5 Secrets to Keeping Customers Loyal Amidst Economic Uncertainty
Whether it’s the loss of third-party tracking or a new Google algorithm update, marketers always have a new challenge to face. Today, that challenge is inflation.
An overwhelming majority (85 percent) of consumers say inflation has caused them to change their shopping habits, with 79 percent seeking out discounts and 77 percent reducing their shopping. Even among consumers who plan to keep their spending the same, with product prices up 10 percent, that equates to thinner slices of the pie for retailers.
However, it’s not all doom and gloom. Like other challenges before, savvy marketers always find a way to weather the storm.
When Wallets Are Lean, Lean Into Loyalty
Consumers are seeking out discounts more than usual, but they’re still shopping — and they want to keep shopping. In fact, while the average shopper plans to spend less, some customer segments plan to spend more. Higher-income households ($120,000-plus) will increase spending by 15 percent this year, and millennials plan to spend 11 percent more this year.
According to Mastercard SpendingPulse data, in-store retail sales increased 10.5 percent over 2021 during the 2022 Black Friday weekend, while e-commerce saw a 12.5 percent increase. The spree stayed strong through Cyber Monday, with total retail sales up 9.7 percent year-over-year.
Clearly, there are sales to be made — but with inflation in the mix, marketers need to rethink their strategy. It’s not enough for marketers to rely on consumers’ desire to shop. With less cash to spend, consumers will be choosier about who they spend with. That means now is the time to double down on customer loyalty.
Many brands react to economic fears by cutting investments in marketing, but that's a huge mistake. The companies that lean into marketing and customer loyalty strategies will fare better than their peers that pull back spending and find themselves further behind.
5 Best Practices to Win Sales and Secure Loyalty
The right customer loyalty strategy is about much more than a rewards program. It’s about creating an unparalleled customer experience. That’s the key to customer loyalty.
Brands can’t afford to deprioritize customer experience, especially during a recession. Between 2019 and 2022, companies with the best experience ratings not only outperformed their peers, but more than doubled their lead over the stock performance of companies with poor customer experiences.
Investing in customer experience is also the smart long-term play, reducing customer churn and increasing customer lifetime value. Globally, one in three customers will leave a brand they love after a single poor experience.
Overall, everything comes back to driving loyalty through delivering better service and digital experiences. If customers can easily browse, shop, make returns, answer questions, they're more likely to stay with you. Here’s how to win their loyalty and their sales this year — and beyond:
1. Nail the user experience basics.
A positive customer experience, and consequently customer loyalty, starts with the basics.
Zoom out and consider whether your website is organized in a way that shoppers can navigate and find products easily. Once they arrive on product pages, do those product pages offer a lot of information, images and other materials (e.g., customer reviews or Q&A) to answer their questions?
Finally, are you sending the right product recommendations to the right people? The more relevant your recommendations are, the easier it is for shoppers to find what they’re looking for and buy.
2. Make shopping easy, wherever it happens.
Once the basics are taken care of, brands should consider additional ways to ease the shopping experience and increase loyalty.
Make it as convenient as possible for customers to shop with you, however they like to shop. Offer BOPIS or curbside pickup for those who want to pick up their purchases faster. Reduce friction with convenient one-click reordering and customer wish list technology. Extend your return windows to increase confidence and beat your competitor.
Finally, offer more payment options, like store payment plans or financing. Seventy-one percent of consumers are considering using these this year, a quarter of whom have never used such payment options before. Buy now, pay later (BNPL) usage is also expected to more than double this year, from 5 percent in 2021 to 13 percent in 2022.
3. Offer proactive support.
It’s one thing to solve a customer complaint when it happens; it’s another to resolve it before it happens.
Make sure your customer service, returns and FAQ policies are clear, comprehensive and easy to find. Promote how easy it is to connect with your brand via live chat, text or phone. The goal is to put your customers at ease and give them enough tools and information so they don’t need to call customer service (but if they do, it should be easy to do so).
For those who prefer to shop from home, offer home delivery with faster shipping, proof of delivery and delivery tracking so shoppers feel confident their purchase is on its way. The stakes are high here: one in three shoppers will switch brands upon receiving an incorrect or damaged item, and up to 40 percent will switch if their delivery is late.
4. Get creative with discounts.
A vast majority of consumers expect the same amount of deals this year, if not more, with price, value and free shipping being the main factors driving their purchasing decisions.
However, brands can only discount their products so much before it starts to affect the brand. Therefore, think outside the (discount) box to win sales from loyalty members. Exclusivity can keep brand perception high without over-discounting your brand.
Offer exclusive discounts for loyalty members. Or, instead of discounts, send gifts with purchase to clear out slow-sellers.
Host early and extended sales for loyalty members. Amazon.com held a second Prime Day in October, while Walmart offered early access to Black Friday sales for Walmart+ members. And Sephora VIB members get early access to sales (and higher discounts) depending on how much they spend with the retailer.
5. Make shopping with your brand fun.
An easy shopping experience goes a long way towards building loyalty. To graduate from loyalty to advocacy, though, you need that extra “it” factor.
Therefore, make shopping with your brand feel good. Celebrate customer milestones with a gift with purchase or a “thank you” email. Host loyalty member-exclusive experiences, like in-person and digital launch events. Partner with influencers to spread the word on how shoppers can score the best deal and find the latest products.
For example, Ulta Beauty’s loyalty members generate 95 percent of its total sales. The retailer sends introductory messaging to orient new members to its app and rewards program, but it also works with TikTok influencers to share the best hacks for maximizing rewards points.
Reimagine Your Customer Experience
With consumers tightening their wallets, the question isn’t whether they will spend; it’s who they will spend with. To ensure it’s your brand, it’s time to up your loyalty game.
Vice president of customer success and marketing for digital agency Whereoware, Randi Mohr ensures clients’ digital services achieve intended business objectives. Mohr also oversees Whereoware’s brand messaging and marketing efforts to accelerate sales growth.
Related story: 3 Components of an Effective Loyalty Program