To answer this question we first have to establish “What is a loyal customer?” We need to know what they look like, how they shop, and the emotions they feel.
Everyone will have a different definition of a loyal customer, because they will look different across industries and will vary depending on the size of your store. But here is my definition of a loyal customer:
I realize my definition is a little long but it is necessary to distinguish a “loyal customer” from a “repeat customer.” Both types of customers are profitable but there are some key differences which I will illustrate through this post.
The Road to Customer Loyalty
To understand how to create loyal customer, we first need to understand the road a shopper takes to get there. In the diagram below we have what I refer to as the “5 stage road to loyalty” it is the journey a shopper will go through on the way to becoming a loyal customer.
At each stage along the road a shopper is influenced by different things. At each stage they require something new to push them forward. But before we go into how to move someone down the road, let’s look at the makeup of each section along the journey.
Definition: Has not yet made a purchase but has visited your site and browsed your goods
Likelihood of a purchase: Your store’s conversion rate
Definition: Has made a single purchase from you in the past
Likelihood of a purchase: Slightly better than your regular conversion rate
Definition: Has returned to make a second purchase from your store
Likelihood of a purchase: Around 27% higher than a 1st time customer
Definition: Has returned to make a two or more purchases from your store
Likelihood of a purchase: Around 45% higher than a 1st time customer
Definition: Purchases from you regularly and has become an advocate of your store
Likelihood of a purchase: Around 54% higher than a 1st time customer
You can clearly see as customers move towards customer loyalty they become much more likely to make a subsequent purchase. You are getting much better conversion out of your repeat and loyal customers. In fact you need 9 regular customers to get the conversion of a single repeat one.
If that wasn’t reason enough, your repeat customers also spend more! Your top customers are spending 3x more per order than your average customers, according to RJMetrics. If you need more convincing you can read “Repeat Customers are Profitable.”
The point here is that as you create more loyal customers you are creating more revenue for your store! So let’s get into how to progress customers through the journey.
Move Shoppers to Loyal Customers
The majority of stores have tactics in place to get a shopper to the site and convert them to a customer. I am not here to tell you how to do that, what I can help you with is moving people to become repeat purchasers and ultimately loyal customers.
I will be brief with tactics used in the first few stages so I can focus on the later ones.
Browser to Customer
For detailed explanations you can read “Converting Visitors into Buyers.”
Tactics:
- Visible shopping cart
- Clear checkout buttons
- Shipping information clearly outlined
- Allow guest checkout
- One step checkout
- Create urgency
Obviously the goal here is to get a shopper to the checkout page to complete a purchase.
Customer to Returning Customer
For a detailed explanations you can read “Generating Repeat Business.”
Tactics:
- Collect emails
- Send out newsletters
- Send targeted emails
- Encourage account registration
- Ship an offer for their next purchase with the order
- Be careful if you are going to discount
To encourage a second purchase from an existing customer you need to focus on creating an opportunity to re-engage them. You can do this by capturing an email address or by sending additional offers in the current purchase. You need to be able to invite them back to make another purchase.
Returning Customers to Repeat Customers
This is the point where I see the majority of retailers having the most problems. They are able to get a few customers to come back and make a second purchase, but struggle getting them to come back again and again.
This point on the road to customer loyalty is where you need to start focusing on customer retention strategies. You need to engage your customers and get them loving you as a store and not just what you sell.
Tactics:
- Loyalty programs
- Customer rewards
- Gamification
- Support systems (like live chat)
- Learning centers
- How to videos
If you want to get people making multiple purchases from your store the tactics you use need to focus on getting them engaged and interacting with your store. Your customers need to view you as more than a destination to buy something.
The tactics listed above are all amazing ways to get a customer to interact with your store. Tactics like gamification make buying from your store fun and exciting. Support systems live live chat give your store a human feel and a personality. Lastly loyalty programs give an incentive to return and interact with your store by leaving reviews or referring friends.
The name of the game here is engagement! There are a ton of alternatives out there where your customers can shop, be sure to give them a reason to shop again with you. Repeat customers are too valuable to ignore!
Repeat Customers to Loyal Customers
A loyal customer is the end of the road, in a good way! A loyal customer is the holy grail for your online store. They spend more, share more, and are extremely unlikely to move to a competitor. They are the ultimate customer.
These loyal customers differ from repeat customers because they go above and beyond just making purchases. When you create a loyal customer you are essentially adding a customer marketer. Here are the tactics to encourage loyal customers.
Tactics:
- Personalization
- Offers based on their preferences
- Attention to their actions
- Gifts
- Incentives to share and promote
The proposed tactics may seem a little general here, but that is because there is no one way to create loyalty. Loyalty is an emotion that you need to inspire in your customers and in my experience the best way to do that is through personalization!
We all love that restaurant that knows our order as soon as we sit down at the table. eCommerce is no different, your customers are looking for that personal touch that will make them fall in love.
Add personalization by first discovering your best customers through segmentation. When you have found these customers you can start reaching out to them personally. This is an amazing way to turn a repeat customer into a loyal customer.
Some personalization tactics include: Using email solution provider to address customers by name and provide offers and content based on what they have bought in the past. Dotmailer is a great example of such a tool.
Sending personalized messages and a gift is also a great tactic to encourage loyalty from your repeat customers.
However you decide to create an element of personalization is up to you. The important thing is that you identify your repeat customers and begin to offer a personal touch to encourage customer loyalty. It also helps if you incentivize these customer to become loyal customers.
Accelerating Customer Loyalty with a Loyalty Program
I know, who would have guessed that a loyalty program helps create loyal customers. But in all seriousness a loyalty program is a great way to encourage more loyal customers and get them there faster.
Online loyalty programs allow you to reward points to customers as they complete actions. These range from account registrations to referring friends. No matter what you reward for when a customer has points they are given a switching cost which encourages them to come back. This moves a customer to a returning customer.
Some loyalty programs also allow you to create a tiered program. These types of programs encourage customer to continue shopping in order to reach different status groups and achieve different rewards. A great example of a program like this is Sephora's VIB program. Tiered programs accelerate returning customers through the repeat customer stage and into the loyal customer one.
Even loyal customer can be reluctant to invite friends and share socially. A loyalty program offers additional incentive to get them to take action. Loyal customer will see a ton of value in your points and will perform your desired actions in order to receive them.
Customer Loyalty is a Journey
As you can see customer loyalty is a journey. You can not simply create a loyal customer they have to be moved through the journey a step at a time. The journey doesn’t have to be a long one though.
Many ecommerce sites are not putting an adequate amount of investment into creating repeat and loyal customers. Just like you need Adwords, social media, and retargeting tools to acquire customer effectively you need retention tools like loyalty programs, live chat, and referrals to get more loyal customers.
Make an investment in your customer retention efforts, you will be glad you did!
