The Connection Between Loyalty Programs and Customer Satisfaction

Building repeat business is a sure-fire way to increase a store’s revenue. As business owners, we naturally tend to focus on getting new customers; taking steps to court existing customers is a promising strategy as well. Typically, it is less expensive to keep an existing customer than it is to attract a new one.

For online storeowners, however, getting repeat business can be tricky. Return clientele is a rare gem in eCommerce since customers hardly return to a site after making a purchase. Fortunately, there are some tools that can be used to increase the chances of bringing visitors back – namely, a loyalty program. Of course, this type of program can only be effective if good customer service and products are already in place.

Loyalty programs, which are common among brick-and-mortar stores, can be effectively used by ecommerce merchants to keep customers coming back. These programs can take various forms and involve all or some of the following components:

  • Percentage discount off of certain purchases
  • Electronic coupons for frequent shoppers
  • Rewards points redeemable for products
  • Free/reduced shipping for members

As nice as these perks may be, an effective loyalty program should do more than just give things away. Retailers must focus on providing consumers with a satisfying experience, be it in the overall service they receive, personal touches, such as a birthday promotion or priority notification on desirable items. It may seem counter intuitive, but rewards alone won’t make customers commit to your program, let alone create loyalty. Genuine customer loyalty is earned through positive experiences with your products, customer service and brand.

Ask yourself: Is there enough value in my products? Is my site accessible and user-friendly? Am I taking care of my customers? Evaluate how you run your business and remember that no matter how glamorous your loyalty program is, it won’t make up for substandard products or poor customer service.

Building customer loyalty may be difficult in the highly competitive ecommerce business, but customer satisfaction can always tip the scale in your favor. So whatever you do, think about your customers and how you can improve their shopping experience. A loyalty or rewards program should be the icing on top of the cake.

Below are some of the basic, yet effective, elements your business should deliver:

  • Easy navigation to complete transaction (easily found “check out” button)
  • Detailed and accurate product descriptions with clear images
  • Uncomplicated checkout process
  • Prompt shipment
  • Secured shopping cart software security hacker safe (add trust symbols like Verisign)
  • Helpful customer support (include a tollfree phone number)

Disregard any of these and you can forget about a loyalty program. Strive for an excellent customer experience and watch your program succeed. But how do you measure the success of a loyalty program? Membership increase over time is one metric. After all, more members could mean more conversion, right? Well, not exactly. Although membership growth is important, it’s not the most reliable indicator. To measure your program’s success, study your analytic data. But even without it, you can still tell if your loyalty program is working based on the following:

  • The percentage of “participating” members (i.e., accruing points, spending money)
  • Frequency of spending
  • Customer retention
  • Member’s program engagement (i.e., redemption activity)

A successful loyalty program can strengthen the relationship a store has with its customers. It should also collect useful data that can be studied for patterns in customer purchasing behavior, rate of spending, and so on. This information can also be used to engage “unprofitable” customers, using rewards and incentives to encourage participation.

Ultimately, loyalty programs cannot guarantee customer loyalty, but they can complement your excellent products and first-rate customer service. Loyalty programs can provide value for regular customers, as well as intimate details about customer preferences, which can be used to effectively tailor future marketing campaigns. Above all, knowing your customers and catering to their wants and needs is the real secret to happy, returning customers.

By: Shirley Tan


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