Customer loyalty is a win/win scenario: it links shoppers with the retailers they love, while businesses enjoy the increased spend and advocacy of those loyal customers.
In the latest edition of our Inside Australian Online Shopping Report, we share insights from behind the scenes of industry leading loyalty strategies to illustrate how effective loyalty can be for businesses.
Loyalty programs: a key element of building customer loyalty
When considering why it’s important to have a loyalty program, the numbers speak for themselves: 63% of customers expect businesses to have a loyalty program, while just 32% of businesses currently have such an offering . This gap is an opportunity to explore how a loyalty program could give your business a competitive edge – especially in a crowded and competitive eCommerce market, where customer acquisition is getting harder than ever.
Loyalty programs don’t come in a one-size-fits-all method. Some brands use a tiered loyalty program in which customers enjoy increased benefits as their spend grows. With the benefits increasing at each level, this can become an aspirational model to regular shoppers.
Other brands find success with loyalty programs that are focused on accumulating points that can be redeemed for products or rewards, members-only prices or discounts, or offering the same benefits to all subscribers or members regardless of the amount spent. Notably, three-quarters of shoppers say their favourite loyalty reward is free shipping .
A loyalty program that meets your customers’ needs has the potential to increase shoppers’ engagement with your business: 80% of SMEs with loyalty programs say customers spend more when they’re part of a loyalty program1. And the customers are waiting: the pandemic years have contributed to the growth in shoppers’ uptake of loyalty programs, with one in three saying they use loyalty programs more often now2.
Customer loyalty strategies are more than programs
A loyalty program is a great element to a customer loyalty strategy – but it’s not the entire strategy. The businesses that are most successful at building customer loyalty create more than a program; they activate end-to-end strategies that consider how loyalty can be created through every interaction a customer has with the business.
Customers agree with this approach: research indicates that a loyalty program is just one of the things they’re expecting from a retailer in order to continue purchasing from them. They also place high value on quality products, great service, value for money and fast order fulfilment and delivery2.
How business-customer relationships can enhance loyalty
On the surface, loyalty is about a customer returning to your business. Dig a little deeper, though, and you’ll find the foundation of loyalty is a relationship between you and the customer. It’s this positive relationship that can encourage a customer to commit to shopping with you instead of with competitors.
Establishing a relationship with your customers can enhance their loyalty in two ways: giving them an opportunity for transactions they value (because it may be contributing to their points balance or membership level), as well as creating an emotional connection.
The latter is important, because customers no longer consider loyalty a purely transactional concept. They want to feel a connection to be loyal to the brand itself instead of simply drawn to a price point3.
There are a few ways in which you can create a connection with your customers that inspires emotional loyalty:
- Build a community. Some brands build an online community via social media to enhance their customer loyalty strategy. This can provide loyal customers a space to interact with others with similar interests, creating their own community, as well as providing insights to the business.
- Create engaging content. Content creation and storytelling, the blending of both commerce and content to educate and engage with customers, is becoming more important than ever. It provides a more intimate and personalised online shopping experience for the customer and helps to establish trust in your brand.