Retention

Five Things That Drive Loyalty When Consumer Confidence Dips

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When consumer confidence dips, ecommerce retailers can take two different approaches to keep the cash register ringing: 

  • Keep investing in acquisition tactics – even though effectiveness may be called into question
  • Or, double down and focus on retaining the customers you already have

It’s never been more important to cherish what’s yours already: an active customer base, a brand community and a list of contacts who want to hear from you. 

This is partly because even in a time of uncertainty, your existing customers are more confident to complete a purchase with your brand thanks to the emotional connection they have already established. It’s also partly because once consumer confidence returns to normal, the relationships you’ve formed and the loyalty you’ve secured will help you drive more growth in the long term. 

To help you understand what fuels customer loyalty today, we asked thousands of shoppers what made them return to a brand to shop time and time again. From this research, we identified five key drivers: 

  1. Trust in the brand
  2. A feeling of aspiration and exclusivity
  3. Personalized interactions 
  4. Knowing that your emotionally and socially aligned with brands
  5. And, an enjoyable user experience

In this post, we’re going to digest the results of the research and share ways you can adapt your focus to retention with them in mind.

Factor #1: Trust

Unlike brick-and-mortar, ecommerce relies solely on trust being created and maintained digitally. According to Edelman, 81% of shoppers say that trust is an important factor in their purchasing decisions. Yet, only one-third said they trust the brands they buy from. 

Trust also has an important part to play when securing customer loyalty. 80% of consumers say that feeling they can trust a brand to use their data helpfully is important when choosing who to shop with again.

To establish trust online, loyalty data can help. Use it in the right way and you’ll be able to create experiences that feel far more relevant to your customers and add significant value to your marketing. 

There are three segments you can identify using your loyalty insights: loyal customers, at-risk shoppers and those who have churned altogether.

To deepen trust between you and your customers, you need to show you’re using data to drive value. Do this by creating unique campaigns for each segment. 

For example, underwear brand, Lively, uses different loyalty tactics for customers in different segments. This means they can improve their email strategy, serve up more relevant content and deliver unique one-to-one experiences.

For their loyal customers, they send emails that encourage referrals. A clever tactic, considering that 76% of consumers say for them to be loyal to a brand, they need to trust that if they recommended it to a friend they would have a good experience

These shoppers already know and love the brand. Encouraging them to act as advocates demonstrates to new customers that they are worth trusting – helping make a purchasing decision quicker. At the same time, the referee feels involved with the brand as they have helped grow their customer base. 

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For their at-risk and churned customers, Lively uses two recovery tactics: points balance reminders and surprise-and-delight campaigns.

They send these customers personalized point update emails that include what they could be spending their acquired points on. These remind customers that the loyalty program exists and shopping with them provides value.

 

Factor #2: Exclusivity and aspiration

Our research showed that customer loyalty is also motivated by the feeling of aspiration and exclusivity: 

  • 74% say that they would be loyal if they felt they were working towards a goal
  • 79% said they would be loyal if they could unlock exclusive benefits

Modern shoppers are goal orientated and want to feel valued. Research shows that emotionally connected customers spend twice as much as customers who are merely satisfied with a brand.

Giving motivators to keep returning and spending will keep shoppers returning to you as they’ll be looking for an experience they can’t get elsewhere. Aspirational rewards – such as exclusive promotions and experiences – show that you care about your loyal customers.

To create an exclusive and aspirational shopping experience, harness loyalty tiers.

100% Pure’s tiers give their customers something to aspire to. Each tier has its own exclusive rewards. These perks get more desirable the higher the tier. At the highest level, “Pure Revolutionist”, customers get experiential rewards including; priority customer experience, early access to new products and upgraded shipping. 

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Factor #3: Personalization

The move to ecommerce has some worried that the personal touch will be left behind. However, it’s clear that tailor-made experiences are still important to consumers: 

  • 78% say they would be loyal to a store if they were individually rewarded and recognized for their loyalty
  • 65% say they want personalized offers
  • 61% want personalized product recommendations

In today’s competitive ecommerce landscape, it’s the brands that make their customers feel individually recognized that succeed. This is because customers are bored with a one-size-fits-all approach and scatter-shot marketing.

To show your shoppers you know them, use loyalty emails. The open rate of loyalty emails are almost three times higher than other ecommerce emails. What’s more, the click rate of these emails is almost ten times better. This is because the content inside is unique to each customer.

To personalize their loyalty emails, Beauty Bakerie sends monthly loyalty emails that display the customer’s unique points balance and rewards available. This makes the customer feel special as the email included their unique loyalty data – rather than promotional messaging.

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Personalized loyalty emails are also a great way to upsell and cross-sell to your customers. Farmacy Beauty uses their point summary emails to do this. At the top of their loyalty email, Farmacy Beauty, shows the customer’s point balance. Underneath this they show the products the customer could be using their points on to get money off. 

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Factor #4: Identity-led loyalty

Ethical consumption is on the rise. As a result, self-identity has become an important factor when choosing where and what to spend money on.

  • 68% of consumers return and shop from brands that share their value
  • 66% of shoppers would become a member of a store if they knew their purchases would have a positive social impact
  • 71% of 16-24-year-olds feel strongly about corporate social responsibility

As well as being mindful with their purchases, consumers also want to feel part of an active and engaged community: 47% of customers said they would be loyal to a brand if they could become a part of a like-minded group.

To show your shoppers what you stand for and the social or environmental causes you back, you need to spend time and attention communicating them in the right way.  

Use your welcome emails to communicate to your newly acquired customers how you’re similar to them, painting you in a positive light from the outset. Annmarie Skin Care uses its emails to tell shoppers about their focus on the environment  and their wild-crafted products. 

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Once you’ve established shared beliefs with your customers, you can keep building the relationship. Over time, they will become invested in you and will act as patrons of your brand, recommending others to you who are cut from the same cloth. 

To build up their brand community, Annmarie welcomes their loyalty program members into an exclusive Facebook group. This is a private space where the brand promotes give-aways and a social space where kindred spirits share beauty secrets. Thanks to this community-building initiative, Annmarie’s members now spend 140% more than their non-members. 

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Factor #5: Customer experience

To get customers to sign up to your store and re-engage often you need to make sure there is no UX friction: 

  • 77% of consumers say that the benefits of a loyalty program would need to be clearly communicated for them to join it
  • 78% say that there would need to be an easy sign up process for them to opt in

When it comes to ecommerce, customers are motivated by a process that’s easy to navigate and understand. This is because shoppers have little patience. Plus, if you serve up an experience that’s engaging, you could draw them back over an extended period: 63% of US customers said they enjoy shopping with brands that exceed expectations across the customer journey.

To create an engaging and enjoyable user experience on your ecommerce site. Try embedding loyalty components across the customer journey. Never Fully Dressed, a UK-based fashion brand, does this and gives shoppers multiple opportunities to engage with its program across touchpoints. 

When a new customer lands on the site, they display a pop-up that shows the points they’ll get for becoming a member. This incentivises customers to sign-up. 

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They also advertise the program in the footer and in the site’s main navigation menu. This makes it easy for shoppers to navigate to the program and find out what it’s all about.

To make the on-site loyalty experience engaging, Never Fully Dressed also have an integrated loyalty page. Here customers can complete actions to earn points (sharing their birthday or a social follow) without leaving the page. This creates a destination for shoppers to return and engage with the brand long after their first purchase. 

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Key takeaways

Now is the time to focus on the customers you already have a relationship with. They’re the ones who will drive your bottom line longer-term, and increase revenue by telling others about you. 

If you want to learn more about the findings of our research, download your copy of the “Loyalty: Up close and personal” report. 

 

About LoyaltyLion

LoyaltyLion is a data-driven loyalty and engagement platform that powers ecommerce growth. A loyalty program is about more than points and rewards. It is about unlocking real insights to increase customer lifetime value. With LoyaltyLion, you can build a better understanding of what drives longer-lasting customer relationships, and use those insights to connect and accelerate your existing marketing efforts. Proven to increase retention and spend, LoyaltyLion is trusted by thousands of fast-growth ecommerce merchants worldwide.