Not only do repeat customers spend more money per average order in comparison to first-time customers, but they also improve every relevant metric a business could care about.
While the conversion rate of a new customer lies between 5 to 20 percent, the conversion rate of a repeat customer hovers around 60 to 70 percent. Additionally, increasing customer retention rates by a mere 5 percent can bump business profits anywhere from 25 percent to 95 percent.
Even the cost of retaining an existing customer is about one-fifth of the expense of acquiring a new customer.
Therefore, eCommerce companies should look into how they can increase the loyalty of their customers.
Offering Personalized Experiences
According to a recent survey, around 94 percent of companies asserted that personalizing their customers’ experiences was central to their success. These same companies found that their personalization efforts boosted their sales by 19 percent.
Aside from enhancing customer experience, personalization improves business performance and operations as well.
Still, many companies do not offer personalized web experiences for their visitors. This can be attributed to the problematic perception of personalization as both complicated and invasive.
However, with today’s technology, personalization can be as simple as clicking a few buttons.
Marketers have numerous AI solutions at their disposal that can automate the entire personalization process.
There is also plenty of evidence to counter the concern that personalization is invasive.
Global brands like Amazon and Google have made personalization a de facto of internet life, and modern consumers are not only accepting this but are also showing signs that they prefer it.
Almost three out of four consumers “like it” when they receive personalized promotional messaging.
What’s more, two-thirds of consumers want to get personally relevant offers and 56 percent state that enjoying a personalized experience would make them more inclined to do business with an online retailer.
Giving Out Discounts
Whereas personalizing experiences is a general strategy that B2C businesses should adopt, giving out discounts is a tactic that should be utilized every once in a while. Nevertheless, it can be a very effective tactic if used correctly.
There are many benefits to offering discounts. Customers are attracted to sales. It creates a sense of euphoria and triumph, which is why Black Friday is such a big deal.
Additionally, when a company offers a discount for a limited time only, the scarcity concept comes into play, where customers become afraid of missing out on the sale. This makes them more liable to purchase on the spot, increasing a company’s overall sales.
Discounts can also be used to move old inventory that would have stayed on the shelves otherwise.
When a company offers discounts, it’s important to remember that there are right and wrong ways of doing it. For instance, offering discounts too often can harm profitability and desensitize customers for future discounts. In other words, if customers get used to seeing the discounted price, this becomes the new norm for them.
As a result, desensitized customers may refuse to pay full price again, and the company’s overall strategy ends up attracting only price-driven shoppers.
Developing A Loyalty Program
One of the most straightforward ways of increasing customer loyalty is to start a loyalty program that rewards customers for their repeat business and encourages them to come back. This program may offer various incentives, from access to new products to exclusive discount offers.
The benefits of loyalty programs are numerous. Loyalty programs can increase a company’s revenues by 5 to 10 percent, and these programs incentivize their members to make more frequent purchases.
This is not to mention how loyalty programs can improve brand reputation and help spread a company’s name through word-of-mouth marketing.
Loyalty programs can also help companies acquire valuable customer data. This data can facilitate personalization efforts, help with inventory management, and make budgeting for the coming quarters much easier.
Moreover, having a wealth of customer data can make it easy to spot unprofitable customers and figure out how to handle them.
A pillar of any successful eCommerce store is the proper management of inventory.
On the one hand, understocking can lead to lost sales as customers will not hesitate to leave a site that is out of stock in favor of one that has what they are looking for.
Understocking can have other financial repercussions, including higher costs to expedite shipments and overtime pay to ensure that workers finish last-minute products on time.
On the other hand, overstocking can have harmful effects. It ties up a business’s capital, making it unavailable for other projects. Furthermore, an overabundance of stock means an increase in warehousing costs, which exacerbates a company’s working cash flow situation.
Sometimes the only way to move all of the inventory is to offer it at a discount, which, if not part of a larger strategy, can do more harm than good.
This is why managing inventory efficiently is crucial for any online business.
Fortunately, the mountains of data available to online businesses, along with the proper use of AI technology, can make forecasting and planning tractable tasks. Companies can resort to any one of several inventory management solutions that utilize state-of-the-art software.
Along with forecasting and planning, businesses need to track their current inventory. This enables them to remove a product from their store the instant it’s out of stock, making sure that no customer has to experience the frustration of seeing that out-of-stock sign.
Moreover, tracking inventory can highlight any inefficiencies within a business’s value chain and even deter acts of theft or vandalization.
Companies can ensure maximum overall resource efficiency by tracking and managing all their assets, not just their inventory. This means closely monitoring both current and fixed assets, and the cash flow to be aware of the size of the runway ahead of them.
Otherwise, a business can get blindsided by a freak event, such as the coronavirus pandemic, and face a tough decision that might have been averted with better management.
Improving Customer Support
Good customer support is invaluable to B2C businesses. It ensures that customers have a satisfying experience from start to finish, and it cements a company’s brand as it offers the most direct interaction a customer has with a company.
Excellent customer service also increases a business’s profitability: 86 percent of customers enjoying a positive experience with customer service will increase their average order value, shortened as AOV, by up to 25 percent.
A big reason customer service can boost profitability is that it ushers customers through the buyer’s journey and helps them make it from one end of the sales funnel to the other.
And, when a business gives customers an excellent, personalized experience, it increases the likelihood that the customers will praise the business elsewhere. This doesn’t just have to mean word-of-mouth marketing; it also includes leaving positive online reviews that can help cultivate new business.
Remember Brand Loyalty
Even though most of this article was focused on customer loyalty, B2C companies should also vie to establish brand loyalty, which is quite different from customer loyalty.
While customer loyalty focuses on retention through offering lower prices and better offers than the competition, brand loyalty is about offering a product or service that is so superior to competitor offerings that the customer becomes price-insensitive and decides to stick with this particular brand.
It’s only when businesses aim for both customer and brand loyalty that they will enjoy soaring profits and an unassailable position within the market.