Consumer behaviour is changing more rapidly than ever. As we head into a challenging 2023, how can your business keep up?
As experts in customer behaviour, Love2shop have created a useful introduction to customer loyalty in 2023. Here, we’ll explain the basics: from the value of loyalty to your business to converting customers into brand advocates.
Invest in loyalty before attracting new customers
This year more than ever, making every pound work for your business will be crucial to your success. Instinctively, when businesses encounter trading headwinds like recession, they do two things – look at where savings can be made and explore how to attract new customers.
But improving customer loyalty can have a much more profound impact. The standard rule of thumb is that it costs around five times more to attract a new customer than retain an existing one, but research from Bain & Company and Harvard Business School reports that increasing customer retention rates by just 5% can boost margins by between 25% and 95%.
This is supported by best-selling marketing guide, Marketing Metrics, which states the probability of selling to an existing customer is up to 14 times higher than selling to a new customer.
So, investing in customer loyalty makes total business sense, allowing you to minimise your outgoings and increase your profits.
Being the cheapest doesn’t always secure customers
In a world where consumer is king and choice abounds, how can you build and inspire loyalty without creating a race to the bottom on price?
Understanding customers is crucial. Price is always a consideration but in 2023, customers expect more – get it right and you can make that work in your favour.
This year, we will continue to see the younger generation focus their attention on brands and businesses that share their ethical and moral positions. This is no longer about paying lip service to environmental or social causes by updating your social media logo, but having robust sustainability or diversity and inclusion policies – and offering meaningful support to charities and causes that matter to those customers.
And what matters to customers? Authenticity. If they’re confident you’ve taken action because you truly believe in it, that will positively influence their brand loyalty and advocacy.
Prices do still matter
While today’s consumers do weigh-up other factors, price is still important. Particularly in 2023 when customers will have less spare cash to spend.
This is where meaningful engagement can really work for your business by increasing customer loyalty.
Love2shop has recently worked with a large national builders’ merchant to create a successful loyalty programme applicable to their customer base covering sole traders up to mid-sized builders employing 100+ people.
The goal was to create a simple reward programme that customers would use to encourage greater loyalty and sustain purchasing by offering realistic benefits they would want.
Using the Love2shop Engagement Platform, our expert team was able to create a programme that rewarded customers with points for each purchase and allowed the business to serve up seasonal offers on products they wanted to drive.
The implementation of the reward programme resulted in a 91% reactivation of ‘dormant’ customers, (those with accounts who had not spent for a long time), and a 46% increase year-on-year in registered customer spending. Can you imagine the impact these increases could have on your own business?
Customer expectations are on the rise
Buyer journeys have always been important – but greater awareness of this among consumers has given them an even greater understanding of their value – something consumers will really begin to leverage this year.
Luke Ladyman, co-founder and chief operating officer at cashback website Cheddar, told Forbes that customer ‘savviness’ has reached unprecedented levels.
“Gen Z consumers are going through a very tough time, with many having not experienced a situation like this before,” he said. “This has spawned a much savvier consumer, one that is ultra-connected, engaged and pragmatic with their money.”
He added that customers in 2023 will be more alert to whether offers and incentives represent good value and those businesses that do will see a rise in customer loyalty and recruitment.
Now is the perfect time to review your customer rewards – are the discounts or rewards you issue to customers being redeemed? If not, consider a survey to find out why. Strong data will always make your campaigns better.
It may be that the discounts are not deep enough or the rewards take too long to accrue to a meaningful level. Perhaps what they get for them is not appealing?
Rewards that are simple to use and can be redeem across a range of retailers and items – such as Love2shop multi-retailer gift cards – are the most effective way to recognise customer loyalty.
Offering rewards that are flexible and can be used to purchase what your customers really want have a stronger influence on loyalty than, for example, ladder-based reward systems where certain amounts of points trigger free gifts or third-party discounts.
Insight can help you personalise your customer reward offer. Alternatively, with the right customer loyalty strategy, or engagement platform, you can harness purchasing data to streamline the process and create even more effective engagement strategies.
Service, service, service
Anything you do to increase customer loyalty needs to be simple and intuitive. It also needs to work.
Poor service, whether online, via a customer profile or at the point of delivery, will derail loyalty fast.
Ecommerce giants such as Amazon and QVC have raised the bar on ‘fulfilment’ – delivering the product quickly and on the day it was promised. And excellence in customer service is a given.
If dealing with your business is a pleasurable experience, customers will return. And they will become brand advocates, posting reviews on your company website or sites like TrustPilot. These reviews are key to driving new customers through the door.
A simple affordable solution
So how do you build smooth, effective customer engagement into your processes if you’re a small or medium-sized business with ambitions to grow? Or a large multi-national with complex CRM systems to navigate?
The answer is modular. Love2shop’ two decades of experience in customer engagement has allowed it to create an engagement platform that only gives you what you need.
The core module is ideal for businesses starting out and looking for an affordable, off-the-shelf platform they can quickly integrate into their business. But for those looking for more advanced or bespoke functions, Love2shop Engagement Platform offers those as add-ons – so you only pay for the services your business needs.
In addition, you have access to a dedicated account management team which works with you to understand every aspect of your business, provides extra insights and solutions you might not have seen yourself and ensures your platform delivers real results and return on investment.