Covid-19 has transformed how brands do business, pushing many more traditional companies into the digital realm and challenging marketers to acquire and retain the customers that will keep business going despite financial obstacles. But Covid-19 has also transformed the way customers do business. According to McKinsey, 78% of U.S. consumers have switched stores, brands, or […]
Covid-19 has transformed how brands do business, pushing many more traditional companies into the digital realm and challenging marketers to acquire and retain the customers that will keep business going despite financial obstacles.
But Covid-19 has also transformed the way customers do business. According to McKinsey, 78% of U.S. consumers have switched stores, brands, or the way they shop due to the pandemic. As e-commerce options continue to grow, consumers have more options than ever when it comes to who they’ll shop with, and they’ve begun prioritizing convenience, value, and product quality over brand loyalty.
So, how are brands supposed to increase retention and build loyalty when the customers those initiatives depend on are ready to jump ship?
Customer retention isn’t just about keeping customers coming back — it’s about building loyalty and encouraging enthusiasm around your products so that customers are excited to engage with your brand and share that with others. Rewards programs can go a long way by adding value to otherwise short-term customers and increasing brand loyalty and ROI.
The key to a successful reward program is to look further out than just this season’s promotions or giveaways. While short-term rewards can give customers a chance to try new products, a program that relies on long-term engagement is where you’ll find ROI. One example would be a points system that requires multiple purchases to earn a special offer or free item. By accelerating the customer lifecycle with incentives to keep coming back, you’re building loyalty that will last beyond the upheaval of Covid-19.
Be sure to map out the finances before designing your brand’s rewards program: it’s easy to view them solely as profit-generators while overlooking the very real costs associated with them. Harvard Business Review notes that the “value created must exceed cost of value delivered,” and emphasizes business’ tendency to ignore the long-term costs of their rewards programs when implementing cash-burning, short-term offers. Make sure that you can not only deliver your offer with ease, but also make up for it (and more!) down the road when it comes to revenue.
When it comes to building brand loyalty, not all of your customers will be great candidates. To efficiently cultivate long-term customer relationships, you’ll need a system in place that allows you to understand what makes your best customers unique, predict lifetime value, and deliver relevant offers and promotions.
Understanding what sets your loyal customers apart can be difficult if you’re just looking at your first-party data, which is often limited to transactional history and surface-level personal information. One could argue that the quantity of repeat purchases is an indicator of loyalty — and short-term, it may be. But will those customers stick with you in the long run?
Introducing richer data into the mix can illustrate who these customers are outside of their engagement with you and clarify how high-LTV customers are different from seemingly loyal repeat buyers who could jump ship any time. Tools that help brands predict customer lifetime value can also benefit from richer data, as the accuracy of LTV predictions increases with a wealth of customer data.
Once you’ve figured out who your high-LTV customers are, you can refine marketing campaigns and sales outreach by prioritizing these truly loyal customers for retention campaigns. You can also create lookalike audiences using the criteria that are most indicative of a loyal customer, thereby extending your marketing reach to the most valuable prospects.
While rewards programs and audience segmentation can improve brand loyalty, it won’t matter if the customer experience isn’t enjoyable.
With consumers staying at home this past year, e-commerce boomed: 2020 brought the highest annual online sales growth of any year at $791.70 billion, up 32.4% from 2019. Brands that never had an online sales presence launched e-commerce websites, and brands with existing sites realized the pressure was on to deliver top-notch customer experiences.
Because consumers have more options at their fingertips than ever before, retaining customers and building loyalty is critical to sustaining positive growth. Providing a pleasant, user-friendly customer experience is key to capturing leads and progressing customers all the way down the sales funnel to conversion again and again.
Even before Covid-19 pushed many consumers to engage with new brands, 80% of customers were willing to pay more for a better customer experience. Loyalty was on the line if it meant smoother transactions, user-friendly websites, more convenience, or superior customer service. With this in mind, here are a few tactics many brands employ to reel customers back in time and time again:
The hope is that once the pandemic is over, loyalty won’t be such a challenge. But as consumer landscapes continue to change and the economy opens back up, nothing is for certain.
Building brand loyalty doesn’t happen overnight, but the better your customer experience, the more likely they are to stick around. Right now, marketers should be digging into their customer data, focusing on engaging the customers who matter most, and testing new retention tactics.
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Want to learn about more data-driven customer retention strategies? Check out this virtual retention panel featuring Faraday CEO Andy Rossmeissl along with industry leaders from Reebok, Lob, and Mattel.