Brand Loyalty Strategies: How to Create a Stellar Loyalty Program
Editor’s Note: This article about brand loyalty is a guest contribution from Mollie Woolnough-Rai, a senior content marketing executive at LoyaltyLion.
In 2020, ecommerce saw the equivalent of ten years’ growth in three months. Trends that were already well underway accelerated and consumer habits intensified as more people went online to shop. For European retailers, Brexit loomed large, making an already tumultuous time more daunting.
In moments of disruption, as well as normality, focusing on building brand loyalty will mean you retain the customers who matter most. When we spoke to shoppers last year, 68 percent said they preferred to return to the comfort of brands they already knew.
These returning shoppers work wonders for your business. It costs five times less to retain one existing shopper than it does to acquire a new customer, meaning these customers save you time and money to nurture.
Want to increase brand loyalty in your customer base? Keep reading to learn:
- What brand loyalty is and why it’s important for ecommerce businesses
- What a brand loyalty program is
- 3 tips to build a brand loyalty program for your business
What’s brand loyalty and why is it important for ecommerce brands?
Put simply, brand loyalty is when your customer feels connected to your brand, leading them to choose your products over others.
Loyal customers make that choice not because your products are the only or cheapest option, but because they’re emotionally connected to your brand. In fact, 82 percent of consumers with high emotional engagement say they always buy from brands they feel loyal to.
The business benefit of brand loyalty is outstanding. Once you establish a truly loyal relationship between your customers and your brand, consumers will turn to your brand instead of your competitors. Their repeat purchase rate will increase and they’ll spend a larger sum of money with you over time.
This behavior increases a customer’s lifetime value (CLV)—the estimated total they’ll spend over their entire relationship with your brand. The higher the CLV, the greater return on investment you get on how much it cost to acquire that customer.
Too often, ecommerce retailers get stuck in a hole of costly acquisition tactics (such as paid advertising) that don’t lead to loyal customers. The short-term satisfaction of quick sales is attractive but won’t contribute to your long-term business growth if you fail to nurture the new customers you acquire.
Nurturing loyalty in the people who have already made a purchase from your brand creates a long-term, stable customer base. So how do you get there?
How a loyalty program works
A loyalty program enables you to develop lasting relationships with your customers—while increasing your repeat purchase rate. With a dedicated loyalty program and strategy, you can give your shoppers a top-quality customer experience.
There are two key components to a successful loyalty program.
First, you can award shoppers loyalty points for making purchases or completing activities on your site. Activities could include: following you on social media, leaving a review, making an account, or signing up for your newsletter.
Second, make sure customers can spend these points on rewards at your store. There are a variety of reward options, like a percentage off discount, a free product, or, even, a contribution to a charity.
A loyalty program also acts as a cost-effective acquisition tool. You can reward program members for referring friends and family to your store. Referred customers are 18 percent more loyal than customers acquired in other ways as they’ve been recommended to you by someone they know and trust.
3 tips to build a loyalty program for your business
So how do you build an effective loyalty program that boosts brand affinity and your bottom line? Follow these three tips to design an effective program.
1. Encourage frequent purchases
Customers who have only purchased once or twice are usually the people who need the most encouragement to come back to your store.
Back in 2015, RJ Metrics reported that 53 percent of customers who make a second purchase return to make a third. This number jumps to 64 percent between the third and fourth purchase.
To motivate more shoppers to make that precious second or third purchase, give them incentives and reminders to return to your brand more often.
Email is a great way to deliver these reminders. In fact, 80 percent of marketers use email as their primary retention channel.
To nudge one- or two-time buyers to purchase again, send personalized loyalty emails that remind customers of their available points and rewards. This will encourage people to return to your site more often to use their points or to complete activities (like leaving a review or referring a friend) to earn more.
Tower London, the premier footwear retailer, sends monthly reminders to their loyalty program members. These emails highlight the shopper’s points balance and the tier they’re in to keep the loyalty program top of mind, while also including CTAs to shop and continue building their loyalty points.
Waterdrop takes this approach a step further by giving customers ideas on what to do with their rewards points.
In their monthly point update emails, Waterdrop shows shoppers what they can get with their points, like limited edition water bottles and cups.
If the customer doesn’t have enough points to get the reward item they want, the inclusion of pending points can inspire them to make another purchase to get closer to the necessary number of points.
2. Create exclusivity for your VIP customers
Seventy-nine percent of customers are loyal to brands if they can unlock premier benefits—exactly the reason why exclusivity is an ideal differentiator to make customers feel important and valued by your brand.
Using their loyalty program, Lucy & Yak gives members access to a private Facebook group. Here, they run member-only “yard sales” where they sell defective stock at a discount.
The exclusive perk makes their existing customers feel like VIPs. Meanwhile, new shoppers are motivated to become members of the program to access the perk.
If you create tiers within your loyalty program, you can also reserve top-shelf rewards for members who have a higher CLV.
Supernatural gives members in their “Ethereal” tier access to exclusive promotions and surprise rewards. Customers will want to return to your ecommerce store more often and spend more so they can reach the more exclusive perks on the horizon.
3. Connect emotionally with your customers
Sixty-six percent of customers say they join a loyalty program to create ongoing relationships with the brands they like. To connect with shoppers on a personal level, show that you’re aligned with their values.
The clothing brand Zorali uses their loyalty program to contribute to their mission to give back to the planet.
When shoppers create an account, purchase from the brand, follow them on social, or refer a friend they earn points that relate to actual trees the brand plants. If a shopper earns 10 points for a purchase, Zorali plants 10 trees on the shopper’s behalf.
By connecting with customers through mutual values, customers will connect more personally to your brand. You’ll be able to communicate with them in an honest and frank way—even if you have not got great news, like if something’s gone awry with their order.
You can even connect your loyalty program to your help desk provider, so if customers have an issue, you can add loyalty points to their account to apologize for any inconvenience.
These emotionally-connected shoppers typically spend more over time because they’ll prefer to return to shop with you over other, less thoughtful brands that didn’t solve their queries in a sincere way.
Drive business growth with brand loyalty
The changes ecommerce will continue to see in the coming year are difficult to predict.
What’s for certain, though, is that your existing customers will always be important. In times of uncertainty and routine, building a relationship with your customers will help bring them back to your store and contribute to your revenue growth.
Follow the tactics I’ve outlined above to connect with and retain more of your dedicated customers—and see growth while you’re at it.
Loyalty is just one stage of the customer journey. Learn how your brand can make an impact through the entire customer lifecycle.
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