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The Importance of Customer Loyalty in E-Commerce

When you consider that nearly two-thirds of revenue comes from repeat business for most companies, fostering customer loyalty in e-commerce is crucial to success. Loyal customers make more frequent purchases, and they spend more — as much as 67% more with brands they trust.

However, turning potential customers into first-time customers and then nurturing them throughout the customer journey to build that loyalty requires a strategic approach. So let’s take a look at customer loyalty in e-commerce and some strategies for e-commerce success.

What Is Loyalty in E-Commerce, and Why Is It Important?

Loyalty is a beautiful thing in e-commerce. Once brands earn that trust, it pays dividends for years. According to one study, 59% of consumers say that once they become loyal to a brand, they’ll likely do business with that brand for the rest of their lives.

Building customer loyalty leads to:

  • Increased customer lifetime value (CLV)
  • Increased average order value (AOV)
  • Reduced customer acquisition costs (CACs)
  • Enhanced brand reputation and customer trust

It’s not surprising that the brands with the most loyal customers are also among the top in their industry, generating higher profits than their competitors. Despite understanding the benefits of customer loyalty programs, though, 46% of brands say their customer loyalty strategies are not innovative enough.

Customer Retention vs. Loyalty: Understanding the Difference

While similar in scope, there’s a difference between custom retention and loyalty. A customer retention strategy aims to prevent churn, or the loss of customers. E-commerce customer loyalty is about building long-term customer relationships.

Retention strategies focus on creating satisfied customers by:

  • Providing excellent customer service and support
  • Offering loyalty programs or special offers for future purchases
  • Efficiently addressing customers’ complaints and feedback 

E-commerce customer retention is crucial, but companies generally take a short-term, transactional approach, such as offering discounts for additional customer purchases. On the other hand, e-commerce loyalty programs go further, creating a deeper emotional connection. Not only does this encourage repeat online shopping, but it also creates advocates who actively promote your brand and extend your marketing outreach.

How Can You Build a Loyal Customer Base in E-Commerce?

Building brand loyalty requires an exceptional customer experience at every touchpoint to build that emotional connection, but this can be a challenge. 

Today’s customer journey isn’t always a straight line, and the ability to research multiple brands and products online, or even on a smartphone while in a physical store, has created new touchpoints for companies to consider. Brands must meet customers where they are, and they must be consistent in delivering high-quality interactions to engender loyalty.

Improve the Shopping Journey and Customer Service

The shopping experience must be frictionless from start to finish. Like it or not, Amazon has set the pace for e-commerce. By offering a large assortment of products, price ranges for different types of online shoppers, and fast — and often free — delivery, the e-commerce giant has established the standard against which other sites are judged.

This means that everything about the shopping journey must be orchestrated to provide a seamless experience, from research to purchase to delivery. Any speed bumps along the way can frustrate customers and drive them elsewhere because there are so many other options online.

And the experience has to be consistent. 

Think about this scenario: A regular customer goes to your website, finds the product they want at the right price, and breezes through the checkout process. Then, the item fails to show up on the day it was promised. Not good. Businesses know they need to keep a close eye on metrics like on-time in-full performance (OTIF) because a logistics problem that delays order fulfillment can turn a positive experience into a negative one. 

In fact, half of customers quit doing business with a company immediately after a bad experience.

Provide Personalized Content and Product Recommendations

A key to building loyalty is delivering a personalized experience. Using customer behavior data can guide personalized product recommendations, content, and marketing messages. This creates a more personal experience and increases the likelihood of a customer making future purchases.

The e-commerce giants make billions on this strategy with their recommendation engines. For example, Amazon increased its revenue by 35% using a recommendation system, and Best Buy recorded a 23.67% increase in sales doing the same. In both cases, this led to repeat business and fostered customer loyalty.

Incentivize Customers With Loyalty Programs

Sixty-one percent of brands and retailers use a loyalty or rewards program. More than half of customers even pay to take part. Providing special offers or incentives to customers can drive repeat purchases. The more they spend and the better the experience is, the more loyal they become.

Customers believe they should get specific rewards for participating in such programs. Whether it’s a discount, cash back, or some other value-added service, a premium experience goes a long way. Keep in mind, though, that the average consumer in the U.S. belongs to more than 16 rewards programs, so this strategy needs to be just one part of your overall approach if you want to stand out.

Offer Shipping Perks and Exclusive Discounts

Shipping is a critical part of the e-commerce experience. Free or discounted shipping and fast or expedited delivery can help foster loyalty. When you provide exclusive offers, you can make customers feel special, enhancing their emotional connection with your brand.

It’s a bit of a balancing act, though. You want customers to feel special and get excited about the offers, but if they get these perks too often, they can lose their impact. 

How Surgere Can Help You Improve the Customer Experience

Sixty-two percent of customers say they don’t believe the brands they’re loyal to are doing enough to reward them. Consider these customers to be at risk. If you don’t continue to provide exceptional customer service and support to deliver a seamless customer experience, you aren’t likely to build the type of long-term customer loyalty that will produce the biggest payoff.

Surgere can help you build better customer relationships by optimizing your supply chain visibility, shipping process, and logistics. Surgere offers supply chain solutions that leverage IoT technology, tagging, hardware, and software to deliver real-time visibility, tracking, and intelligence to drive operational efficiency. This combination of innovative technology ensures that you have complete visibility into your supply chain at all stages.

Contact Surgere today to see how we can help you nurture loyal customers.

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