Today’s E-Commerce Customer Loyalty: Designing Programs for Growth

Brand loyalty is a driving factor in today’s commerce. It affects where people shop, what they buy, and how much they spend. Yet customer loyalty is changing in today’s blended e-commerce landscape that combines traditional retail with direct-to-consumer. Customers are interacting with retailers differently, and businesses need to nurture, nudge and delight them.

Retailers have an opportunity to capitalize on loyalty, but in order to do so, it’s important to understand what drives customer loyalty. In a survey of thousands of shoppers, Yotpo’s 2019 State of Consumer Loyalty report discovered how brand loyalty is changing.

From building emotional connections to establishing technical frameworks, find out what you can do to inspire customer loyalty and drive sustainable growth..

Building Customer Loyalty is a Business Opportunity

Customer loyalty can have a significant impact on your business growth. Nearly all consumers are influenced by their brand allegiances, and 95 percent claim loyalty to at least one brand.

Loyalty can have two major business impacts: revenue and reach.

On the revenue side, the effect of loyalty on customer decision making is so strong that brand allegiances can supersede price. Significantly, 37 percent of loyal shoppers are willing to spend more on a product even when there are cheaper options elsewhere. For retailers, this upends the race to the lowest price.

Loyalty also impacts reach because loyal customers transform into brand advocates. When shoppers feel loyal, 59 percent will refer a retailer to others, helping you expand your reach organically.

For Customers, Loyalty is Emotional

Customer loyalty, in many ways, is similar to personal relationships, and the data reveals these emotional underpinnings. For 40 percent of shoppers, loyalty means they feel “brand love.” Rather than the details of the shopping experience, loyalty is about a strong emotional bond.

Conversely, 12 percent of loyal customers said that buying from a competitor brand feels like cheating. This further drives home the commitment of loyal customers. They’re on board, and they’re all in.

The feelings of loyalty also alter behavior, making customers willing to engage more frequently and in several different ways. When customers feel loyal, 27 percent will visit a physical store. Nineteen percent will receive communications, including email newsletters and physical mail; 32 percent will take a survey; and 18 percent will participate in a contest or promotion.

Nurturing Loyal Customer Relationships

The impacts of loyalty are clear. However, in today’s competitive retail environment, loyalty is difficult to earn. That’s why each aspect of the shopping experience must be stellar.

The most important factor in loyalty is what you’re selling and how much it costs. Our survey found that 78 percent of consumers say they’re inspired by product, and 63 percent are inspired by price.

The next important consideration is interaction and user experience. Among shoppers, 26 percent say customer loyalty is inspired by customer service, and 18 percent are inspired by the shopping experience.

Interestingly, 22 percent of shoppers say loyalty programs themselves are what inspires them. Whether they’re getting insider access, free gifts or discounts, the experience of loyalty programs can help you build a strong connection with a customer.

The Architecture of E-Commerce Loyalty and Decision Making

Even as customer loyalty is widespread, shoppers tend to only engage with a handful of loyalty programs. About 78 percent of shoppers are a member of between one and six loyalty programs. That means there's strong competition to earn customer loyalty and keep it.

Because of this competition, it’s critical to ask how you can make your loyalty program matter.

The first step is to design a customer loyalty program that encourages engagement and builds authentic connections. This is best done through customization. A cookie-cutter rewards program doesn’t stand out.

With the right loyalty platform, you’ll have the tools at your fingertips to provide customized rewards, incentivize shopper interactions, analyze detailed metrics, and more. When ThirdLove implemented its loyalty program using the Yotpo platform, it had a vision for something that went beyond points. The results were overwhelming. Within three months, new account creation increased by 400 percent.

A loyalty program should also dovetail with other shopper interactions. For example, your program can incentivize Instagram shares or online reviews. These actions, in turn, add even more value to your e-commerce pipeline. Data shows that 81 percent of shoppers rely on customer reviews, and 56 percent find customer photos to be helpful.

When your loyalty program is integrated with a strong review platform, shopper enthusiasm can become viral. Not only are you reinvigorating your connection with existing loyal customers, but you’re also inspiring the user-generated content that helps your customer base continue to grow.

Raj Nijjer is vice president of brand marketing for Yotpo, a leading e-commerce marketing platform based in New York. Yotpo’s solutions for reviews, user-generated content (UGC), loyalty, and referrals help brands accelerate growth by enabling advocacy and maximizing customer lifetime value.