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3 Tips To Earn Customer Loyalty

Cracking the Customer Loyalty Code

The latest statistics about customer loyalty show that as much as 97% of consumers are loyal to at least one brand. Food (62%), fashion (57%), and personal electronics (44%) are three areas where clients tend to show more loyalty than others. Reducing your customer churn rate by just 5% can boost profitability by 25% to 95%. That is because acquiring a new customer can cost five times more than retaining an existing customer. As consumers, we all have favorite brands that have earned our loyalty and business for life by investing in marketing, customer service, and/or offering a unique value proposition. You may find it impossible to imagine shopping without Amazon Prime, driving anything but an Audi, or using any mobile device besides Apple. But how do you earn this level of customer loyalty as a small business? Let’s break down customer loyalty into manageable steps. 

How to Measure Customer Loyalty

Customer loyalty is an ongoing positive relationship between a customer and a business. Customer loyalty drives repeat purchases and prompts existing customers to choose your company over a competitor offering similar products or benefits. So, how do you know if your customers are loyal? Besides seeing their name on repeat orders or noticing increased likes and comments on your social media posts, how do you measure loyalty?

While every brand has unique measurement needs and goals, there are standard customer-centric KPIs for customer loyalty. The metrics below will help you identify how loyal your customers are, and which customer segments offer the best return on investment (ROI).

Customer lifetime value (CLV) is the total worth to a business of a customer over the whole period of their relationship. Knowing the CLV helps businesses develop strategies to acquire new customers and retain existing ones while maintaining profit margins.

Repurchase rate (also known as repeat purchase rate) is the percentage of customers who have purchased more than once in a time period. If your e-commerce business runs on Shopify, you may be familiar with the repeat purchase rate visualization in your Shopify analytics dashboard (called “returning customer rate” in there).

Upsell ratio This is the ratio of customers that have bought multiple types of products, compared to customers who have bought only one.

Whichever metric you choose to measure customer loyalty in your business, let’s take a look at ways to encourage customer loyalty and improve each of these performance indicators.

How Do You Encourage Customer Loyalty?

1. Meet your customers where they are

Brand perception and customer service go hand in hand. Multiple positive encounters with empathetic, knowledgeable, efficient agents build a solid foundation for customer loyalty. Today’s customers appreciate having multiple options to contact brands, from live chats to phone and email. Mobile messaging is growing in popularity as a customer service channel. Even social media is a customer service channel, with a study from Statista showing that 47% of respondents have a more favorable view of brands that provide customer support responses over social media. Take an audit of the channels where you currently offer support and how satisfied your customers are with the service they are receiving. If you notice that one of the channels is providing a subpar experience, focus on improving that channel before you add any additional channels. No need to jump into SMS customer service if your agents are not able to respond to email requests quickly enough. Additionally, note how each of your team members performs within various customer service channels, and consider matching each channel with the employees(s) best suited to that particular method of communication. Some people are fantastic on the phone, while others are clever and quick on social media. Whatever channel(s) you choose for customer support, measuring service quality allows you to spot areas for improvement, assess and compare the performance of team members, set clear targets to aim for, and, most importantly, improve customer satisfaction.

2. Offer a subscription experience

A subscription experience is one of the best ways to increase customer loyalty in eCommerce. Subscription business models are based on the idea of selling a product or service to receive monthly or yearly recurring subscription revenue. They focus on customer retention over customer acquisition. Today’s consumers crave convenience and cost savings, which happen to be the two primary benefits of a subscription. The very nature of a subscription encourages customer loyalty and automatically increases the Repurchase Rate. Subscriptions also make customers’ lives easier, particularly when it comes to a product that is regularly consumed and needs to be refilled. At ShipWizard, we find that vitamin and supplements subscriptions are a convenient way to help consumers get into the habit of taking supplements every day. From makeup and supplements to clothing and flowers, subscriptions are a smart way to build customer loyalty as well as recurring revenue. 

3. Simplify Returns

With 89% of shoppers checking the return policy before making a purchase, it’s clear that an effortless return experience is a top priority. Another important statistic is that 87% of consumers are unlikely to buy again from a brand after a poor return experience. Your returns management process has a tremendous impact on your customer loyalty. According to a global survey from Narvar, the three top complaints around online returns were related to needing to pay for return shipping, lack of communication regarding return status and not knowing when they will get their refund.

While returns will always be an inherent part of retail, the right returns process and strategy can turn them to your advantage. Did you know that often the customers who return the most are also your highest-value and most loyal customers? It is worth making the returns process less painful. Fortunately, you don’t have to go it alone – reverse logistics specialists such as ShipWizard can take care of the details for you. 

At ShipWizard, our returns management services include receiving your returns, aggregating merchandise to send back to your warehouse, integrating our systems with yours, and managing your inventory for faster sale. If your business is based outside the U.S., you can think of us as your U.S.-based address for client returns without the additional expense of international shipping returns. When it comes to returns management and supply chain efficiency, ShipWizard’s Smart Returns is the top choice for companies looking for a smarter—and better—returns process.

Contact us today to learn how our reverse logistics expertise can help turn your customers into loyal fans. 

November 16, 2022
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