Online customer loyalty refers to the likelihood that a customer that has previously purchased a product or good from an ecommerce site will make another purchase in the future. Building customer loyalty is vital for all businesses, including those that operate online. In this article, we provide an overview of online customer loyalty.
It is estimated that the cost of acquiring a new customer is up to 25 times more expensive than selling to an existing customer. On top of that, existing customers spend, on average, 65 percent more than new customers. The takeaway: customer loyalty is extremely important.
What is Customer Loyalty?
Customer loyalty refers to the likelihood that an existing customer will purchase a product or service again from a company they have already done business with. This loyalty is the result of several things, including:
A customers positive experience with a business
The satisfaction a customer feels after doing business with a company
The value of the products or services that a customer receives from a business
It may sound obvious to say because obviously brands want to make every effort to provide the best possible experience, satisfaction and products or services for their customers. However, it is important to highlight the importance of customer loyalty because loyal customers have the ability to grow a business faster than marketing and sales combined.
Why Customer Loyalty is Important
Customer loyalty is important for three primary reasons:
Loyal customers are more likely to continue shopping with a brand that they have had a good experience with.
It is far less expensive to retain existing customers than it is to acquire new customers. Moreover, loyal shoppers spend significantly more money on repeat purchases than new customers who make first-time purchases do.
Loyal customers serve as brand advocates. In other words, they are more likely to tell their friends and family about their positive experiences, thereby attracting new customers without companies having to invest in additional marketing.
How to Build Online Customer Loyalty
How does an online business ensure that their customers are happy and become loyal? First and foremost, they must ensure that they are delivering exceptional products and services, that they are meeting their customers needs, and that they are providing outstanding customer service.
Fulcrum Resources-Tip: If an online business can hit all of the aforementioned nails on the head, it can transform their happy customers into loyal ones by putting a customer loyalty program into practice. A customer loyalty program is a rewards program that a business offers customers that make frequent purchase. These programs can offer things like discounts, free products or services, rewards, or new products prior to their official release.
Why do customer loyalty programs help build a loyal customer base? In short, its because they offer happy shoppers an incentive to return to a business to make future purchases. The more loyal customers a business has, the more revenue it stands to make in the long run.