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Advice

Building customer loyalty

Imagine a world in which every customer is a repeat customer, strategies focused on acquiring new customers would be a thing of the past. It sounds like a dream, but could this become a reality?

We understand the value of something already acquired – after all; a bird in the hand is worth two in the bush. Why then does the retail industry focus so disproportionately on customer acquisition?

Why focus so strongly on customer acquisition?

The cost of customer acquisition is at least five times more than retaining an existing one. Even with marketing investment the probability of converting a new prospect is only five to 20%.

While focusing on acquisition may show rapid results, existing customers are willing to pay more for a good experience. A retention-led strategy is more profitable, and we need to shift our collective mindset from acquisition towards retention.

The value of loyalty

Whilst ‘loyalty’ may conjure images of points and discount cards, the reality is that these strategies no longer capture the hearts of customers. A brand-loyal customer not only buys into a brands products or services, they also buy into its vision, mission and values. Consumers will value that brand experience as much as its products.

Moments make an experience

To develop loyal customer relationships, brands and retailers need to focus on what happens after their customers have made a purchase. This means offering convenient, thoughtful and personal moments beyond the buy button. These post-purchase moments make customers feel valued and keeps them coming back.

So how can you create moments after the buy button which generate greater loyalty?

1. Be specific and personal at the point of purchase

On the product description page (PDP) and at checkout, the customer should be provided with clear information on the estimated date and delivery time, which will give them confidence to click ‘buy’. Providing accurate estimated delivery dates also encourages 58% of customers to shop again

2. It’s good to talk

Customers who feel ‘ghosted’ are four times less likely to buy with that brand or retailer again. It’s essential that brands and retailers communicate proactively around issues like delivery and returns. Communicating proactively shows that brands and retailers think of an online customer as a person not a number. Proactive communication with customers can reduce costly and damaging, “where is my order?” calls, and can be used to up-sell and cross-sell, as customers are at their most engaged when tracking their order.

The communication channel matters too. Millennials are 20% less likely to contact a retailer via email and are five times more likely to use live chat on a website than baby boomers.

3. Provide branded experiences from start to finish

Why hand off post-purchase communications to a third party, such as a delivery provider? Brands and retailers must take back ownership of every post-purchase interaction with customers. This gives them the opportunity to drive customers towards dedicated, fully-branded tracking portals that provide value-add content and personalised recommendations.

The same applies for returns and exchanges, customers who experience branded experiences are more likely to become advocates. In fact, a great returns experience is proven to drive loyalty: 95% who are satisfied with a returns process said they’ll purchase with the retailer again.

Competition in retail is fierce and the battle for market share is not an easy fight. The value of having loyal customers who truly believe in your brand is clear. Customer retention is not just a tactic: it really matters. Increasing customer retention rates by 5% can increase profits by between 25 and 95%. In this environment, post-purchase experiences are rapidly becoming a new battlefront upon which retail profits hang.


By Amit Sharma, CEO of Narvar, a platform designed from the ground up to drive long-term customer loyalty.

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