Customer retention: Getting the Most From Your Loyal Customers

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Online merchants are facing some of the toughest competition around with the ecommerce market growing 13% every year. At the same time, Amazon monopolizes the market with a staggering 44% of all online purchases, and acquisition tactics are becoming less and less effective. Case in point: Just 4% of digital ads are viewed for more than two seconds.

You may think that creating a successful online business in today’s world is an impossible dream. But there is a tactic that often gets overlooked that’s incredibly valuable for your company.

Read on to learn more.

Benefits of Customer Retention

Customer retention has many benefits. Compared to acquiring new customers, it costs five times less. Not only is it a more cost-effective approach, but these loyal customers are more profitable to your business. Research shows that once a customer has purchased from you, they are 27% more likely to return to purchase a second time. This number almost doubles to 43% between purchases two and three, and continues to increase as they move along the customer lifecycle.

The statistics don’t end there. When we dug a little deeper, we saw that 53% of your revenue comes from the top 20% of your customers. Those customers make repeat purchases and have a higher average order value because they already know and trust your brand. Focusing on a retention plan will bring more customers into that top 20% and generate more ROI.

So, now you know the importance of customer retention, what’s next? Well, a loyalty program is a perfect tool for driving your customers to repeat purchase by incentivizing return with redeemable points and discounts.

Here are four tactics to drive customer retention using your loyalty program:

  • Customer experience
  • Make it personal
  • Build a community
  • Use advocates to acquire new customers

Customer Experience

According to a Walker study, customer experience is set to overtake price and product as the key brand differentiator by next year. Customers are no longer wowed by cheap prices; they expect an excellent shopping experience from start to finish. This could be competitive delivery options, a generous returns policy or a quick-to-respond support team. The numbers speak for themselves. 73% of buyers identify customer service as an important factor in purchasing decisions and 83% of buyers are willing to pay more for great customer service.

Pro Tip: Use your loyalty program to create a customer experience that will keep people coming back to your site. Make it an engaging and smooth experience for your shoppers that will delight them into returning.

TheChive, for example, has gamified their loyalty experience so customers are excited by the prospect of returning to engage with it. They place their customers in a leader board and move them up or down when they complete onsite activities – such as uploading or reacting to a photo. As a result of this friendly competition, their customers enjoy returning to engage with their store as they know they’ll get points in exchange for interacting.

Make it Personal

Ecommerce is impersonal by nature. It lacks the friendly face that assists in your shopping experience that you get from a brick and mortar store. This is hard to replicate for customers interacting with a machine, especially in the age of GDPR, where data must be treated with sensitivity.

But research shows that customers are looking for that personal experience online. 58% of consumers say a personalized experience is very important when purchasing from a company. And, 57% of customers are willing to share personal data in exchange for personalized offers and discounts.

Pro Tips:

  • Use your loyalty program to send emails, offers and discounts to your members that are tailored to their needs and preferences.
  • Try displaying products related to their first purchase, and the loyalty points they’ll get for purchasing as a way to cross-sell.
  • Or, send them an email that displays the loyalty points they have waiting for them.

Did you know that: loyalty emails have a far higher open rate than all other marketing emails. This shows that using the information you have from their accounts will allow you to create that customized shopping experience that they’ll want to open and engage with.

Build a Community

64% of consumers cite shared values as the primary reason for having a brand relationship. Use your loyalty program as an extension of your brand, allowing it to showcase your personality and values. A good example of this is Annmarie Skincare, pictured below, whose loyalty program is on brand with its natural beauty products.

Another way to build community is by creating loyalty tiers. This gives customers a reason to return and makes them feel like they are part of a group of similar consumers, enhancing that sense of community. Take a look at how Beauty Bakerie has included tiers in their program. The brand’s “New to This” and “True to This” tiers make their customers feel like they belong to wider groups of customers in a similar position to them.

Use Advocates to Get Customers

The most reliable form of advertising comes from people we know and trust. 83% of online respondents say they trust the recommendation of friends and family. If a friend of a potential customer knows already trusts the integrity and quality of your brand, then it is easier and faster for them to make a purchasing decision.

Similarly, reviews are an essential part of the buying process with 95% of shoppers consulting reviews before making a purchase. If a potential customer consults the reviews of your store to see glowing references from brand advocates, they will be more likely to trust your brand and complete a purchase.

Pro Tip: Use your loyalty program to encouraging your existing customers to become advocates for your brand. Do this by rewarding shoppers with loyalty points in exchange for leaving a review or referring friends. Your customers will see the value of sharing your brand with others and new customers will trust your brand over the competition.


There are many ways you can use your loyalty program to drive customer retention. To get started, begin by focusing on the four areas we’ve outlined above; the customer experience, personalization, community and advocacy.

Remember: Returning customers already know and trust your brand. They are also more likely to buy again and, on average, generate the bulk of your revenue. So don’t forget about them. Want to find out more about customer retention? Check out this e-book from Loyalty Lion that covers everything you need to know to get started.

About LoyaltyLion

LoyaltyLion is a data-driven loyalty and engagement platform trusted by thousands of ecommerce brands worldwide. Merchants use LoyaltyLion when they want a fully customized loyalty program that is proven to increase customer engagement, retention and spend. Stores using LoyaltyLion typically generate at least $15 for every $1 they spend on the platform.

There are ways to balance customer satisfaction and offer hassle-free returns at your online store. A great returns experience can increase sales in the long run as your best customers often make the most returns, as noted in the NRF report.

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