Practicology’s Head of Data & CRM, Will Dymott, explains the value of loyal customers and explores how to inspire loyalty for your brand.
Although cultivating loyalty is difficult, successful retail businesses rely on the loyalty of their customers. It is not unusual for 80% of profits to be generated by 20% of your retail customers, and retaining these loyal, high value customers is vital.
So, how do you create loyalty?
Customers can consider any number of factors when making a purchase. The decision-making process behind the purchase of kitchen towel is vastly different to that of a winter coat.
In today’s connected world, it’s very easy for customers to browse multiple retailers, across multiple channels and shop elsewhere. If a retailer’s proposition isn’t memorable for all the right reasons, then a customer has no real incentive to return.
For many retailers operating in saturated marketplaces, customer retention is a constant challenge with an average of only 36.4% of customers making a return purchase. To compound this, if investment occurs in the wrong areas when trying to recruit new customers, the customer base will continue to stagnate.
To help overcome this problem, retailers should ask themselves the following five questions:
- Why should your customers return to you?
- What barriers do you have in place?
- Are your customers really motivated to be loyal to your business?
- Did your customer’s original purchase go well? If not, why not?
- Are they really ‘your’ customers? Or are you simply renting them via third parties, or buying them through discounting strategies?
Creating loyalty in a crowded marketplace
Wordery is an online bookshop that should be struggling to compete with Amazon, yet they have mastered customer loyalty and are reaping the rewards.
My wife has become a loyal Wordery customer admiring the free bookmark with every order and a delivery note that reads ‘This book belongs to…’. Most importantly, my wife feels that Wordery really love books, and this is the reason that she goes back time and time again, ignoring our subscription to Amazon prime.
Wordery has gone to extraordinary lengths to distinguish its brand from its rivals. Its mission is clear: to be a traditional bookshop with the convenience of an online store, and to restore the enjoyment of buying books.
Founded in 2012, Wordery now has five million customers in over 100 countries and it is no surprise that business is thriving. Although it is not always the cheapest option compared to Amazon, it doesn’t have to be because its ideals are in alignment with its customers.
Brands can learn from Wordery and should strive to find their raison d'etre, becoming remarkable and delivering a wonderful, unique service.
The five key factors to consider when inspiring loyalty
To deliver truly memorable customer experiences and ultimately drive loyalty, retailers need to concentrate on the five key areas shown in the customer experience wheel below.
For a retailer to succeed, it needs to provide a unique offering in at least three of the five segments of the wheel. Wordery may not have a unique product, but its offering is unique across the four remaining areas and it has been able to thrive despite Amazon’s domination of the sector.
At Practicology we help consumer facing businesses identify the areas where they are under performing, provide a practical plan on how to rectify any issues, and implement it, helping to build a loyal following and ultimately thrive.
For any more information on how Practicology could help your business, please contact us.