If you’re anything like us, you’ve spent the past month or two alternating between wanting to consume every single ecommerce stat to hit the headlines, to feeling overwhelmed by the amount of – often contradictory – information coming your way.
We have no desire to add to a Coronavirus information overload, so we’ll keep this short and sweet. But we did want to share some insights that might help you focus your marketing efforts as you adapt to a new normal in ecommerce.
We’ve looked at the loyalty data for March from over 600 of our stores – here’s what we’ve found:
Your loyal customers remain your most reliable source of revenue
As you might know from previous LoyaltyLion research, your loyal shoppers are your most valuable, with 50% of revenue for stores of all sizes typically coming from just the top 20% of customers.
The good news? That hasn’t changed.
- The number of orders made by loyalty program members remained steady throughout the month of March, and actually outperformed the last week of February (week zero) for four out of five weeks.
- Member order count for the last week of March was 22% higher than the last week of February.
Loyalty program engagement also remained positive:
- The number of loyalty points earned fell by 16% in the second week of March (week 2), however it then steadily recovered week by week, with the last week of March seeing 5% more points earned than the last week of February.
- The number of points that program members redeemed was impacted less, and similarly recovered to be 11% higher than the last week of February by the end of March.
Despite a knock to consumer confidence, loyalty program members continued to repeat purchase and make the most of their points balances.
This highlights the importance of focusing on the customers you already have, as they continue to be the most valuable and have the most immediate impact on your bottom line.
Customer lifetime value should still be your #1 metric
When we asked LoyaltyLion merchants what their biggest challenge was back in 2019, an overwhelming number said increasing lifetime value. And it looks as though this has never been more true.
- Average order values have continually fallen across the board in March. This could be a natural consumer response to the pandemic, or it could be a result of the increased number of discounts and sales that stores have launched in response.
- However, the average order values of loyalty program members have remained consistently between 20 and 30% higher than the average order values of guests.
With the landscape changing so quickly, it’s difficult to say whether the time between purchases will increase or decrease in coming weeks. However, if there is the slightest chance it may decrease, then a drop in average order value becomes a greater headache.
Loyal customers who are engaged with your brand continue to have significantly higher average order values than non-members. This makes it even more important to use customer lifetime value to segment your customer base, so that you can focus your marketing efforts on those customers that will bring you the greatest ROI, fastest.
Your loyal customers are still a viable acquisition channel
In an earlier blog post, we spoke about the fact that with more consumers socially distancing or self-isolating, there was an opportunity to encourage more advocacy.
As it happens, your loyal customers are still helping you to acquire new customers more cost-effectively.
- The average number of reviews that were rewarded with loyalty points in March initially fell, but later in the month saw a big jump. In the last two weeks of the month, review activity was up to 26% higher than in the last week of February.
- The average number of members that were rewarded for making referrals followed a similar trend, but ending 33% higher in the last week of March than it was in the last week of February.
It turns out that your existing customers are still willing to act as advocates and remain one of your most cost-effective acquisition channels – great news for anyone that has been impacted by fluctuations in ad cost and effectiveness and is concerned with cash flow.
Worth noting however, is that UK stores saw a far bigger uptick in review and referral activity in the latter half of the month than US stores, which suggests that US shoppers may need a little more encouragement.
The lifetime value of customers referred to a brand is proven to be higher than those who reach a store via other channels so it’s good to see that this is an acquisition channel that continues to work hard for brands at the moment. However, it’s important to step up referral and review activity as soon as possible, so that you can benefit from increased browsing activity now, rather than in a few months.
Consumers are still open to connecting and building relationships
We know from industry insights that consumers have strong feelings about the way brands have communicated and acted in recent weeks. However, we’re happy to report that shoppers are currently no less likely to strike up a new brand relationship than they were before.
- Aside from a dip in early-March, the number of members signing up to loyalty programs has been steadily increasing. The last week of March saw 26% more member sign ups than the last week of February.
However, the key data point to look at here, is the number of customers who have not become members. This is where brands are missing big opportunities to connect longer-term.
- The number of guest orders stores are seeing has significantly increased in the latter half of the month, yet the proportion of those customers who have become members has fallen and in the last week of March was 10% lower than the last week of February.
The fact that customers are just as happy to create accounts and enter into longer-term interactions with brands is hugely encouraging at this point in time. It’s also good to see that orders are increasing again.
However stores who do not act quickly and encourage guest checkouts to create accounts will miss out in the near-term when they are unable to keep up communication and draw those customers back for their first repeat purchase. Remember, if a customer joins your loyalty program, the chance of them purchasing for a second time is 47% higher than if they don’t join your loyalty program.
So there you have it – a quick glimpse into the impact that COVID-19 has had on customer loyalty to date.
TLDR? Firstly, your loyal customers remain your most reliable source of income and should be the focus of your marketing. Secondly they are still willing to act as advocates and could be a key acquisition channel for you. And finally, stores must prioritise converting guests into members in order to build good relationships, quickly.
Do you have questions on your own loyalty data or how to adapt your existing retention strategy? We’re here to help – just book a time to chat with one of our team. Or check out how other stores are using loyalty programs to respond positively to the pandemic.
In order to provide the most useful observation of the ongoing impact of Covid-19 on customer behaviors, this dataset features the same cohort of 634 stores being tracked across a timeframe of six weeks which began on February 24th (week 0). This is a trend analysis comparing each week of March with the final week of February rather than a year-on-year comparison, using means with 5% of outliers excluded for each metric. All data has been converted to USD, using the March 1st 2020 exchange rate.
This article originally appeared in the LoyaltyLion blog and has been published here with permission.