A loyal customer is no less than a blessing for an online store. Repetition in customer visits not only increases the chances of them buying your products more frequently, but it also contributes greatly to the probability of a customer recommending your products in their network.
In fact, according to multiple surveys, loyal customers are not just more likely to make more purchases from a brand they love but 59.3% of them tend to also refer the brand to their friends and family.
Considering the increasing competition in the eCommerce space, no matter what products your store sells, customer loyalty is more important than ever.
In this article, we’re sharing everything you need to know about customer loyalty. Right from what it really means, why it is so important for your Shopify store’s growth, how you can create customer loyalty and secret tips from our experts on creating a customer loyalty program for your store.
What is customer loyalty?
In simple words, we can define customer loyalty as the tendency of customers to prefer the products of a certain brand over any other competitive brand. So, irrespective of the offers that are available to them from other online stores, these shoppers come back to you every time they need to make a purchase.
Think about the last time you wanted to purchase regular loungewear and entered H&M yet again to buy from their collections. It’s the same with your customers!
But building that kind of customer loyalty is difficult.
A typical online shopper has the choice to buy the same product from at least 10 online stores. Each one offering a deal or a discount to lure them towards making a purchase.
Customer loyalty depends on many factors. It could be the shopping experience, the quality of the products they purchased, their post-purchase experience or even something as small as the shipping method you offered. The reason to remain loyal to a brand is different for every shopper.
But one factor remains the same— customer’s loyalty depends on positive emotions. It depends on emotions like trust, comfort, satisfaction, empathy, and understanding between the customer and the brand.
But the question, is loyalty worth the effort?
Why is customer loyalty important?
Say, your Shopify store sells footwear. Now think about the number of online stores that have added footwear as a range in the products they sell. That’s a lot, right?
So even if you’re looking for a simple black shoe, you get to choose from 10 brands minimum!
But the new-age consumer isn’t just looking for deals. They’re looking for brands they trust and they’re willing to pay a premium price for it. They’re looking for brands that they can go back to time and again for the quality they offer. That’s the importance of customer loyalty in an ever-growing competitive industry!
1. Loyal customers tend to come back for repeat purchases and higher cart values
The goal of running a successful online store is not just to make sales, it is to be able to increase your overall revenue. And that revenue is directly dependent on the profit margin you earn. Without a good profit margin, you’re basically just selling a product at almost the same cost as you purchased it for, for your inventory. But will customers really pay as much to cover your profits?
Customer loyalty helps an online store generate good profit margins because it is observed that returning or repeating customers spend far more than new customers. In fact, it was found that existing customers spend 67% more on average than new customers. And about 76% of companies see customer lifetime value as an important aspect of their brand’s growth.
2. Boost word of mouth promotions and improve brand recognition
A loyal customer is a shopper who has had a great experience in your store. They come back to make a purchase because they know your products offer the quality they seek, and your deals make the purchase pocket-friendly for them.
But this behaviour of repeatedly purchasing products from you also has another positive effect. These customers tend to talk more about their positive experience with your brand to the people they meet.
Studies suggest that 58% of customers tend to recommend a brand on social media if their experience with the purchase has been great.
So, it’s crystal clear that customer loyalty does two things for you apart from driving repeat purchases – boosts word of mouth promotion and builds brand recognition.
3. Shields your brand from negative online reputation and reviews
Product reviews or brand reviews can make or break your online store’s reputation and, eventually, sales.
While you’re doing your bit to ensure a great shopping experience with your store, there are going to be some consumers that have negative things to say about your brand. They might go online and share those reviews with others as well.
But did you know that 5 negative reviews can get nullified by just 2 positive reviews from genuine customers? This can be seen after the launch of products by a giant like Apple. There are always some customers who keep criticizing the brand, but it never comes to the surface. Those bad reviews are nullified by the good reviews given by the customers who are loyal to the brand. Customers who love their Apple gadgets.
Your loyal customers are those 2 shoppers who become the shield for your brand against negative reviews and go above and beyond to share their experience with others.
4. Secures your sales in an ever-changing market
Market conditions are ever-changing. Take the slowdown caused by COVID-19 into consideration. One day, online stores were making sales worth thousands of dollars, and the very next day, most had to halt taking orders for almost 4 weeks before things started to slowly open up.
But in these 4 weeks, a lot changed. Consumer behaviour changed. A lot more brands went online with their products. And now there’s 2x competition for attention in every industry.
While some stores will sail through, others will find this challenging to deal with – but not when you have a loyal customer base.
Loyal customers attach a certain emotion with brands. Given a choice, they will support your brand despite market changes and the various other policies you may change to keep up with trends or to save your business. A study suggests that around 80% of customers are willing to pay more for a better experience. You can have these 80% customers if your customers identify your brand as a brand that promises them a better experience.
It’s like having an extended family that cares about your brand!
Didn’t you go back to your usual coffee shop when the lockdown got lifted despite the various other options you had?
It is the same thing. You’re a loyal customer of the coffee shop.
How can you create customer loyalty?
The first step towards creating strong customer loyalty is to understand who your customers are, how they interact with your brand and why, and how you can add more positive value to their journey with your brand.
Know what they’re looking for, understand what motivates them to make purchases. And then work towards bringing them back to your store more frequently, building up your customer loyalty.
Create a brand that customers fall in love with
Love prevails as the greatest driving force, even in the world of eCommerce and marketing. If you want to have loyal customers, you need to turn your brand into something that people fall in love with. Something that becomes a part of their day-to-day lives. Just like how you turn to Amazon for every little purchase you need to make!
Now creating a brand that everyone loves can be tough. But it starts by truly understanding what your customers need and offering them a consistent quality of products they purchase from you. Products that also evolve with their changing needs. All you need to do is pay special attention to the feedback provided by the customer – in fact, sometimes even go ahead and ask for it.
Offer impeccable customer service to your customers
It’s not just about the sales you make. The post-purchase experience is as important.
If by any chance, a customer faces a problem with the product and reaches out to the store, it becomes especially important for the store to resolve that issue as soon as possible while making sure that the customer faces minimum inconvenience. Be it an exchange of products, a return or a refund request. Keep in mind what you would expect in such a scenario from the customer service team of a brand.
Studies suggest that customers are 10 times more likely to remain loyal to a brand if their post-purchase experience with customer service was positive. The reason being that it makes them feel valued. It makes them feel that you truly care about their experience and want to help them make an informed purchase every time.
And most importantly…
Reward customer loyalty with benefits that add value to shoppers
Take credit cards for example.
You’re more likely to use a bank that offers you more points on a purchase so that you can make use of those in the next. The same holds true for an online store – you’re more likely to go back to one where you get some added benefits on your purchase because of a previous purchase you made.
Yes, we’re talking about customer loyalty programs.
If you reward customers for every time they engage with your brand, they become more involved with it. For instance, when a customer makes a purchase of an exclusive product on your store, you offer them 100 store credits on completing the purchase.
Similarly, when the customer comes back to review this purchase, you reward them with 20 more store credits. Now the customer has about 120 credits that they can redeem while making their next purchase. This makes them more likely to come back to your store to make the purchase – even if a competing store is offering a bigger discount than you are.
But creating a successful loyalty program can be tough. It needs to offer rewards that motivate shoppers to make purchases. It needs to tap into consumer psychology.
That’s why we looked through all the customer loyalty programs that online stores using Flits have set up to get you tips that make it actually work!
How to set up an effective customer loyalty program?
Now that we’ve understood things about customer loyalty and a customer loyalty program. It’s time to dive into more specific elements of a customer loyalty app.
While choosing your customer loyalty app, you need to understand what your customer is looking for, and only then can you decide which customer loyalty app you want to set up. These elements may seem like finer details, but they have a great impact on a customer’s behaviour.
1. Customize your loyalty program
Take, for instance, a scenario where Samsung starts a customer loyalty program. However, the program doesn’t personalize its rewards to Samsung. Generic rewards within the loyalty program can be a major disappointment for the customer. This is why personalizing your loyalty program plays a very important role in its success.
If you are opting for a customizable loyalty app, then it can be beneficial to have your store name and logo on it rather than the app’s name. Brand logo and customized rewards can create a stronger bond between the customer and the store. It can also help you offer a wide range of rewards to your loyal customers.
Marks & Spencers have named their loyalty program “Sparks”, setting up unique reward tiers for their shoppers.
PS. Did you know that with Flits you can set up a fully customizable customer account page to boost your loyalty program? Install the app today.
2. Set up online and in-store rewards for a seamless experience
If you have an online as well as a retail store, you should be able to offer your rewards both virtually and within your retail store.
Flits integrates with Shopify POS to allow customers to redeem their store credits whether they are shopping online and in-store. Such a seamless shopping experience can ensure that the shopper can choose to shop however they want without having to compromise on their needs.
PS. Did you know that with the Flits Shopify POS integration you can offer store credits to both online and offline shoppers? Read about it here.
3. Ensure better usability
Your customers, as well as your staff, should be able to use your loyalty program. No one likes to work with a complicated interface. Customers won’t be able to navigate around it and your staff will have a hard time understanding how your shoppers use their loyalty rewards.
With Flits, we build a rewards program that is easy for customers to use as well as for merchants to monitor. Customers can view their store credits through their customer account, simplifying how they access their credits.
Our dashboard allows you to view how customers are using their credits with detailed reports. You can also send promotions to your loyal customers about their credits via email and web push notifications.
4. Give shoppers their own mobile wallet or store credits
According to a study, 73% of customers are more likely to join loyalty programs with mobile wallets.
With mobile wallets, you can directly reward your customers and surprise them with occasional store credits on different types of actions they take on your site. Be it store credits in the wallet for subscribing to your newsletter, reviewing your products or sharing their purchase, this little reward creates a positive effect on the customer and makes them shop more.
Flits enables these store credits for your Shopify store. These credits are stored within your customer’s account and they can easily see how they spend and earn their credits. This functionality is similar to a banking app where customers see their savings account and its statements.
With a store credit wallet, you can gamify the experience of earning credits for your shoppers, making them eager to visit their credit wallet and find ways to earn more rewards. A good hack to get more product reviews!
5. Set up referrals to spread the word
A referral program goes in hand with your loyalty program. Allow your customers to refer your app to their friends in return for rewards. You’ll see that this will help you build strong leads for your Shopify store – those who will be more likely to convert into paying customers.
Referral programs have proven to deliver high ROI, helping you multiply your customer base. Ensure that you’ve set up rewards for referrals. On Flits, you can assign rewards for every new referral sign-up as well as when referrals make a purchase.
You can also send marketing emails and web push notifications to your customers about the enticing rewards they will earn by referring, helping you catapult your growth.
Tips to make your customer loyalty program a success
One of the most essential things before creating a customer loyalty program is to set goals. It is no surprise that goals can differ from person to person and store to store. Pre-setting goals will help you pick the rewards that you are about to offer your customers. There are many strategies that you can apply in your loyalty program, and each one of those is beneficial in their own way. In order to make it work, you need to walk a mile in your customer’s shoes as well.
Let’s look at some important points that you need to focus on while creating a customer loyalty program.
Identify what will make your customer happy
The first step in choosing the reward is deciding the affordable margin. The most common margin is considered as 10% of the product value. It should be considered as a long-time investment because it is keeping your bond with the customer tight and making them come back to your store more frequently.
Around 66% of customers say that a good rewarding system actually changes their spending behaviour. And there is no doubt that this money falls right into the store’s pocket.
The reward list is wide enough to choose freely, but you need to understand your customer before choosing the reward, depending on their likes and dislikes. You can choose to offer store credits, a free product, free shipping, an additional discount, gift, etc.
From what we have seen, store credits work the best. The ability to earn them easily as well as apply them to the next purchase, makes shoppers want to interact with your brand more. You can use store credits to not just nudge repeat purchases, but also ask customers to drop reviews on products, share their purchases and more.
To understand how store credits work, read our blog on the 8 different types of store credits that can increase your customer engagement and sales.
Create a ripple with a referral loyalty program
Imagine getting rewarded when you refer your friends to your favourite coffee shop. For every referral, you get a free cup of coffee. It’s a win-win situation! That’s exactly what a good referral program makes a customer feel.
A referral program not only makes your customers loyal towards your brand, but it also proves to be a successful marketing strategy. It forms a chain of new shoppers that can be converted into customers with just a little push.
Also read: Tips to make your customer loyalty program a success and boost repeat purchases
Train your team to build customer relationships
Make sure that your staff is trained to pitch the loyalty program to your customers. There’s no doubt that good customer service goes a long way in building customer’s trust in the brand, which leads to their lifetime loyalty. Most of us have been in a situation where the staff of some store wasn’t trained enough to help positively.
This kind of experience changes the experience of the customer negatively. Staff training is one of the primary and most important elements of a successful loyalty program.
Let them know about the benefits of your loyalty program
There’s no benefit of creating a loyalty program if your customers are not aware that it exists. Make sure that your loyalty program is promoted on every possible platform to board maximum customers on it. It can be promoted in stores through staff-customer interaction, on websites and apps, and various social media platforms.
Statistics suggest that an average person is spending around 2 hours and 22 minutes of their daily time on social media. Once you’ve succeeded in promoting it, then a bounce in customer loyalty and ever ending bond with your online store can be gained smoothly.
Do you really need a customer loyalty program?
We hope this guide helped you understand exactly how you can set up a loyalty program and increase repeat purchases on your Shopify store. While it is time-consuming to build loyalty on your store, the effort is worth it. 83% percent of customers admitted that loyalty programs keep their relationship with the brand intact and make them continue doing business with the brand.
With a loyalty program, you can ensure that your brand can generate revenue and maintain its growth. A well-designed loyalty program creates a desire for customers to earn more credits, making them change their shopping behaviour and even spend more.
Competition in eCommerce is increasing, and the same goes for the cost of customer acquisition. There’s no guarantee that a repeated customer today will stay with you for another year. So, in these times, it becomes crucial to keep your customers close, stay connected, and ensure they choose you over your competitors.
A good customer loyalty program can help you stay afloat and rise in the modern competitive eCommerce world. With Flits, you can set up a customized loyalty experience for your shoppers that makes them want to come back to the shop and earn rewards.