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9/30/2020
 

Customer Loyalty in E-Commerce

9/30/2020

Importance of Customer Loyalty in E-Commerce


<p>The concept  can be broken down quite simply: whoever has something to sell online needs  customers to buy it. How the seller reels in permanent buyers is typically a  bit more complicated. Staying on the online market long term requires a loyal  customer base that can always be relied on. Of course, new customer acquisition  is also a part of the business but the efforts of bringing in new customers is  becoming more and more expensive and the number of potential customers does not  tend to increase over time. That is why customer loyalty in e-commerce is just  as important as it is in-store.</p>
<p><strong>Expensive  New Customers</strong><br>
  The costs  of gathering new customers, as mentioned before, is also the main reason for  the need of long-term loyalty. The key indicator used for this is the Cost New  Customer (CNC), which is more often now above 50 euros and sometimes even  exceeds the 100 euro limit. This is especially due to the fact that the  conversion rate for digital advertising is usually less than 1% for first-time  buyers. Some costs need to be drawn back in and for that it is best when a  customer returns - the more often, the better. However, it is not the only  reason why existing customers are so valuable.</p>
<p><strong>Profitable  Regular Customers</strong><br>
  One example  is Adobe's Digital Index showing that five to seven first-time buyers (with no  orders) in the U.S. and Europe must be acquired to achieve the sales volume of  a regular buyer (with several orders already). This can also be seen in the  relationship between the number of sales and visitors: In the U.S., 40% of  online sales come from repeat buyers (with previously one order) and regular  buyers, although these only represent 8% of visitors. In Europe, this ratio is  38% sales with 10% of visitors. The sales revenue from regular buyers increases  especially during the Christmas season and even more during economically trying  times.</p>
<p><strong>Valuable  Customer Loyalty</strong><br>
  Taking this  into consideration, a focus on customer loyalty in e-commerce is not only  necessary but extremely valuable. Certain factors, such as ever-growing  competition and the easy accessibility of offers that can be found through  comparison sites, make it all the more important to have loyal customers. The  path to achieving this begins with new customers becoming regular customers and  continues with taking appropriate measures to retain these regular customers.  But how can this be accomplished?</p>
<p><strong>Voluntary  and Involuntary</strong><br>
  In general,  customer loyalty results either from involuntary or voluntary factors, known as  factual or emotional loyalty. Involuntary loyalty results primarily from  existing barriers that make it more difficult to switch from. These include,  for example, contracts with a commitment, certain cost structures, commitment  to an operating system, non-transferable profile data or even a highly  personalised offer that the customer does not want to part with.</p>
<p><strong>Satisfaction  and Trust as Conditions for Commitment</strong><br>
  Voluntary  or emotional loyalty is based on satisfaction with a service, which may result  from the choices available, the prices offered or good service. Trust in a shop  is also an important aspect for the long-term loyalty of a customer. This trust  is created above all by an error-free ordering process, secure payment  processing, reliable delivery and uncomplicated and solution-oriented handling  of any problems that may arise. It is important to note, however, that  satisfaction and trust do not immediately lead to customer loyalty but are  necessary conditions for it. If the customer believes that they will experience  the same level of quality in the future as they have in the past, they will  come back and their loyalty will develop.</p>
<p><strong>Measures  for Customer Loyalty</strong><br>
  This leads  us to the measures to create and maintain the bond. These can be divided into  four main areas, each of which should be addressed in a particular way:</p>
<ul>
  <li>Comfort/Usability</li>
  <li>Individualisation/Personalisation</li>
  <li>Interaction/Communication</li>
  <li>Information/Service</li>
</ul>
<p><strong>Comfort/Usability</strong><br>
  Even when  planning an online shop, numerous aspects can be considered that can have  positive effects on customer loyalty. This begins with a simple and  self-explanatory menu guide that the customer can use to find desired products  more easily. In addition to this are navigation levels and a targeted search  feature with good filter options. The registration process should have as  little data requirements as possible and logging in later should be easy. The  same goes for the order process. The fewer clicks necessary, the better -  mistakes should not be made and everything must go smoothly.<br>
  Even things  that are sometimes considered as trivial, such as font size and colour  contrast, should not be neglected. Technical aspects, such as the site speed, a  good mobile layout and the security of electronic payments with different  payment providers, are also important factors. Of course, it is essential that  the shop ensures good product selection and availability. And those who would  like to sell in other countries must make their shop in all respective  languages available. All in all, the purchase process should be as easy,  error-free and as clear as possible for the customer - only then will they  happily return.</p>
<p><strong>Individualisation/Personalisation</strong><br>
  When it  comes to personalisation, many things can be implemented correctly during the  planning of the online shop or its relaunch. If the customer can configure the  home page to their needs or it is adjusted to their previous preferences, they  are more likely to return. The profile should also offer the customer the  possibility of customisation, with examples such as wishlists, a search and  purchase history and they should, of course, be addressed personally. Customers  can also be reeled in very quickly if they receive personal offers or product  suggestions based on their previous purchase or search behaviour, or if they  are suggested relatable, additional offers for a purchase. They will feel even  better if they can customise the product to suit their needs, but of course  that is dependent on the products offered.</p>
<p><strong>Interaction/Communication</strong><br>
  Customers  feel better when they believe they are well looked after. That does not just  apply in-store but also online. An online consultant that helps with purchase  decisions or that answers important questions in a live chat can provide the  customer with this assurance. A product configurator is also a good tool. It is  generally important to be available when the customer needs something. That  could be a service hotline, on social media or via email - the more contact  options available, the more taken care of the customer feels. This also means  being in contact with the customer and for them to keep you in the back of  their minds. Newsletters with new products or special offers shared on social  media posts are suitable for this. On social media it is especially important  to, not only advertise, but also to interact with customers when they have  questions about a particular post or a general question about an offer.</p>
<p><strong>Information/Service</strong><br>
  Depending  on the type of products offered, the customer needs a different amount of  information to imagine the appropriate picture. If it is technical, meaningful  technical data is a must so that a purchasing decision can be confidently made.  If clothes are offered, the visual appearance plays a large roll with the zoom  and all-around visibility features being very helpful. Consider your products  and think about what you would need to feel secure about making a purchase.  Customer reviews bring additional information to light that can increase the  customer's trust in making a purchase.<br>
  There is  some other information that not only makes the customer comfortable but also  gives them a feeling of trust. Clear information on the privacy policy also  contributes to the customer's seal of approval along with well-designed FAQs  and service information. Even after a purchase, customers want to be  well-informed by means of a purchase or order confirmation as well as a reliable  way of tracking the delivery. Here, newsletters play an important roll in  sharing up-to-date information about offers, new products or seasonal  campaigns.</p>
<p><strong>Customer  Loyalty Programme as a Multiplier</strong><br>
  Customer  loyalty programmes with additional and exclusive benefits for members are ideal  to strengthen the customer loyalty measures already taken. This is where the  reward for loyalty is paramount and the customer receives the reminder with  every purchase that they are greatly appreciated by the online shop. There are  a number of ways these benefits can look. It can be special discounts, bonus  points or even Cashback.</p>
<p><strong>Cashback  World Partner</strong><br>
  The  establishment of a customer loyalty programme for online shops is often  expensive and usually involves some sort of investment. That is why it is  recommended to use an existing programme. <a href="https://partner.cashbackworld.com/">Cashback  World Partner</a> makes  an interesting proposal here, offering customer loyalty programmes both purely  for e-commerce as well as for stores with online shops. The benefit is that new  Partners become connected to a customer pool of 14 million potential shoppers  around the world and grant Cashback and Shopping Points as benefits to those  shoppers with every purchase. As a result, Cashback World Partners are actively  sought out by shoppers, all the while being actively promoted through the  Cashback World marketing channels. myWorld.com is also a part of the Cashback  World and knows the value of its benefits.</p>
<p><strong>Customer Relationship Management</strong><br>
  Customer  Relationship Management (CRM) is also a part of the Cashback World Partner  Programmes and should generally be included in the implementation of customer  loyalty measures. With the help of CRM, customer and sales data can be analysed  precisely and thus the measures can be checked, managed and ultimately  improved. Only the exact data analysis allows for relationship-oriented market  and customer segmentation in order to reach the relevant target groups with  exactly the right offers and messages. As a result, it can be determined if the  target group approach was successful or not and readjustments can be made if  necessary. That way you can reach your customers better and more efficiently.</p>
<p><strong>It's the  mix that yields results</strong><br>
  In  conclusion, if you want to achieve reliable customer loyalty in e-commerce, you  may have to put some work into your online shop, but the reward for this effort  will all be worth it. It is important to find the right mix of measures for  your own shop that leads to the desired result: Customers who find their way  around a shop easily feel at ease and are well looked after. Such customers  will gladly return and will spend more on their follow-up purchases than they  did on their first purchase. That is the return of investment that is so  important for online shops. Or simply put: If the customer is happy, the shop  will also be happy for a long time to come.</p>
<p>&nbsp;</p>
<p>Sources: <a href="https://www.omt.de/online-marketing/kundenbindung-im-e-commerce/">https://www.omt.de/online-marketing/kundenbindung-im-e-commerce/</a> <br>
  <a href="http://success.adobe.com/assets/de/downloads/whitepaper/13926.digital_index_loyal_shoppers_report_de.pdf">http://success.adobe.com/assets/de/downloads/whitepaper/13926.digital_index_loyal_shoppers_report_de.pdf</a> <br>
  Blömeke,  E./Clement, M./Shehu, E./Pagendarm, E.: 2013, S. 85f.<br>
  <a href="https://www.ifhkoeln.de/blog/details/ecc-erfolgsfaktorenstudie-kundenbindung-ist-der-schluessel-zum-erfolg/https:/www.ifhkoeln.de/blog/details/ecc-erfolgsfaktorenstudie-kundenbindung-ist-der-schluessel-zum-erfolg/">https://www.ifhkoeln.de/blog/details/ecc-erfolgsfaktorenstudie-kundenbindung-ist-der-schluessel-zum-erfolg/https://www.ifhkoeln.de/blog/details/ecc-erfolgsfaktorenstudie-kundenbindung-ist-der-schluessel-zum-erfolg/</a> <br>
  <a href="https://de.statista.com/statistik/daten/studie/305216/umfrage/einzelkriterien-der-benutzerfreundlichkeit-bei-online-shops-in-oesterreich/https:/de.statista.com/statistik/daten/studie/305216/umfrage/einzelkriterien-der-benutzerfreundlichkeit-bei-online-shops-in-oesterreich/">https://de.statista.com/statistik/daten/studie/305216/umfrage/einzelkriterien-der-benutzerfreundlichkeit-bei-online-shops-in-oesterreich/https://de.statista.com/statistik/daten/studie/305216/umfrage/einzelkriterien-der-benutzerfreundlichkeit-bei-online-shops-in-oesterreich/</a> <br>
  Blömeke,  E./Clement, M./Shehu, E./Pagendarm, E.: 2013, S. 83<br>
  <a href="https://www.gs1-germany.de/fileadmin/gs1/basis_informationen/ECC-Vertrauensbildende_Massnahmen_im_E-Commerce_auf_dem_Pruefstand.pdf">https://www.gs1-germany.de/fileadmin/gs1/basis_informationen/ECC-Vertrauensbildende_Massnahmen_im_E-Commerce_auf_dem_Pruefstand.pdf</a></p>

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