With ever-steeper competition forcing sellers to work harder for their wins, prioritizing retention is a smart strategy. Unfortunately, customer loyalty strategies don’t always resonate with consumers—which means merchants must think beyond the basics of customer-lifecycle messaging to offer a unique value proposition that sticks beyond the first buy.
In their most recent annual survey of eCommerce retailers, technology researcher Forrester found that loyalty has dropped in the past year, with the percentage of customers who are repeat customers dropping by 5 percent. The impact on sales is even steeper, with just 45 percent of sales driven by repeat business — a 26 percent drop from 2015, when well over half of sales came from repeat buyers.
| Metric | 2015 | 2016 | % Change |
| Repeat customer rate | 40% | 38% | -5% |
| % of sales generated by repeat customers | 61% | 45% | -26% |
Source: Forrester and Shop.org, State of Retailing Online 2015 and 2016
The explanation for waning loyalty comes down to the bottom line. The ease of comparison shopping means that shoppers can find the lowest price with a single tap or click—causing a race to the bargain basement that many small- to mid-sized merchants can’t win when competing against mass merchants.
And cost consciousness isn’t just about product price tags. When it comes to shipping, “free” is now the norm—driving shoppers to buy from whichever website offers the lowest total order cost. More than half of shoppers have added items to an order to meet the free shipping threshold, 45 percent of shoppers have abandoned an order when it doesn’t qualify for free delivery, and 44 percent have searched for a free shipping promo code before purchasing online. As a result, close to two-thirds of online orders now involve free shipping.
But while mass merchants may have the advantage when it comes to pricing and discounts, smaller sellers do have unique assets that position them well to earn loyalty – if they can deliver on what they promise. Crucial to winning the battle for hearts and minds:
- Making “out of stock” obsolete
Merchants’ hard work to attract and retain customers can be for naught if shoppers can’t immediately lay claim to the products they desire. While 75 percent of 2015 holiday shoppers said they planned to buy from merchants they were already familiar with, that loyalty evaporated if items were “out of stock” online (a whopping 76 percent would shop from another retail brand, Deloitte found). To counteract this potential for abandonment, merchants should implement universal fulfillment strategies, such as ship-from-store, ship-to-store, and in-store pickup, that give shoppers anywhere access to the brand’s complete inventory across stores and distribution centers. - Definitive selection within a self-defined niche
Merchants should strive to define their brand’s areas of expertise and then deliver on that promise with an array of goods that demonstrate a keen understanding of customers’ needs within the niche. That means highlighting expertly-curated accessories to complement products, one-of-a-kind items and brand exclusives, and themed categories tailored to address shoppers’ concerns or needs. Merchants can make the most of the depth of their product assortment by highlighting the provenance of products and providing copious expert buying advice, further demonstrating deep knowledge within their chosen niche.
For example, Kibo merchant Sundance Catalog highlights its mission to source handcrafted, artisanal finds by profiling artists on the eCommerce website and including detailed descriptions of materials on the product pages. Shoppers are invited to consider complementary items beyond the cross-sell, such as including the option to add a polishing cloth to the order.
- Fast fulfillment with a personal touch
While “free” still trumps “fast” when it comes to shipping, the speed with which merchants can unite shoppers with their orders is still an important factor and one that can foster positive connections with merchant brands. A quarter of consumers said that they’d consider a retailer other than Amazon if that retailer could match or beat Amazon’s delivery speed, according to the Kibo/e-tailing group Consumer Shopping Survey. Furthermore, faster delivery times correlate with higher Net Promoter Scores, with 87 percent of those who received orders within five days becoming promoters of the merchant’s brand versus 66 percent of those who received orders after more than five days, according to Kibo.
Implementing universal fulfillment services can give merchants the edge when it comes to quick gratification of consumers’ needs. Merchants can further cement their standing with shoppers with “above and beyond” customer service to support order fulfillment, whether through staff interactions at the pick-up counter in-store or in the packaging that accompanies eCommerce orders. By making the presentation and delivery of items a memorable part of the shopping experience, merchants stand a better chance of winning loyalty.
The monthly gaming subscription service Lootcrate encourages customers to share their excitement over new deliveries with a step-by-step guide to unboxing included right on the packaging. The promotion demonstrates the merchant’s understanding of its Internet-savvy core audience and encourages social media activity.
- Bringing customer history into stores
Speaking of in-store interactions, merchants should do their utmost to equip store associates with access to customers’ purchase histories. That way, one-on-one conversations between customers and store associates can incorporate suggestions for complementary items, advice about care or maintenance, and even personalized discount offers based on customers’ past orders—lending continuity to the store experience and giving associates the opportunity to demonstrate expertise that matches individual customers’ needs.
Unfortunately, few merchants currently operate the technology that incorporates order history tools into their mobile solutions for store associates. To truly offer excellent customer service, retailers should look for mobile point of commerce platforms that offer store associates an intuitive and easy way to facilitate functions related to fulfillment (such as inventory lookup and save the sale capabilities), as well as customer order history and upsell/related product opportunities.
- A sense of agency
Merchants should go beyond inviting buyers to submit customer reviews and offer opportunities for ongoing feedback and interaction with the brand. Invitations to submit surveys, join conversations on social media, or attend in-store events are further opportunities to initiate dialogue, while returning buyers with longer purchase histories may be asked to join customer feedback panels or groups. These strategies not only give merchants insight into shoppers’ priorities and experiences, but they also give customers a sense of ownership of the brand — especially if their suggestions and feedback are put into use and then promoted or shared.
Kibo merchant Title Nine, a women’s recreational clothing outfitter, uses its Facebook outpost to tap followers’ viewpoints. One post invited followers to participate in a one-question survey about the cover image for the next catalog; another showcased pants that meet the needs of customers, who “request[ed] … gear that can go straight from the ride to the desk.”
What strategies are you using to foster customer loyalty?
