No matter what industry you do business in, everyone knows that without customers, your business won’t last. As a result, developing customer loyalty and retention strategies is critical for the health and wealth of a company — so much so that over a quarter (28.2%) of marketing budgets went to loyalty program management and CRM in 2022 globally.
To help you perfect your customer retention strategy, you’re going to need customer retention software. The trouble here is: where do you start? Some customer retention tools and strategies that work for one ecommerce store can be less suitable for others. Why? It depends on which stage of growth your store is in.
Writing for Forbes, bestselling author of “Cracking the Data Code” Mike Bugembe, explains how ecommerce businesses (of those that make it past their initial launch) have three stages of growth:
- Stage 1: Start-up growth
- Stage 2: Stagnant growth
- Stage 3: Scale-up growth
For each of these growth stages, customer retention systems and tools will look different. So in this guide, with the help of a few contributing experts, we’ll cover what customer loyalty and retention tools and strategies are best suited for each stage of growth, to help you narrow down your search for potential solutions for your ecommerce business.
Stage 1: Start-up growth
While it’s a hard job to give an exact number, it’s safe to say that most new ecommerce businesses don’t make it past the launch stage to enter the “Start-up growth” stage. For those that do, it’s crucial to capitalize on this exciting (albeit stressful) opportunity.
You know you’ve entered this stage when you validate your product or concept by having real customers coming in with growth starting to accelerate. With start-up growth, ecommerce stores need to focus on turning those new buyers into loyal customers—to help you do just that, use the following tips and tools.
Start a loyalty program if you haven’t already
It’s a good idea to start implementing a customer loyalty program and strategy as soon as possible. Having an established loyalty program in place helps increase trust, customer satisfaction, and commitment right away.
Kevin Wang, an interior designer, and Co-Owner of Inyouths (a designer LED Mirror store), echoed this position, saying:
“For newer stores starting to see startup growth, it is important to focus on building relationships with your customers. When customers feel like they know and trust you, they are more likely to be loyal long-term.
To accomplish this, reward customers for their loyalty with unique promo codes, discounts, or other rewards that can be redeemed for future purchases.”
By promoting your loyalty program, you also have a way of incentivizing account creation and generating some zero-party data for your business. For customers who don’t create accounts right away, you can send notifications or welcome emails to help bring them back.
Get active on social media
If you don’t have a background in social media marketing, it can seem a little overwhelming to build your brand online—but it’s crucial you try. A recent survey from Klarna (Q4, 2022) found in the U.S., 40% of shoppers purchased a product after seeing it on social media.
When you start building up your online presence on social media platforms, you can take advantage of UGC (User Generated Content) and incentivize a ton of positive actions to keep up engagement and keep your brand top of mind.
On this front, when we spoke to Cesar Cruz, Co-Founder of Sebastian Cruz Couture (a DTC luxury menswear store), he said:
“Keep your eCommerce store top of mind for customers by maximizing touchpoints. For example, consistently posting on social media and showing up in their feed will remind your audience about your brand.
If you continue to get in front of your customer, they will likely continue their loyalty to your brand.”
As a bonus, you can use your loyalty program to help build a social media presence (and vice versa). A store that does this really well is Ana Luisa—which offers its customers’ loyalty points for various social media engagements:
Another area that will help you with branding on social media is influencer marketing—and you don’t need to pay millions for it. Average nano (1k–5k followers) and micro (5k–20k followers) influencers charge between $10–$110 per sponsored post on Instagram and between $4–$50 on TikTok.
Using the Gatsby integration with LoyaltyLion can even help turn your loyal customers into nano/micro-influencers by rewarding them for creating authentic content and mentioning your brand.
Using these tips and tools to engage as much as possible on social media will help create as much noise and buzz for your brand as possible, generating more customers for your store as you move through the start-up growth stage.
Stage 2: Stagnant growth
The second stage of growth for ecommerce stores is a tricky one. The initial buzz starts to slow down, which is always deflating. You might even have inspired other stores to follow in your footsteps or prompted existing stores to invest more in outperforming you to win their customers back.
At this stage, ecommerce owners might start to panic and look for quick fixes, gambling on ad-hoc strategies and looking for levers to pull hoping to get out of the growth plateau. But it’s essential to keep a cool head and think about long-term strategic decisions.
When you hit this stage, consider some of the following long-term strategies to help move your business forward.
Bolt on a referral program to your loyalty program efforts
If your existing loyalty program doesn’t have any referral bonus incentives, now would be a good time to launch one. Referral programs are a great way of keeping acquisition costs down and increasing customer lifetime value (CLV).
For example, Mukti Organics runs a referral program that gives referred customers $25 off their first order, while the referrer also gets $25 worth of points when the new customer places an order. A real win-win for everyone!
Using a referral program like this, as well as using a points-based loyalty system (as opposed to direct discounts), will also help keep your profit margins higher in this slower growth stage. These value-based strategies also do some bonus work by creating emotional connections with your customers which helps you stand out from the competition.
Consider a subscription-based model
Another long-term strategy you can consider is creating a subscription model for your products, but only if it makes sense to do so. For example, skincare or other health and wellness products are great for subscriptions since customers run out of the product after using it.
An example of a brand using this strategy particularly well is Vitabiotics, a vitamin supplement brand. Vitabiotics offers subscribing customers a 20% discount, fifth order free, loyalty points, and free delivery.
Another type of subscription you can consider is a “club membership” using a tool like Recharge. Creating a subscribed “club” tier helps you offer your VIP customers better rewards, and your brand gets to build up monthly recurring revenue (MRR).
Review your tech stack
At this stage, it may also be worth taking stock of what’s in your tech stack. Do you use a premium-tier email marketing provider? Does your store use the Shopify platform? What about SMS marketing?
If so, a good way to help your business move forward is to consolidate your workflows so you spend less time on the menial work and more time on developing strategies to propel your business to the scale-up stage.
Stage 3: Scale-up growth
If you’ve survived the stagnant growth stage and implemented sustainable, long-term strategies, chances are you’re starting to see a renewed spark of growth. You might have also made some major changes in your business, such as re-prioritization, re-platforming, a change in business goals, or important hires and restructures to get here.
The key to helping your business thrive in this stage is keeping a more coherent and cohesive approach to your technology, utilizing data as much as possible to gain the best customer insights for experimentation and testing.
So what are some of the strategies you can use to help you scale up after stagnation?
Explore new automation use cases
If your store uses the Shopify Plus platform, for example, you can use Shopify Scripts/Flow in more advanced ways. An example of a store using advanced automation is Free Fly, which uses Scripts to automatically give free shipping depending on the loyalty tier the customer is in:
Another example of automation you can use is chatbot-based customer service to help your customers 24/7 anywhere in the world. Co-founder and CEO of CureSkin, Guna Kakulapati, advises going down this road, also explaining the added benefit of increased data:
“When the business can scale up, invest in a robust customer service infrastructure, using chatbots or dedicated support staff to ensure customers receive immediate, practical assistance. The data you collect and analyze will drive profits from its valuable insights into customer behavior and preferences.”
Explore more advanced and personalized customer experiences
Guna’s tip on using data gathered from automated tools leads nicely into this tip to explore advanced/personalized customer experiences. Some areas you can explore improvements in the customer experience include:
- The checkout process. Make it more seamless and/or personalized, like the Free Fly example above, and look for opportunities to improve conversion rate optimization (CRO)
- Customer support. Review your tech stack to see if you can better utilize your loyalty data in other parts of your business, like customer support, to help drive more ROI
Using the data you collect from your loyalty program (i.e. subscriptions, purchase history, etc) in combination with other data such as customer support history, can help you deliver unique, personalized experiences.
Consider building a brand community
The scale-up stage isn’t linear, and doesn’t last forever. At some point, your business will revert back to a period of stagnation, until another period of growth. So one strategy you can use to help you move through future stagnation periods is to build a brand community.
Brand communities have been around for decades and have a ton of academic literature supporting their positive effects on brand engagement and longevity.
Sometimes brand communities happen naturally, as a result of customers engaging with each other—but other times you also help to manufacture a community by providing the space for it, e.g. an online forum, YouTube channel, Discord server, etc.
One brand that uses this method exceptionally well is Beardbrand. With its original YouTube channel garnering almost two million subscribers, the brand created a secondary channel dedicated specifically to its brand community—Beardbrand Alliance, which has over 200k subscribers at the time of writing.
Using these methods will help your business develop and grow during the scale-up stage, and help push you through future stagnation phases.
Level up your customer loyalty strategy with LoyaltyLion
No matter what stage your ecommerce business is in, learning to level up your customer retention system with loyalty programs and supporting tools (with integrations) is a key factor in helping to grow your business in the long run.
However, some loyalty strategies work best at different stages of ecommerce growth:
- Start-up growth: creating a loyalty program, and getting active on social media
- Stagnant growth: referral programs, subscription-based models, and tech stack reviews
- Scale-up growth: exploring new automation, providing more advanced/personalized customer experiences, and building a brand community
Using a holistic customer retention tool like LoyaltyLion, you can utilize the strategies that best fit what stage your business is in, and as your business levels up, LoyaltyLion can evolve with you.
To learn how LoyaltyLion can help your ecommerce brand with customer retention, book a demo with us today.