Technology Focus Part 2 Build Online Loyalty Efficiently

Best practices to increase loyalty and retention on your Web site

Do you need a formal loyalty program to boost customer retention and customer loyalty? Don't assume so just because your competition has one.

Recent research indicates that some focused Web site improvements and carefully constructed e-mail campaigns can have a very positive impact on loyalty just by improving the overall online experience. Here are some best practices that can make your online offering more relevant to customers' interests and needs, building retention and loyalty while avoiding the costs of developing and running a formal loyalty program.

1. Launch a loyalty program. Loyalty programs offer formalized incentives for customers to buy repeatedly. Depending on your business environment, a carefully designed loyalty program may be appropriate. Some customers will respond well to your program, but many won't. Forrester Research found that only 24 percent of online consumers feel more connected to marketers because of loyalty programs, and that just 34 percent of online consumers say they buy more because of loyalty programs.

It's no secret that online customers tend to be disloyal because the Web makes it so easy to find a lower price elsewhere. So if a loyalty program does no more than peddle discounts (as most of them do), it'll primarily appeal to price-motivated buyers. Its overall impact may simply be to deflate your prices and reduce your revenue.

2. Build loyalty into your site. The key to encouraging profitable loyalty is to build loyalty enhancing features right into your site. This helps you build an emotional connection with your customers. If you can provide a compelling reason for them to buy from you — other than price — you have a significant advantage over the competition.

3. Reach out with e-mail. Ask them to come back. Targeted e-mail is a good way to keep customers in the fold, particularly if your message speaks on a number of levels. Focus on providing relevant offers, messaging and content that give your customers a compelling reason to come back.

"We've missed you" or, "We value your business" messages evoke an emotional connection between your site and customer. Offering free shipping will convert some sales. Some merchants include small ads for discounts at the bottom of the e-mail page to appeal to the price-sensitive buyer.

4. Offer valuable content and information. A customer who appears disloyal or fickle actually may be shopping around for information. Such shoppers expect to have full product details at their fingertips and they don't have confidence in any marketer that doesn't provide it.

Many sites include substantial product information, such as product specifications and warranties. The Home Depot goes way beyond this by adding a huge "Know-How" section — not unlike what it does with its free, in-store courses. People go there just to find out how to do something, whether they're buying or not. And as with a store, a site that becomes an information resource will be top-of-mind when it's time to buy.

5. Provide exemplary customer service. Shoppers will never be loyal to a site that provides bad service or is unreliable. Customer service starts with a pleasant and efficient shopping experience, a streamlined checkout process, fast and trouble-free site performance, and easy access to self-service information.

A comprehensive customer service section with well-organized help-yourself information is necessary, providing customers the answers they need when and where they expect them. Most online retailers provide contact information (phone, fax, e-mail and snail mail addresses), ordering help/FAQs and general information about the company. You should explain your shipping policies and charges, and if possible, provide an order tracking tool. Apparel retailers should provide sizing information, and a specialized product line should be explained in detail through an "About Our Products" section. A clearly stated, easy return policy is extremely important because it builds trust and confidence.

6. Personalize. A personalized shopping experience actually is part of good customer service, since its goal is to seamlessly direct customers to whatever they're looking for. A good online personalization tool makes your site, messaging, e-mail and all related communications more relevant to all individual shoppers who come your way, and their natural inclination will be to return next time they want to buy.

7. Keep your branding consistent. Your customers want to know that they're dealing with a familiar, trusted resource. Make sure you provide a consistent brand image and messaging across all your sales channels. Maintain the same look and feel between your online store, catalog and brick-and-mortar stores. This can have a profound effect on retention and loyalty by making your site feel more familiar to those who know you.

8 Offer an attractive product mix. Customers will stick with merchants that are perceived to provide exceptional quality, great guarantees, or unique, custom or exclusive product lines. And no matter what your products, presenting them in a more attractive way than your competition has the same effect.

The core strategy behind these eight techniques is making the Web site more relevant to customers' interests and catering to their personal needs. Online retailers who succeed in this may decrease their need for a formal loyalty program, enabling them to spend more of their marketing money on expanding their customer base rather than paying to merely maintain it.

Ken Burke is chief executive of MarketLive, a provider of e-commerce retail technology and services. Reach him at (707) 773-3434 or via e-mail at ken@marketlive.com.