It is a popular belief that people shopping online tend to toggle from one website to another in search of a better offer. While it is true that the majority of the first-time customers in eCommerce make the purchase based on offer or promotion; however, in due course, shoppers tend to develop a deep sense of loyalty towards a particular eCommerce website if they have had a positive experience in the first few purchases.
Why do you need repeat customers?
There are various types of customers in business. These include customers who have made a purchase at least once and returning customers who’re purchasing from your website for the second time. The most crucial, the ones which every business wants to see a customer tuning into are repeat customers. They are the ones who have made a purchase for more than two times, and it is the returning and repeat customers that help sustain a business. According to the report, “The ROI from Marketing to Existing Online Customers” by Adobe, 40% of the total revenue of an eCommerce business comes from returning or repeat customers who ironically comprise only 8% of the total visitors, in the United States. The number remains pretty similar in other countries also.
Cost of acquisition
Even though the probability of an existing customer making another purchase is 60 – 70% and the for that of a prospect is just 5 – 20% in addition to the fact that it costs five times more to acquire a new customer than to retain an existing one, majority of the business focus more on acquisition than retention. Why do you think is it so? Here is why:
- There cannot be repeat customers without turning the prospect into a customer in the first place.
- As per the data above, there is only a 5-20 % probability of a prospect making the first purchase. So, it needs more effort to influence them.
- Focusing more on new resources does not mean ignoring existing customers. In reality, existing customers are targeted very aggressively to make them return frequently. The confusion is due to the quantity. Compared to the number of existing customers, the number of prospects is astronomical. Hence, more resources.
Power of loyal customers
Customer loyalty is an outcome of consistently meeting customer expectations while delivering quality and on-time services. Having a customer base that keeps coming back to you for more in very integral to the success of your business. getting Loyal customers not only helps a business grow but also increases credibility while setting high benchmarks for revenue.
Here are a couple of points that highlight the importance of loyal customers.
1. Existing customers spend more
Having developed a sense of confidence with the online retailer, a customer turns to the eCommerce site frequently to avail of the service they have grown accustomed to. Longer the relationship with the customer, larger the transaction the customer makes. According to studies, an average repeat customer purchasing apparel spent 67% more in the month 31 -36 compared to the first 6 months. Another interesting find is that the shopper’s fifth purchase was 40% larger than that of the first one and the tenth purchase was a whopping 80% larger than the first one.
The study went to prove that the repeat customer purchases frequently, which is great news in itself. However, the main take away is the fact that they make a larger transaction, which is great news for the online retailer where each transaction costs more or less the same. Large transaction means more profitability for the retailer.
2. Repeat customers refer
More than any marketing channel, it is the word of mouth that is the most powerful and effective channel. It can make or break a business. In eCommerce, it is not only the product that matters; the service associated with the purchase also plays a crucial role in shaping the success of an eCommerce business. Studies have shown that the lifetime value for new referral customers is 16% more as compared to non-referrals.
3. Repeat customers cost less
As mentioned earlier, it cost five times as much to acquire a new customer than to retain an existing one. It is natural to require more persuasion to convince someone for the first time. After a few transactions, there is a sense of mutual confidence between the customer and the retailer. The customer, based on the product quality received and the service rendered in the previous transaction has grown accustomed and hence it requires less persuasion. Compared to the prospect, the existing customer is much lesser in number. Even if the maximum effort is rendered toward the existing customer, due to the difference in number, it will always cost less to maintain an existing customer.
4. Loyal customers buy other products
There is a reason why people prefer to shop in a mall or a multi-brand store. Apart from the convenience of getting everything under one roof, it is the sense of familiarity that attracts a customer to a particular store. An existing customer of grocery would most likely prefer to buy toiletries from the same retailer. The latest eCommerce marketing trends prove the same thing. The loyal customer provides an opportunity for cross-selling, which is essential for business expansion.
Ways to bring about customer loyalty on Shopify
So, you have a product you’d like to market. You have set up a Shopify store including all the nitty-gritty of running an eCommerce business using the tools provided by Shopify. You think it is all set ready to fly. Wait! What follows is the most crucial part of the business; getting people to shop in your Shopify store. It starts with getting people to visit your site.
In order to increase the traffic on your site, you can adopt any of the online marketing channels such as email marketing and social media marketing. Once you start selling, remember the points considered above, it is the repeat customer that sustains a business in the long-term. From this point onward, it is equally important to focus on customer retention, building a relationship with the existing customer, nurturing their loyalty towards your business. The service from Shopify has provisions and tools to help you retain your existing customer.
Some of the ways in which it can be done are:
1. Referral programs
It works on two levels; firstly, it is a great way to increase sales. No other marketing channel comes close to the word-of-mouth (or referral) marketing when it comes to effectiveness. Secondly, by rewarding the customer for their referral, it helps nurture loyalty and increase retention of an existing customer. However, this is applicable only if the service rendered to the customer is of exceptional quality. A satisfied customer will always refer. But an attractive referral program without quality service may not work.
2. Special day wishes
Loyalty comes from the customer relationship, so it is vital to make your customers feel special and appreciated every now and then. The dashboard for every Shopify store comes equipped with a system to automatically send out wishes on the occasion that are special for the customer.
3. Coupon Codes
In addition to a referral program, coupon codes are an extremely effective tool to persuade a customer to return frequently.
4. Social Media
Social media is a powerful tool to inspire brand loyalty. Connect with the customer by sharing relevant and quality content. Try making the best use of the Shopify app store to multiply your brand’s social media presence.
5. Personalized Communication
Communication could be SMS, an email newsletter or social media communication. The tone and language of the communication need to resonate with the customer; otherwise, it will be lost in transit. There are apps available in the Shopify app store that can help you personalize your communication with your customers.
Few apps to help your business gain, loyal customers
- Referral Candy is an app to manage the referral program. Currently rated 4.9 stars at the Shopify app store, it is extremely easy to operate; there’s no need for developer or coding skills.
- Conjured Referrals is another highly rated referral app with a 4.9-star rating. Unlike other apps, it does not charge commission or transaction fees on the referred revenue.
- Rise: Gift Cards & Loyalty is a Store Credit & Loyalty Program. The gift card is usable across multiple stores (Online, Shopify POS). The app is rated 4.9 stars.
- Outfy – Social Media Promotion helps retailers promote products on as many as 12 social media networks. It is currently rated 4.8 stars.
- Social Media Icons is another app to boost social media presence. It is currently rated 4.6 stars. It has a free service but also comes with three paid packages.
- Post Studio – Social Auto Post is the highest rated app (5 stars) to engage with customers via social media. It works effortlessly on Facebook, Twitter, and Bit.ly. It provides free service along with a paid version.
- Instagram Feed for Stories can showcase Instagram Stories & run Instagram Shout out on Store. It automatically pulls the brand’s most recent Instagram stories feed and shows up on the website like stories that show up on Instagram Mobile App, and is a free app.
- Spin-a-Sale adds an interesting twist to the subscriber pop-up, making it interactive, fun and irresistible for visitors. It is a wonderful app to increase visitor engagement and customer loyalty. The app is currently rated 4.9 stars.
- MailMunch – Email Popup ensures timely popups to present the customers with tempting offers and coupons just at the right time. Currently rated 4.7 stars. It also has a free service but also comes with two paid packages.
- Flashy – Marketing Automation is an all-in-one marketing automation platform for eCommerce. It allows email marketing, SMS marketing, and marketing automation with customers and visitors based on purchase history and website activity. It is currently rated 5 stars.
Conclusion
It is a fact that getting a new customer is of utmost importance to build a business and it is clear from the practice of distributing resources, where a major chunk of the resources goes into acquiring a new customer. It is definitely not a wrong move to do so. However, it is also an established fact that loyal customer plays an important part in the profitability of a business in the long run.
The purpose of this guide is to educate the rising entrepreneur on the importance of maintaining a relationship with the customer. Ways in which businesses can attract and persuade the customer to return. The importance of rendering an exceptional service that can help bolster the relationship, which ultimately will lead to a loyal customer. As an entrepreneur, it is highly recommended for the reader to always look out innovative ways to connect with customers. If you take care of the customer, they will take care of you. Remember that Shopify is not only a platform to jumpstart an eCommerce business; it is much more than that. It is a community helping each other; it is an ecosystem in which businesses can thrive.
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