How to Establish Brand Loyalty During the Holidays

Ron Dodby Ron Dod

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The Pareto Principle (which is often referred to as the 80/20 rule) dictates that in business, 80 percent of a brand’s revenue will be driven by 20 percent of its customers. This idea means that cultivating loyal customers who purchase from a company frequently is paramount to success.

At the same time, however, an increasing number of consumers refuse to be loyal to a single brand. Frankly, why should they be loyal? In today’s digital eCommerce ecosystem, consumers have access to a vast array of competitors, prices, perks and other persuasive factors for every purchase they make.

However, brand loyalty does still exist. It’s just changing.

A recent study from Accenture Strategy revealed a variety of factors that keep customers loyal in online retail environments. Accenture surveyed over 25,000 individuals to assess their perspectives on brand loyalty and how they have recently interacted with brands. As the study uncovered, 54 percent of American consumers switched companies within the past year.

Current Customers spend more and cost less

While this certainly doesn’t bode well for brands, it is vital to breed devotion as loyal customers are highly profitable. Not only is acquiring a new customer 5-25 times more expensive than retaining an existing one, but current customers spend 67 percent more than new customers.

Given these sobering statistics, eCommerce brands must establish effective strategies for nurturing buyers into brand loyalists.

During high spending times like the holidays, eCommerce merchants are exposed to an array of new shoppers, making this the perfect time to craft experiences that boost brand loyalty.

Ready to obtain a mob of diehard patrons? Check out these four strategies for encouraging brand loyalty.

Implement a Rewards System

Rewarding customers for shopping with a company is the cornerstone of brand loyalty.

The aforementioned Accenture study showed that 59 percent of consumers feel loyalty towards brands that present them with special offers and rewards. Nielsen surveys have revealed that a staggering 84 percent of consumers worldwide are inclined to shop with businesses that offer loyalty programs. Additionally, a full 68 percent of millennials have expressed that rewards programs are a necessity for loyalty to exist.

customer loyaltyLoyalty programs need not be elaborate, either. Building a successful loyalty program can be as simple as a one to one points system which provides customers with rewards (discounts, freebies, etc.) at specific intervals.

Many companies overthink these programs and institute convoluted and confusing systems that only serve to frustrate shoppers.

Keep things as simple as possible to incentivize consumers to purchase more and earn more rewards. Used book site Thriftbooks is a prime example of a loyalty program done well.. For every dollar a customer spends, they earn eight points. Every 500 points win shoppers a free book. Simple as that.

Other merchants such as Sephora opt to go even more straightforward, giving shoppers one point for each dollar spent.

Of course, many eCommerce companies (including Thriftbooks and Sephora) offer tiers to their loyalty programs, which continues to incentivize even the best customers by scaling the program up according to how much a customer spends. While this is a fantastic idea, merchants can start at the base level to get started and build from there.

Provide Outstanding Customer Service

To effectively cultivate brand loyalty, businesses must understand where they are losing customers to their competitors and uncover why so few consumers become loyal shoppers.

In far too many cases, the answer is bad customer service.

Bad customer service quote

According to Consumers Reports surveys, nearly 91 percent of consumers will refuse to patron a brand for a second time if their first encounter is unsatisfactory. Moreover, the studies found that a full two in three customers have walked out of a store as a result of poor customer service.

While many businesses today may not act as if the customer is always right, this is undoubtedly a perception that shoppers still hold. For that reason, eCommerce retailers should go out of their way to ensure that their customer service is not only remarkable but superior to any other company’s assistance.

When it comes to social media, consumers have come to view this as a viable and expedient contact channel. Moreover, users anticipate rapid responses. When reaching out to a business on Twitter, 53 percent of shoppers expect a reply within an hour. If the issue they are reaching out over is problematic, that figure skyrockets to 72 percent.

When stacking the numbers up against the reality of the situation, the results are dismal. The average amount of time it takes a brand to respond to consumers via social media is 10 hours. Four hours is the maximum that a buyer will wait before moving on to a competitor. Not exactly a great strategy for inspiring loyalty.

However, social media is not the only contact channel shoppers prefer.

A study by Google revealed that 61 percent of mobile users contact a business via phone when preparing to make a purchase. People call because they are often looking for quick answers or they want to talk to another person. If a customer receives poor service over the phone, they are incredibly likely to abandon the brand and vent about it on social media.

Providing incredible customer service is the exact behavior that has earned brands like Zappos a cult-like following. The shoe retailer holds customer service at the core of its ethos. Not only is this principle baked into the brand’s core values, but the brand’s CEO even goes so far as to claim that Zappos is a “service company that happens to sell shoes.”

This is the mindset that businesses must take to cultivate a loyal following. Live and breathe customer service. Without customers, the brand can’t exist.

Wear Your Values on Your Sleeve

More than great products, incredible service, low prices or any number of other factors that may inspire loyalty, consumers want to see a brand with ethical values.

A study from the Corporate Executive Board (which is now Gartner) that was published in the Harvard Business Review analyzed answers from 7,000 participants spanning the globe. The analysis found that loyalty is primarily contributed to a single factor:

“Of the consumers in our study who said they have a brand relationship, 64% cited shared values as the primary reason.”

Moreover, in other reports from Gartner, findings revealed that consumers worldwide repeated the sentiment that they were loyal, “not to companies, but to beliefs.”

This statement means that what hooks consumers often isn’t a brand, but what a brand is built upon. As stated by Aaron Lotton, former head of Research for CEB:

“We saw that emotional attachments to brands certainly do exist, but that connection typically starts with a ‘shared value’ that consumers believe they hold in common with the brand.”

Businesses helping community quote

This notion is supported by the fact that over 81 percent of millennials expect companies to become active in their communities and foster social responsibility. In fact, nearly 66 percent of consumers around the globe are willing to pay more for a brand’s offerings if it has shown commitment to engendering positive social and environmental changes.

Moreover, some of the world’s most beloved brands that built loyal followings have shown such initiative. For instance:

 

To cultivate true brand loyalty, put your brand’s mission before its profits.

Celebrate Your Customers

The Accenture Strategy study mentioned earlier noted that 41 percent of consumers are loyal to brands that personalize their program offerings.

elebrateThis figure points to the idea that personalization is central to brand loyalty. Therefore, eCommerce merchants should utilize consumer data to create more personalized customer experiences and craft custom offers that appeal to individual shoppers.

This notion is supported by research that uncovered a direct correlation between personalization and consumer satisfaction scores. Of those surveyed, 79 percent stated that they were very satisfied with highly personalized reward programs.

Moreover, other studies have shown that consumers are willing to share their data to obtain a more personalized shopping experience. A different study from Accenture revealed that 73 percent of shoppers prefer frequenting businesses that use personal data to create more relevant interactions.

By capturing and analyzing customer data, brands can boost loyalty by crafting personalized offers, shopping experiences, recommendations, upsells and promotions relevant to consumers.

Learning to effectively leverage customer data to build personalized experiences can help eCommerce retailers encourage that elusive second purchase.

In the current digital retail ecosystem, eCommerce brands are under immense pressure to meet consumer expectations that grow loftier year-after-year. The most effective way to give customers what they want is to listen to them.

What do consumers want? They want rewards. They want great service. They want a company that cares about its community. They want a personalized experience. Rise to meet these desires and your brand will build a diehard following.

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