. Get access to four ebooks and webinars tackling acquisition, conversion, fulfillment and post-purchase strategies.

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About the author

Mollie Woolnough-Rai

Mollie is a Senior Content Marketing Executive at LoyaltyLion. After graduating from UCL in 2016, she has worked both in-house and at marketing agencies providing expertise in content for both B2B and B2C clients. At LoyaltyLion, Mollie manages our content, making sure our readers get the best quality resources about customer loyalty and retention.