Customer loyalty in e-commerce – how is it shaped and how to build it?
May 13 2022
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You should start building customer loyalty in e-commerce long before they even make a purchase. Marketing activities that establish customer loyalty need to be implemented in multiple and simultaneous ways. What contributes to customer loyalty and how to create it?
How do you build customer loyalty?
Above all, think long-term. Managers and marketing specialists too often approach promotional activities from the perspective of a specific time period, usually a quarter or a year at most. They fit their activities into the needs of the current product or service campaign. Whereas the best results are achieved when short-term actions are integrated into a long-term plan.
Here we are talking about more than just a marketing idea. It is about branding, about the company’s brand. And such a brand is created on the basis of company values, including the created shared value. Another important factor is to plan contact with the customer (at every stage of the purchase path!) to ensure that the customer has positive associations with the brand. This is where so-called touchpoints, or points of contact with the brand, play an important role.
What influences customer loyalty?
In my opinion, this is the key to solving the problem – loyalty is usually influenced, not built. There are marketing specialists who believe that it does not even exist in e-commerce. Customers, even if they know what product they want to buy and have already made their decision, are always looking for a better deal. Lower prices, free delivery, shorter delivery times, free extras, text notifications, a special app… You can go on and on. Unfortunately, to a large extent this is true, and it applies to some customers. But not all of them.
Well-tailored marketing activities that build customer loyalty cause them to buy from the same shop over a longer period of time, even if external factors (and sometimes the logic of the household budget) suggest other options.
Loyalty in e-commerce:
- repeat purchases from the same e-shop
- not checking goods and their prices in other competing shops
- not buying traditional goods in regular shops
- buying products even if prices increase (due to higher margins, inflation, other factors)
- recommending the shop to family, friends, acquaintances (word-of-mouth marketing)
- interacting with the shop on social media (engagement)
- desire to increase their knowledge and plan purchases for the future by reading or watching content created by the shop (blog, YouTube video, etc.)
As you can see, a customer’s relationship with your shop can manifest itself in many ways. And how to build it?
Factors influencing customer loyalty
This is where we touch on another challenge. There is no simple answer – there can be as many of these factors as there are shops. Sure, there are some general market trends and rules, which I describe below. The truth is, however, that until you get to know the business, its offering and the conditions of the particular shop, it is all just theory. This is why I always pay so much attention to getting to know the client, describing their challenges and filling in the brief.
Loyalty vs. customer satisfaction? Let us see. The determining factors are:
- finding the right product. This does not require much comment – if the customer does not find what they are looking for, they will in time find another favourite shop. It doesn’t matter if you offer 100,000 products from every possible category or 1,000 products from a niche. The goods must be in stock. Here you can use logistics services offered by InPost Fulfillment.
- properly optimised price. Sure, the most loyal customers will buy the goods even if the price is slightly above the pain threshold, but you can’t just depend on them. It is a minority, and the price is built for the masses.
- simple yet powerful search engine. This is especially important for shops with a larger number of products offered. If a customer wants to find something quickly, they must be able to do so. If they want to enter more variables (colour, year of production, product version), they must also be able to do so.
- choice of delivery method. The more options available, the better. Even details such as the number of available courier companies can influence customer loyalty. Perhaps the customer has had a negative experience with the particular company you’ve signed a contract with? Perhaps they would like to use another? Courier, parcel lockers, collection points – the more, the better.
- free shipping. This is a key differentiator, although increasingly it is becoming a must. Sure, not every shop (mainly due to the scale of the business and turnover) is able to afford free shipping, but it is now possible even for small businesses that sell handmade jewellery. Here, free delivery, of course included in the product price, can start from as little as ten PLN. It all depends on the individual circumstances.
- operational efficiency. Nowadays it is an absolute standard to dispatch goods within two working days. Increasingly, also delivery within this timeframe is expected. There are even same-day deliveries. This is especially true for food products and so-called “dark stores”, i.e. shops used by businesses which are not normally accessible to individual customers. The use of such infrastructure, but above all of the operational efficiency of the shop itself, makes all the difference here. Even just packing and preparing goods for shipping, communicating the stage of order fulfilment to the customer – it all matters. The key is to optimise business processes.
An important remark – in this particular case, too many notifications (simultaneously through the app, SMS, e-mail, etc.) can irritate customers. The customer should have the choice of notification options and ability to disable unwanted forms of contact.
- deferred payment option. This is another increasingly common standard. The most commonly implemented solution is the 30-day option. The idea is that the customer first buys the goods and receives them “for free” and then has 30 days to pay for them. You could call it a kind of simplified credit. Note that this option is increasingly available in regular shops as well. In Polish reality, this includes, for example, the possibility of collecting shoes from CCC brand shops.
- availability of eco-friendly packaging. This is definitely one of the strongest trends at the moment. Customers pay attention not only to what the product is made of, but also what it is packaged in. Today as many as 60% of consumers say they need to reduce their plastic consumption. This also applies to packaging, not only to the products themselves. As many as 85% of consumers want to change their shopping habits to be greener.
The trend is so strong that there is even a whole segment of eco-friendly packaging for luxury products. At the moment, paper and cardboard are valued materials, but also glass. The key to convincing consumers is not only to make the packaging environmentally friendly but also to make it functional. You can find an overview of available solutions on the WorldStar Global Packaging Award website.
Can customer loyalty in e-commerce be measured?
Yes, it can definitely be done. The whole process is called Net Promoter Score (NFS). A simple question is asked: “How likely would you be to recommend our shop to your family or friends?” The response scale is usually between 0 and 10, where 0 means “definitely will not recommend” and 10 means “definitely will recommend”.
Those who chose an answer between 0 and 6 are considered brand critics. Responses at the level of 7 and 8 are given by those with a neutral attitude, while 9 and 10 are given by brand promoters. It is these most ardent supporters who will not only buy but also tell others about a great shop. Our marketing efforts should be focused on them. But not only. The “lower range” must not be neglected. It is the promoters who can bring the most profit to the brand, but it is the critics who build the most value for the brand. They simply show what needs to be improved. They can also be the most numerous group, so if you convince them, you will significantly increase revenue.
NFS itself, however, cannot be seen as the definitive answer. NFS shows trends but does not give deeper insight into why customers are satisfied or not. For this, you need more advanced techniques for working with clients.
Customer satisfaction versus customer loyalty – what not to do?
There are other techniques that build satisfaction. For example, discount codes. However, this does not translate into loyalty.
Recipients treat such activities as part of the offer, not as an element that ties them to the shop. Discount codes are part of sales support, not the brand building itself. And as I said earlier, a brand is about image and value perceived by the customer, not about occasional benefits. Branding is about permanent and unchangeable benefits.
An example of a store that has seen the benefits of discount codes is GOG.com (formerly known as Good Old Games). This platform generates the vast majority of its revenue through promotional sales. The same is true of shops such as Steam, Epic Games, etc. The example from the video game industry is perfect because it shows that while promotional sales (and sometimes discount codes) do translate into sales, they do not translate into loyalty. Steam wins over Epic Games and GOG with the number of features liked by users. This is definitely something to pay attention to.
Another thing is a lack of consistent communication. Aspects such as a maintained standard of product descriptions, a sales newsletter layout or, finally, the naming of products themselves, have a bearing on sales. Don’t jump “all over the place”, get the message right.
There is no single golden recipe for success. It all depends on what is currently implemented in your shop. What works and what doesn’t. What goods do you sell and with what margins. What the market conditions are, whether the goods are fast-moving or have a short shelf life. The factors influencing customer loyalty have a strong link to promotion and sales, but it is something different.