Congratulations! All your marketing dollars have paid off and you’ve just acquired a new customer for your retail business.
But how long will this customer stay loyal to you? The money and effort you spent to acquire this customer has to pay off somehow, and that’s where customer loyalty is most critical.
You can make your marketing dollars stretch much further if you prioritize customer loyalty. While customer loyalty may seem hard to define or measure, it’s helpful to think about both the qualitative and quantitative sides of what motivates customers to stick with you and how these impact your bottom line.
What is Customer Loyalty?
Customer loyalty is defined by a customer’s interest in maintaining an ongoing relationship with your brand — that relationship can be in the form of purchasing products, visiting your website, or engaging with your content on a regular basis.
Let’s keep in mind that customer loyalty is not something over which you have direct control; instead, loyalty is a result of how you treat your customers over time. By focusing on genuine customer relationships, they can have a positive impact on your business for years to come.
Why is Customer Loyalty Important?
You’ve probably heard that it takes more money to acquire a customer than it does to retain a customer — in fact, research shows you may spend up to 25x more on new customer acquisition! The reason it costs less to retain a customer is loyalty. Current customers are not only easier to sell too; they also spend more overall.
When it comes to putting a monetary value on loyalty, keep in mind how customer loyalty will impact your customer lifetime value (LTV). If customer LTV is determined by how much a customer spends per visit and how often she visits, customer loyalty will have a large impact on the second part of the equation — how often and for how long a customer chooses to shop with you.
You can earn customer loyalty through a number of different strategies and methods, and there are plenty of metrics you can look at to measure how your customers are responding to those tactics. You’ll want to keep track of these metrics because they will provide actionable insights for you to increase loyalty, customer satisfaction, and your average LTV.
How to Build Customer Loyalty
Customers may become more loyal for any number of reasons, some that may have nearly nothing to do with the product you’re selling.
Below are opportunities for you to increase customers’ loyalty to you and your brand. Always remember that these strategies aren’t one-and-done; they all take constant attention and evaluation in order to make sure they are bringing about the results you’re looking for: extending how long a customer will stick with you.
1. Analyze your customer data.
In order to know where you should go, you need to know where you’ve been. It’s important to have the right tools and platforms in order to measure how your customer retention rate changes over time and who’s giving you repeat business. For example, if you host an event for a certain group of customers, you need to be able to see if those customers’ loyalty goes up compared to similar groups of customers who did not attend the event.
Another easy way to analyze loyalty is with a tool like Endear. If you have an active sales team who works at your physical retail store, Endear can help you evaluate how customers who shop and speak with a salesperson at your store differ from those who only shop online. If the answer is that customers who shop in-person are more loyal, you’ll know to dedicate more marketing dollars toward motivating customers to visit your physical locations.
2. Focus on customer experience as much as product experience.
It’s never been easier to bargain hunt, so now is the time to focus on the customer experience and great customer service rather than relying on discounts or new products. 69% of shoppers will spend more money on a company with better service, so thinking through what kinds of services your customers may want is a strong way to garner loyalty.
Services can come in many forms — for example, many Endear customers offer VIP programs that give customers a way to access their own personal shopper (online or in-person). Services can also refer to shipping or returns programs, allowing customers to book appointments for repairs or tailoring, or simply giving customers a way to reach you easily over phone or text. Put another way: if the same product is available in two places, a customer is going to purchase wherever makes her life easier — you want to be the company that makes buying an item not only simple, but also a pleasure.
3. Make it easy to be loyal.
If I’m your customer, I should be valued equally no matter how I choose to shop. A common example of poor loyalty management is if I receive a promotional code for having spent a certain amount online, but I can’t use this code in a store. That’s a signal that while a brand appreciates my loyalty on their ecommerce channel, I’m not recognized the same way in-store, and that can be very frustrating for a customer.
As a brand, you want to encourage loyalty at every touchpoint, and that may mean investing in ensuring that all your systems speak to one another. Also, keep in mind that a customer who shops both online and in-store has a 30% LTV than customers who shop from just one channel or another, so the more you can enable customers to move seamlessly between channels the more likely you are to hold on to these customers.
4. Personalize your outreach.
Customers are almost numb to marketing emails today, with low open rates and even lower conversion rates. But if you have a sales team, empowering them to personalize their outreach is a surefire way to grab a customer’s attention.
That’s what Endear is all about — by enabling your salespeople to review purchase history both in-store and online, they can reach out to customers in an authentic way that takes everything they know about the customer into account. In fact, messages sent through Endear have a 5% conversion rate! Especially if you notice a customer is slipping away, re-engaging them through unique messaging is a strong way to keep them with you.
5. Reward loyalty and ambassadorship.
Like with most things, the more you reward customers for their loyalty, the more loyal they are likely to be. There are tons of activities that you should want to reinforce, including when customers make a big purchase or purchase at a frequent rate, but also if they share your products on social media, refer a new customer by word-of-mouth, or give you a positive review. There are a number of rewards programs and apps that make it easy for your customers to do these things, that also make it easy for you to send them a thank-you.
For example, Referral Candy will help you track how often your customers are sharing your brand or products with others, and measure how this channel is impacting your revenue.
You can also think about loyalty as an opportunity for engagement and gamification. This strategy is typically in the form of a “points system”, and it’s an effective way to motivate your customers to repeat a certain action or set of actions in order to reach a specific goal and earn a specific prize (if this sounds like it could be a good fit for your customer base, check out the app Smile).
6. Introduce customers to customers.
A great way to reinforce loyalty is to put together a community of the customers who love you most. Whether that’s in the form of a Slack group, Facebook group, or in-person events, giving your audience an opportunity to speak to one other and hear how other customers use your products, share reviews, and offer feedback also shows your customers you care about what they think.
Communities also enable potential customers to hear from current and repeat customers about what makes your brand special — not just what products to buy but also the other steps you’ve taken to earn their undying loyalty (and, therefore, create brand advocates).
Examples of Customer Loyalty Programs
Here are a handful of exceptional customer loyalty programs in action.
Margaux and their Gaux Girls
This is not the first time we’ve written about Margaux, and I can assure you it won’t be the last. Founded in 2014, Margaux has always been on a mission to ensure that every woman can make it through the day with a supportive, stylish shoe.
From the start, the founders also created an open channel of communication between a group of core customers, called “Gaux Girls”, to hear their input and understand what they wanted — not just from a shoe, but from life. Understanding the various contexts and lifestyles in which Margaux’s shoes were being worn helped the team better determine where to open stores, what products to offer, and what additional services would make their customers’ days easier.
Rebag’s Clair Program
As the re-commerce industry grows, one of the biggest challenges is figuring out how much money you can earn on an item you currently own. Often this can be a very long process — sending the item in or visiting a location in-person, having it analyzed by an expert, and sometimes even waiting until it’s sold to know whether the process was worth the hassle financially.
But not with Rebag. In a consumer world where everything is expected to happen immediately, their Clair program gives customers immediate estimates on what their handbags could be worth if they chose to re-sell them, motivating them to make decisions more quickly and with more confidence. Compared to other resale platforms, Rebag has distinguished itself by making the process of putting your bag on the market both easy & efficient, encouraging customers to engage with the service over and over. This type of service solves a problem that is unique to re-commerce customers and helps to set Rebag apart from its competitors.
Bandier’s Studio B
If you have a retail store, it can be a challenge to motivate customers to come back to you if they are not in the market to purchase an item. Fitness apparel retailer Bandier understood that they could increase loyalty if they provided the actual fitness along with the apparel — hence Studio B.
Studio B is Bandier’s very-own workout studio, offering a broad range of classes, whether you’re a Bandier customer or not. Studio B is a strong way to grow loyalty because it shows that the brand is not just about getting customers to purchase. As the brand says on its website, “Studio B is more than just about fitness. It's about building a forum where the BANDIER community can really come together, sweat it out, shake it off, rock out, and enjoy overwhelmingly good vibes.”
How to Measure the Success of Your Customer Loyalty Program
Once you decide which strategies are most likely to earn your customers’ loyalty, it’s important to be able to measure their effectiveness. Overall, loyalty should manifest in higher LTV, more referrals to new customers, better reviews, and lower churn rates. Another valuable way to measure loyalty on top of calculating LTV is in the form of a Net Promoter Score, or NPS, which highlights a customer’s willingness to recommend you to someone else. Since you can ask customers this question directly, for instance in an email or over LiveChat, it’s a great way to see how loyalty is changing over time.
Learn how Endear can help you build loyal customers by counting on your sales team to clientele. Salespeople can help you gauge how loyalty is changing, not just in the form of sales but also in the form of engagement. In fact, by counting on salespeople to be your eyes on customer behavior, you’ll be able to shorten the feedback loop and more rapidly improve the strategies you deploy. Learn more about how Endear can help you track loyalty on our website.