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2 min read

Customer Loyalty in Ecommerce: Why It Matters and How to Build It

Customer Loyalty Diagram

Customers today are definitely not the same as customers of yester-year. In today's highly competitive ecommerce industry, where almost anyone can create an online storefront, customer loyalty is more important than ever. With so many online retailers vying for customers' attention and business, building a base of loyal, repeat customers is essential for long-term success. Today, we'll start to explore why customer loyalty matters and how ecommerce businesses can build it. Going forward, we'll dive deeper into this topic, and find innovative strategies that differentiate in a crowded market.

Customer loyalty is important for a number of reasons, not least of which is the fact that loyal customers tend to spend more money than new customers, even upwards of 60-70% more over time. Obviously higher revenue and increased profit over time is great, but the real secret sauce is that it comes in the form of recurring revenue.

Why is recurring revenue so important? The list is lengthy, but a few of the most important reasons are that it provides stability in terms of cash flow, improves marketing efforts by allowing you to calculate (and take action on) customer lifetime value, and improves customer service over time as you get to know your repeat customers.

On top of spending more money, loyal customers also tend to be more forgiving of mistakes and more likely to refer others to the business. This can lead to a positive feedback loop in which happy customers bring in more business and help the business grow.

As we mentioned earlier, building customer loyalty can help ecommerce businesses stand out in a crowded market. Far too many ecommerce websites cut corners when it comes to things like reviews. How can you tell if you're actually seeing honest feedback? Quick tip: if you don't see any negative reviews... someone's trying to hide something. The best policy is always to be open and transparent and let negative reviews stay visible (ok, most of the time. No one wants to see obviously unhelpful or just mean reviews). The trick is to remain confident in your product or service, focus on amazing customer service, and let people discuss how great it was to work with you!

Here are a few strategies to consider as you build your loyalty programs:

  1. Focus on customer service. Providing excellent customer service is key to building customer loyalty. Respond to customer inquiries promptly, be helpful and friendly, and go above and beyond to solve problems.

  2. Offer personalized experiences. Use data and customer insights to tailor the shopping experience to each individual customer. This can include personalized product recommendations, targeted email campaigns, and personalized offers and discounts.

  3. Build a community. Creating a sense of community around your brand can help foster loyalty. This can be done through social media, email newsletters, and online forums where customers can connect and share their experiences.

  4. Reward existing loyalty. Offer incentives to customers who make repeat purchases or refer others to your business. This can include discounts, free shipping, or exclusive access to new products or services.

By focusing on these core strategies, you'll be able to build a base of loyal customers who will continue to support and promote your brand for years to come. In future posts, we'll go deeper into each of these points and explore emerging trends to help you stay at the forefront of customer loyalty... aka offering a great customer experience!