How a solid customer loyalty strategy can help you increase profit margins

Mario Palazuelos

7 February 2019

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Have you considered that the thing holding you back from building a successful ecommerce strategy is customer loyalty? Any given ecommerce spends invests large amounts of money in order to attract new customers to their platform. For every purchase made by a new customer, you have a direct marketing cost. If your conversion rate is above average, then most likely your marketing campaign will pay off but, in many cases, it won’t. In these cases, ecommerce stores struggle to get their desired profit margins which keeps them preoccupied on one task rather than considering the operation as a whole. By taking the decision to end this constant struggle for profitable acquisition and placing more focus on customer loyalty, you can cut your direct marketing costs, therefore increasing profit margins.

If you are in a scenario similar to the one mentioned, I highly recommend utilising the following strategies to increase loyalty.

  1. Improve your ecommerce customer experience:

It’s not that hard really, just “keep things simple.” Most of the time, customers exit ecommerce stores because they find them difficult to navigate. In some cases there are too many options to click, the check-out process is complex, it takes a lot of time to load a page, and so on and so forth. These are three of the most common problems when approaching a customer experience analysis for any ecommerce, a quick and efficient solution is to keep things simple.

  • Home Page: For starters, always have your “Hero” content on this page. Don’t overload your customer with too many options; a video, image or cinemagraph in your main banner will do the trick. Get rid of pop-ups that only serve to distract the attention of your customers and try to make them focus on what’s important, your value proposition.
  • Collection page: Have an easy to use set of filters and keep them simple. Three filters is more than enough to get your customers where you want them to go. Also, think in terms of “Mobile First” because it’s very hard to fit more than 3 filters on a mobile screen and retain a good user experience.
  • Product page: Have a good detailed description of your product, and a good comment section as well. Customers increasingly make their purchase decisions based on reviews and comments from fellow consumers, so if your customer can hear about the product from their peers, you have a better chance of closing the sale than with a simple, branded product description.
  • Check-out page: To increase loyalty, it is essential to have an easy check out process. Customers always remember if their payment process was needlessly difficult, so it’s better for them and for your ecommerce to have a simple “name, email/phone, address, and payment method” process rather than asking for lots of irrelevant information such as “Date of birth”, “ID Number” and what not.
  • Site Speed: Decrease your loading time to a minimum. The worldwide average is 2.7 seconds for any page to load, so if your loading time is above that number then you are likely losing the attention of your customers right from the beginning. Try not to put too many functionalities on any page; this way your customer’s browser will load the information faster and decrease loading times.
  1. Understand your loyal customer: what motivates them? What are their consumption habits? What is the correct way to communicate with them?

I have had the opportunity to work and apply Customer Knowledge Studies for a long time in a wide range of ecommerce stores and the results never cease to amaze me. If you don’t know what a Customer Knowledge Study is, it’s really quite simple; it’s a detailed study of your loyal customers points of communication with your brand. The result of this study is a well-mapped Customer Journey full of insights, such as the correct channel for the brand to communicate with their loyal customers and the correct incentive for them to purchase again based on previous experiences, wow points and pain points along the conversion funnel (including marketing campaigns), and vast quantities of useful insights and data.

In this next slide, I’ll show you the result of an ecommerce struggling to increase the conversion rate from loyal customers, by only knowing how to talk to them through Facebook ads and the impact generated by a Customer Knowledge study:

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Getting any ecommerce to the desired conversion rate is quite a challenge but not an impossible one. If you are a beginner, or even an experienced ecommerce manager, then you will probably want to try a solid strategy for increasing loyalty rather than using discounts or freebies to close the sale, as the latter will further harm your profit margin.

So always remember to keep things simple; try not to overuse functionalities such as pop-ups or call-to-action buttons, or overthink how your home, collection and product pages should appear. It’s wiser to conduct a data-based study to take your communication to a new level. Customer Knowledge studies will give you the edge to talk directly to your loyal customers and get you closer to your desired profit margins.