How to Turn Holiday Shoppers Into Loyal Customers
Customer loyalty is essential to running a successful retail business. Retailers spend an enormous amount of time and money developing products their customers will love, messages that will resonate with their customers, and a buying experience that’s simple and straightforward. They think constantly of their customers and how to keep them, but that situation becomes more nuanced during the holidays.
Shoppers are frantically making last-minute purchases, there are now two people involved in each transaction — the gift buyer and recipient — and, on average, people are spending more (on both gifts and themselves) than they do at any other time of the year.
Why Focus on Return Customers?
While sustainable growth requires a mix of new as well as repeat customers, the former is often underprioritized, even though it costs about six times more to acquire a new customer than to retain an existing one. Think about it: new customer acquisition requires costly marketing expenditures and can prove difficult to track when evaluating return on investment, whereas customers already familiar with a brand can be more easily persuaded to come back through simple promotional campaigns offering marginal discounts.
Given the uniqueness of the holiday season, there are a lot of customers to gain — and loyalty to establish — during the busiest time of the year. Here are a few ways you can convert holiday shoppers into customers that keep coming back.
Reward Loyalty With Points or Incentives
If you’ve ever signed up for an airline loyalty program, you know that you’re likely to check that airline first when making travel accommodations. The idea is simple — gain points when you travel, use those points for later travel. The same can be true for retail businesses.
Make sure your rewards points are easy to use and valuable enough that customers will want to use them. To motivate customers to spend more in order to receive more rewards points, retailers like Sephora have created tiered loyalty programs, setting spending milestones to reach more exclusive rewards. For a customer to advance from a Sephora Beauty Insider to a VIB (Very Important Beauty Insider), they must spend over $350; and to reach VIB Rouge status, customers need to spend $1,000 per calendar year. As customers progress through this loyalty program, they receive additional, personalized rewards.
If a customer spends money with your brand over the holidays, rewarding them for doing so is a great way to make sure you’ll see them again in the months (or hopefully, years) to follow.
Make Them a Part of Your Brand Community
Now that you’re interacting with new customers, it’s time to make them a part of your brand’s community while simultaneously working to leverage their personal networks. Anything you can do to encourage new customers to like your brand’s page on Facebook or follow you on Instagram will make it easier for you to stay top of mind once the holiday rush subsides. If you can do that while also getting them to share your content with their friends, you’re killing two birds with one stone.
For example, host a giveaway in which a customer is entered when they follow your brand on Instagram and then tag three friends. You’ve gotten them to subscribe to seeing more information about your brand while also informing their social circle about you. Whether it’s giving them a sharable link, a discount for referring a new shopper to your store or incentivizing social media engagement, there are many creative ways to turn holiday shoppers into members of your brand’s community. This is the first step toward loyalty.
Prepare Your Back-End Operations for an Increase in Traffic
Even though you now have plans in place for turning new shoppers into loyal customers, your effort and the resulting engagement won’t matter at all if the customer doesn’t receive their order on time. It’s imperative that retailers anticipate things like increased site traffic, slower shipping times and higher demand on customer service representatives — and that they plan accordingly.
Last year, out-of-stock rates on online shopping sites were 10 percent to 15 percent higher than in 2014. As operations grow more complex while retailers strive toward omnichannel success, it’s safe to anticipate a similar trend in 2016 — and smart to prepare for it. Since 81 percent of consumers will shop your competitor if a product is backordered or out of stock, it pays to have your inventory under control going into the busiest time of the year.
Customer loyalty is critical to all businesses. Return customers account for 22.6 percent of average retailers’ revenue, yet they only make up 11.6 percent of their customer base. Incentivizing holiday shoppers while making sure your backend is prepared to handle an influx in orders will enable you to provide the exceptional experience consumers seek when deciding where to shop this holiday season — and what brands will gain their loyalty for years to come.
Brandon Levey is the CEO and ThinkerUpper at Stitch Labs, an inventory management solutions provider.