The Retailer's Ultimate Guide to Customer Loyalty

Having a loyal customer base can be the holy grail for most retail businesses. But it can be hard to keep track of customer loyalty and know if you’re doing the right things to help grow it. This guide covers everything ‘customer loyalty’ that you need to know, from where it fits in your marketing strategy, to how to encourage it, and how to build a winning loyalty program.

Where does customer loyalty fit?

On average, loyal customers spend 60% more with you per visit. And their repeat purchases multiply this even further, as they shop with you 90% more frequently [Rosetta]. They are also more likely to spread the news about your store amongst friends and introduce new customers to your store. In fact, loyal customers are 70% more likely to share their favorite stores with their friends.

Your loyal customers typically only account for about 20% of your shoppers, yet they generate around 80% of your total revenue.

Not only do loyal customers make your store more money, they also require less of your marketing budget than acquiring new customers.

Acquiring new customers costs approximately 5 to 25 times more than retaining existing customers [HBR]. So, your marketing attention should be directed at turning new customers into loyal customers. This is where you will make the highest return on investment and maintain this return for the long term, making customer loyalty an important part of any retail store’s marketing strategy.

customer loyalty marketing

How to create customer loyalty

Adding customer loyalty to your marketing strategy doesn’t have to be hard. You’re probably already doing it, whether you mean to or not. Because if you love your store and are focused on making it a brand your customers love too, you’re halfway there.

There’s three major things to make sure your store is ticking off to build a brand that your customers love and can’t get enough of, while encouraging customer loyalty.

1. Build a brand worthy of love

Lovemarks is a revolutionary marketing concept coined by Kevin Roberts, CEO of the advertising agency Saatchi & Saatchi. Lovemarks are brands that inspire loyalty beyond reason and deliver beyond your expectations of great performance. The core concept of Lovemarks is to create a strong bond that’s about love of product or service.

Stores of all shapes and sizes can encourage customers to fall in ‘love’ with them.

Just think of your ‘go-to’ clothing store or your morning ‘must-stop’ at your favorite coffee shop. And it’s your role to play Cupid!

customer loyalty love

Nudging customers to fall in love with your store is as simple as:

  • Knowing your target market, their needs and desires. Then exceeding expectations with your product offering and marketing.
  • Offering consistency of product style and quality, while keeping your range fresh and new over the seasons.
  • Responding to results and feedback to improve everything! Track product sales performance, marketing promotion results, and customer service feedback. The more you listen and improve, the more lovable your store will become.
  • Delivering the best customer service around. It's a sure fire way to ensure customers enjoy their time shopping with you (more on customer service below).
  • To top it all off, a loyalty program that gives something back to your customers can be a little thank you that compels them to shop with you over the competition (more on loyalty programs below).

2. Deliver the best customer service around

Think about your last positive customer service experience. What made it stand out? Was it the barista that remembered your order and your name? The shopkeeper that helped carry your bags out to the car? Or how they entertained your troublesome toddler while you whipped in to try on those shoes that caught your eye in the window?

Customer experience is key to encouraging customer loyalty.

If a customer leaves your store with a smile, they are more likely to come back. 94% of customers who have a positive low-effort service experience will buy from that same business again. However, a dissatisfied customer will tell between 9-20 people about their experience [White House Office of Consumer Affairs]. So it pays to make customer service a top priority for all your staff.

customer service

Your staff are your secret weapon. Make sure your staff know the importance of:

  • Being friendly and helpful. Your staff members’ top priority should be to make customers feel happy about being in your store. This should be carried across all of your store’s touch points, from in-store, to over the phone and email, to on your social media channels.
  • Making everything easy. From finding what they are looking for, to making their purchase, and everything in between, a stress free shopping experience is a must!
  • Keeping things quick. People are time-poor and frustration will ruin their shopping experience. Don't make them wait. But, make sure you give them enough time! They also don't want to be rushed.

Tip: When talking on the phone, make sure your staff hang up after your customer. That way you won’t ever make the mistake of cutting your customers off or appearing brisk.

3. Compel Customers with a Loyalty Program

So your customers love your products and enjoy your service, but they expect to be rewarded for their loyalty. After all, the store down the road has great products and great service too. 84% of global consumers say they want to visit stores where they are part of a loyalty program [Nielsen].

Your loyalty program should differentiate your store and give your customers a reason to come back to you, over your competitors.

And rewarding your loyal customers is a great way to show that you appreciate and value them.

compell customers loyalty program

What to look for in a loyalty program

When looking at starting a customer loyalty program, there are a lot of things to consider. It’s important that you choose a solution that’s right for your business and that your customers will embrace.

Here's five types of loyalty rewards to consider:

1. Customizable

A solution you can customize to make your own is essential for maintaining brand consistency.

Look for the ability to add your logo and customize loyalty rewards to suite your store.

Depending on your goals, rewards could be anything from $ off, % off, or something a little different, like free shipping, gift wrapping or a gift with purchase.

customize loyalty program

2. POS & eCommerce integration

If you have both a brick-and-mortar and online store, make sure you choose a loyalty solution that works seamlessly between them.

A loyalty program that allows customers to collect points and redeem rewards, both in-store and online, will result in a seamless customer experience. A solution that has point-of-sale integration and eCommerce integration will do the trick. Check out Collect Loyalty’s long list of integrations to see if it will work with your systems.

redeeming loyalty reward

3. Usability and automation

Your staff are busy people, so it’s important your loyalty program isn’t going to be too challenging or frustrating for them to operate. Your staff should be able to easily understand and operate your loyalty program so they can ask customers to join and easily apply their loyalty points as part of the sales process, all without having to go out of their way. Otherwise this can often be a frustrating experience for customers.

Look for a solution that automates everything, from rewarding points for purchase automatically, to sending out rewards to customers when they are earned.

Collect Loyalty has been built with busy retail staff in mind - with quick and easy customer sign-up, automated points for purchase, automatic customer emails, and hassle free reward redemption.

loyalty customer email loyalty complete profile bonus

4. Mobile Wallets

A loyalty solution that makes the most of consumer technology is a must! Mobile wallets are one such emerging consumer technology that are just screaming out for retailers to take advantage. Apple Wallet is Apple’s mobile wallet. Consumers use Apple Wallet to keep their coupons, loyalty cards, boarding passes, movie tickets, and more in one place on their iOS device.

A Loyalty solution with built-in Apple Wallet integration will put you ahead of the game.

Customers can add their rewards to Apple Wallet and when customers are nearby, notifications from Apple Wallet prompt them to shop and redeem their reward coupons.

collect wallet add to wallet apple wallet notification

5. Built-in Referral program

71% of consumers say they are more likely to make a purchase based on a referral [Hubspot], making friend referrals a sure fire way to grow your customer base and your sales. And what’s great, is that 78% of loyal customers want to spread the word about their favorite store [Ambassador]. So encourage it by making it easy for customers to refer, and reward them! The American Marketing Association found that offering a reward increases referral likelihood.

A loyalty solution with a built-in referral program that rewards customers for successful referrals is a must!

Collect Loyalty comes with a powerful referral program baked into its customer portal and at the bottom of every customer email. And the best part is, it rewards the customer after their friend's first purchase, making sure that you are getting real buying customers.

referral program collect

How to build a winning loyalty program

Now it’s time to get busy and create a winning loyalty program for your store. Think about your goals. What do you want your loyalty program to achieve? Repeat business? Increased spending? New customers? Or simply growing your database? Make sure you have your goals in mind so you can design rewards that help you achieve them and so you can explain the reason behind your loyalty program to your staff.

1. Choosing your rewards

Think about the different types of rewards that might appeal to your customers, and importantly, keep them coming back to your store. First choose the margin you want to play around with. You’ll want to consider what is going to be enticing for customers, and balance that with what margin you can afford to play with. To give you a ballpark, a common reward value is around 10% of what the customer has spent with you, i.e. giving a reward to the value of $20 when they have spend $200. Remember, you’ll see return on investment from both the immediate sale associated with the reward redemption and the resulting long-term customer loyalty.

reward customer loyalty

Here’s some ideas to start you off:

STORE CREDIT: $$ off their next purchase - It’s always nice to get a discount, and offering your customers the chance to earn store credit is a great way to encourage them to return to your store regularly. Not to mention, they get to choose what they spend it on at your store. And it encourages them to spend more to make up the price difference.

A FREE PRODUCT: Giving your customers a free product is a great way to thank them for their loyalty, because it delights the customer by creating the same feelings as receiving a gift. It’s also a great way to move stock. How about something small, like a moisturiser, nail polish, a pair of socks, a free coffee, or a piece of cake?

A DISCOUNT ON A SPECIFIC PRODUCT OR CATEGORY: This is a good way to move stock and introduce your customers to your different products, inspiring them to buy more in the future. Consider offering a discount on high margin products and categories, so that it doesn’t impact on your profits.

A GIFT WITH PURCHASE: A gift with purchase allows you to move stock, while encouraging another purchase. It’s a good idea to pair a low margin gift with a high margin product purchase. This will help you maximize profit. Or if you don’t want to specify what product the customer must purchase, you could set a spend amount, like ‘Free socks with any purchase over $15’.

Tip: If you’re stuck for ideas, don’t be afraid to reach out and ask your customers what sort of rewards they would like to see in your loyalty program. This will help you come up with rewards that customers really want, which will help your loyalty program to become more successful.

2. Add a referral program

Referral marketing is the most effective form of marketing when it comes to acquiring new customers. Nielsen reports that people are four times more likely to buy when referred by a friend. Referral marketing works because it’s targeted. Friends have shared interests (it’s why they’re friends), they share style, and they have common demographics. Referred customers are also more likely than non-referred customers to spend more and turn into loyal customers themselves [Journal of Marketing].

encourage friend referrals

Think about what a new customer is worth to you and how many loyalty points you want to reward a customer for referring a new customer. And to incentivize the new customer to make their first purchase, choose a discount to send the referred friend to entice them to shop at your store. Using Collect Loyalty you can add ‘Refer a friend’ links on all customer emails, coupons, and the customer portal. So you don’t have to worry about promoting your referral program. It’s all done for you, and it’s completely fraud proof and trackable so you can measure your results. Plus, you only reward customers for successful referrals that result in a new customer making a purchase.

3. Make your staff your secret weapon

A successful loyalty program is all about customer engagement. So, how do you get customers engaged with your loyalty program? The key is to get your staff on board. As well as making sure your staff know the importance of great customer service, it’s vital to your loyalty program’s success that you make them your loyalty program ambassadors. Your staff are the face of your business, so it’s essential that they understand your loyalty program. It’s worth taking the extra time to make sure your staff are confident using your loyalty program, so they feel comfortable asking customers to join. A staff training resource like this one should do the trick.

Tip: Make sure staff ask every customer “are you part of our loyalty program?” It's a good idea if the staff have some reward examples they can use to entice the customer to join.

staff loyalty training

4. Promoting your loyalty program

Once you’ve got your loyalty program up and running, it’s time to share it with your customers and start growing your loyal customer base.

Here’s three quick ways to get the word of your new loyalty program out there:

IN-STORE: Aside from your staff promoting your loyalty program of course, a great way to sign customers up is while they are in-store. Making them aware of your loyalty program while they browse might even be the tipping point that compels them to make a purchase. A simple way to do this is with signage. Consider placing a sign at the checkout “Ask about our loyalty program”, in the changing rooms, or on price tags. And if you’re more tech inclined, an eye catching idea is to use a customer facing iPad or tablet with Collect Loyalty’s signup form to get in-store shoppers to sign up to your loyalty program while they are waiting in-line or just browsing your shop.

ON YOUR WEBSITE: Adding your loyalty program to your website and eCommerce store can be a great way to increase awareness of your loyalty program and prompt visitors to sign-up. A website widget creates an easy-to-use and good looking way for your customers to sign-up and check their points balances and rewards. Adding a widget to your site is easy with Collect Loyalty’s Customer Loyalty and Referral Widget.

loyalty shopify apple wallet

ON SOCIAL MEDIA: Social media is a great way to engage with your customers and get existing and potential followers to join your loyalty program. A post about your new loyalty program on your social pages is a simple way to get the word out and invite your customers to join. And if you want to do something a little more engaging that has some longevity to it, add a Loyalty Program Tab to your Facebook business page. This way your Facebook fans and visitors to your page can sign-up to your loyalty program, check their points balances and rewards, and refer friends, all from your Facebook page. How cool is that?!

loyalty program facebook tab

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