If you run an online business, you know just how valuable new customers are.
Guiding someone through a funnel all the way from first seeing your logo on social media to purchasing a product is by no means an easy feat. It’s a long process that needs to be measured and improved every step of the way.
However, in our marketing efforts, we sometimes tend to focus on bringing in new customers to increase our revenue. That’s why many online business owners are overlooking one big asset that can greatly affect their revenue – repeat customers.
As we’re about to learn, frequent customers deserve the same (if not more) amount of attention as they are easier to convert and have a higher value.
So, let’s learn more about customer loyalty, the value of repeat customers, and what you can do to focus more of your resources and energy on that group.
What is customer loyalty?
Customer loyalty is the rate at which you manage to retain your customers and keep them purchasing your products. We call a customer “loyal” when they keep making purchases from you on a regular basis, possibly to the extent that they stop purchasing from your competitor.
Incredibly loyal customers are also called repeat customers, and they are some of the most valuable assets you can have as an online business.
You can look at two things when trying to identify your most loyal customer: the amount spent and the frequency of purchase. And, while your first instinct might be to consider the big spenders as more valuable customers, your most loyal customers don’t necessarily have to be big spenders. There is a big chance that your repeat buyers’ value will, over time, surpass the value of those big spenders who don’t make as many purchases.
Let’s find out how that’s possible.
Customer loyalty and retention: why do they matter?
You can find a lot of research online that suggests how frequent customers are your absolute bread and butter when it comes to increasing revenue and being more profitable.
For example, one study found that loyal customers can be worth up to 10 times more than their first purchase. So, whenever you see a new customer making a purchase, keep in mind that retaining them should be one of your top priorities – even if the purchase isn’t that impressive. The value of the purchase isn’t important, it’s the lifetime value of the customer that brings long-term success.
And if purchase value is what you care about, it might be that the amount your customers spend on your products tends to increase the longer they stay with your brand. Research shows that the first six months of your customers’ interactions with your brand are the least profitable. When they stay with you for more than 31 months, they can spend up to 67% more on your products.
Shopify illustrates this in a simple way with their hypothetical example.
In this graph, we see how profits can change dramatically after only a 5% increase in customer retention. It’s a simple mathematical fact – over a period of five years, a small increase in customer loyalty accumulates and brings big results. While you might not notice a big difference in the first year, you’ll start seeing amazing growth after more than two years.
This type of growth is nearly impossible to match by focusing on the acquisition of new clients.
How to build customer loyalty
Now that we know how effective customer loyalty can be for your business, let’s go through some good strategies to help you achieve it. Some of these might take some time to set up and execute but, as we’ve shown above, they'll be well worth the try!
Make everything as easy as possible
You can’t expect someone to come back to your website if the experience isn’t enjoyable.
It doesn’t have to delight or wow them – it just needs to be easy, intuitive, and quick. Sticking to the basic UX design principles should be enough. So, keep the navigation easy (don’t over-complicate the nav menu), make your pages easily scannable, and engage the users to scroll. Here are some more rules by Adobe. Check them out and see if your website meets these requirements.
In the meantime, here’s an example of a website that does:
Source: Big Commerce
Cutter&Buck, a fashion eCommerce, offers easy navigation, clear visuals, and a lot of payment options – the pillars of a good webshop.
Get to know your customers
Once you have the basics covered, you can get to the more advanced stuff.
The next thing you can focus on is delivering your customers a tailored experience. If you want someone to keep coming back and check out your offer, you can make them feel like the offer is personalized, curated for them. That way, they’ll feel like they can always discover something new, something that will interest them.
By doing this, you can also cut down on their browsing time and give them what they’re looking for without them having to search for it manually. Think about it, if you’re a man, you’ll usually only want to see men’s clothes, right? And if you visit a particular eCommerce store exclusively for their t-shirts, it would be great if you could navigate through their t-shirt offer as soon as you reach the website. In fact, many people use bookmarks to do this – they simply bookmark Adidas/men/t-shirts and revisit the page from time to time to check out the offer.
Pull & Bear is a great example of a brand that understands this and offers a personalized browsing experience.
Source: Pull & Bear
When you first visit their website, you’re faced with a choice between the Men and Women collections. Once you choose this, you don’t have to choose anymore – every time you visit the website again, it will redirect you to the selected gender and start showing you the items you’re more likely to be interested in.
This is a basic approach that uses only website cookies but it’s effective.
Work on your customer service
In 2021, nothing can deter a customer like bad customer service. On the other hand, good customer service can translate into a good experience with your brand, which makes it more likely for that customer to return.
But, what makes good customer service? Most of us know that intuitively but here are some things you have to cross out from your customer service checklist.
The first one is response time – answering all queries as soon as possible ensures that your customers don’t get frustrated. If you can’t do it with the people you have in your customer support team, consider investing in live chat, which reduces the need for phone calls and streamlines the whole experience.
The second thing you can work on is your overall approach. Around 66% of customers claimed that they would consider switching brands if they went through a customer support experience where they felt like they were treated like a number instead of as an individual. So, humanize your customer support and let your agents do their job without too many constraints.
Finally, you should take constructive criticism and use it to get better. Valuing customers’ feedback is one thing but showing that you actually listen to it and use it to improve your processes is impressive. If a customer notices you’ve changed something they’ve had a problem with for a long time, they’ll be more likely to look at you in a positive light.
Send personalized emails
Another way to impress your customers and gain their loyalty is to surprise them with personalized emails.
When someone makes their first purchase or subscribes to your service, what they’re really doing is trusting you. They’re trusting in your product, service, knowledge, and the value your bringing into their life. Thanking them for this trust is a great way to build deeper relationships and turn first-time buyers into repeat customers.
You can do this with Bonjoro – create simple, yet effective personal videos that speak directly to your customers. With no knowledge of video editing or coding, you can make videos that will almost certainly elicit a reaction from your audience.
One of our favorite success stories is the Good Company – an eCommerce that promotes sustainability.
By welcoming each new customer with a personalized video, they increased their return traffic by 32 percent! Their emails had an open rate of over 70% and they started tons of one-on-one conversations with their customers.
You don’t have to send emails only to first-time buyers. There are plenty of reasons to reach out to someone with a personal email. You can send emails on customers’ birthdays, send them business holiday greetings, or even make videos just to thank them for their support.
This last part may be incredibly important in 2021, as the past year (and likely most of this one) has been challenging for businesses from all over the world. Thanking your customers for their continuous support could be an excellent idea!
Use customer incentives
If you want an effective way to keep customers coming back to your offer – and you don’t mind spending some money to do it – you can invest in customer incentive programs.
Among the most popular such initiatives are loyalty programs. In the case of loyalty initiatives, buying your products gives customers a tangible, worthy benefit. Usually, this benefit comes in the form of a free product, a significant discount, or a voucher. Most programs are points-based, meaning that each purchase awards the customer a number of points. When they collect the target amount of points, the users can then redeem them for their reward.
However, loyalty programs aren’t the only incentive for someone to keep purchasing from you.
You can also give your repeat customers special offers like free shipping and lifetime discounts. Here’s an example of a popup that does just that: favorizes VIP customers.
Source: Agile CRM
You should always make sure that continuous engagement with your brand doesn’t go unnoticed. Reward loyal customers as best as you can – it will pay dividends!
Measuring customer loyalty
If you’re aboard the customer loyalty train, you might be wondering exactly how you can track this metric. What defines a loyal customer and how do you know if your customer loyalty is increasing?
Here are some metrics you should keep an eye on.
- Purchase frequency. The first thing that dictates one’s loyalty to your brand is how frequently they make purchases. You can divide the total number of orders in a set period with the number of unique customers to get this number.
- Repeat purchase rate. This metric shows you which percentage of your customers are repeat buyers. Divide the number of users who made more than one purchase in a certain period with the number of unique customers in that period and you’ll get your repeat purchase rate.
- Average order value. While this doesn’t show you the number of orders your customers make, it is a good indicator of whether the love for your offer is increasing. Simply divide your total revenue generated in a time period and divide it by the number of total orders to get this number.
All of this may sound complicated, which is why many business owners use automation tools to track analytics for them. Once you set everything up and connect the tool to your website, you can just watch the numbers and make business decisions to keep the numbers growing.
Customer loyalty: the final word
If you found this article useful, you’re already one step closer to building more meaningful relationships with your audience. If executed properly, a good customer loyalty management strategy can increase your revenue and make your business run more efficiently instead of constantly chasing for acquisitions.
It does, however, take a little time and effort to set up.
And if you want to spice things up with some personalization and speak directly to your customers to gain their loyalty, consider Bonjoro. We will help you connect with those customers and make sure that none of your “thank you” emails go unnoticed!
Register for your free trial now.