Why loyalty, why now? 

As a marketer myself, I get it. Every decision to invest can feel as though it comes at the cost of something else. When we decide to focus our team’s time and energy in one place, we decide not to focus it on another. When we choose to invest in new technology, we choose not to invest in others. It’s easy to become paralyzed or to remain standing still doing the same things we’ve always done, rather than taking a leap of faith and trying something new that could ultimately make a big impact. 

Sometimes though, we have no choice but to take these difficult decisions, and this is the case for loyalty and retention in 2022. These are the forcing functions that have made your decisions for you. Your existing customers are already there, so put them firmly at the top of your agenda this year. Keep reading for why now’s the best time to focus on customer loyalty.

Post-pandemic life 

Have we seen the worst of Coronavirus’ impact at this point? The answer to that varies depending on a lot of factors, but the outcome for most remains the same. 

Many ecommerce businesses have seen enormous growth and an influx of customers during the course of the pandemic. But it can be difficult to know where to take that growth next. The race is on to build relationships with those new customers, secure a second purchase and prevent them from drifting to another brand. Why is this so important? Because data shows that 53% of customers who return for a second purchase go on to make a third. And, of the buyers who make a third transaction, 63% go on to make a fourth.

There’s a narrow window that exists where you can demonstrate to these customers they should return to you for that second purchase. And that building a long-term relationship with your brand is worth their while. Miss that opportunity, and you’ll have to pay to acquire these customers all over again, at a time when people are more distracted and less focussed on online shopping than they have been over the past two years.  

Find out how Coombe Farm Organics took immediate action to turn their new customers into loyal repeat purchasers. 

Rising acquisition costs

I’m not here to tell you to turn off all your acquisition activity. You need to continue bringing new customers through the door. However, we can’t hide from the fact that our traditional acquisition channels are becoming more expensive. Digital advertising spend is forecast to increase to over 600bn dollars worldwide by 2024. But alongside that increased spend, we’re seeing a decrease in ROI. We can no longer use these channels to collect customer data to use to re-engage shoppers as we have before. 

From the iOS updates to the coming cookiepocolypse, privacy changes and consumers’ increasing propensity to opt out of sharing their data are changing the game. Despite paying more to reach and acquire customers, we are less able to collect the data we need to retain them. We’re bearing the costs of maintaining footfall, but it’s harder to deliver personalized experiences that keep customers coming back. 

The old adage that retaining existing customers is cheaper than acquiring new ones has never been more true. In this opt-out era, we need to focus on our most effective growth lever – the customers who are already opted in, who are happy to share their data in exchange for great customer experiences, and who will spread the word and encourage others to opt-in too. 

Consistent customer experiences 

Delivering consistently great customer experiences is bread and butter for an ecommerce business, but it’s increasingly difficult to do. From the supply chain hold-ups and difficulties that led us into this year, to the rising inflation and interest rates that have greeted us along the way, there are multiple factors that are making it more challenging to meet customer expectations, without negatively impacting your margins or passing additional costs onto shoppers.

This is where an understanding of your existing customers and their value to your brand is crucial. 

If you know who your top-tier customers are – the ones that purchase frequently with the highest average order values – you can focus on giving them consistently great shopping experiences that keep them coming back and referring your brand to others. 

If supply chain struggles have left you unable to meet next-day shipping demands for all customers, then segment your most valuable customers and offer it just for them. If products are in short supply, then make sure your most loyal customer get priority access before they run out. If you’re leaning towards introductory offers to get shoppers through the door as consumer confidence takes a hit, look at alternative incentives such as double or bonus points that could get existing customers returning and shopping instead. 

At a time when there are lots of external pressures on your profit margins, identifying your most loyal customers and prioritizing their experiences will create more buffer, and reduce the need to rely on discounting elsewhere. 

Increasingly conscious consumers

The fourth and final factor that I see impacting ecommerce brands everywhere, is conscious consumerism. This is by no means a new trend. 90% of millennials say they will buy from a brand if they believe their social and environmental claims. And you can bet your bottom dollar that they’ll boycott any brand they perceive to be greenwashing and not living up to their claims. 

You may not be in a position to have revisited your entire supply chain to make sure it’s sustainable yet, but today’s shoppers ARE making decisions based on their values. They want to shop with brands they are confident share their passions and beliefs, so you have to be seen to be doing something genuine and authentic to align with them.

From brands who are using their loyalty programs to offer points in exchange for positive behaviors like recycling, to brands that are allowing shoppers to redeem rewards in the form of charitable donations, ecommerce businesses are making small gestures that go a long way with their customers. Small gestures that are a great deal easier to execute than large-scale operational changes. 

See more examples of these initiatives in LoyaltyLion’s Hall of Fame

Why loyalty, why now? 

To summarise, it’s more important than ever to invest in customer loyalty right now because while you can’t control the external and economic factors surrounding your business, you can react to them in a way that doesn’t damage your margins or negatively impact your marketing ROI. You can focus your attention on your most profitable customers who make up your Insider community, which is likely to be the key to your continued growth over this period. 

See more brands that are investing in customer loyalty and retention and seeing positive results, download the LoyaltyLion Hall of Fame

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About the author

Fiona Stevens

Fiona Stevens is the Head of Marketing at LoyaltyLion, a data-driven loyalty and engagement platform for fast-growth ecommerce merchants. LoyaltyLion helps thousands of retailers worldwide to build fully customized loyalty programs, proven to increase customer engagement, retention and spend. Fiona has almost 15 years experience in Marketing, having worked in-house and agency side across functions including PR, SEO and content. She has specialized in loyalty for retail and ecommerce brands for the past eight years.

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