Grow revenue for your small business without spending more on ads. Here’s how to cut acquisition costs and increase sales by improving customer loyalty and retention.

Every retailer wants to grow a base of customers that come back time and again with a smile on their face and leave the same way, ready to share their experiences with everyone they know.

It makes sense. Loyal customers are the ultimate achievement for a brick and mortar business. It costs five times as much to attract new customers, yet a lot of retailers continually funnel marketing dollars into promotions in the hopes of building brand visibility.

Instead, focus on building customer loyalty. When you switch from a promotional revenue-driven mindset to a customer delight mindset you’ll get happier, more loyal customers. The revenue will follow, partly due to the fact that you’ll spend less to earn more.

The probability of selling to an existing customer is as high as 70% compared to the probability of selling to a new face (as low as 5%).

Here’s how you can start building on that customer loyalty to see a positive change in customer lifetime value and your bottom line.


Reduce Points of Friction in the Shopping Experience

Everything You Need to Know about Building Customer Loyalty — Reduce Points of Friction

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A friction point is anything that slows down the velocity of the customer reaching your checkout and completing a purchase.

With online shopping, there are common causes of friction such as:

  • Requiring customers to register an account to complete a purchase
  • Too many steps to checkout
  • Poor navigation or inadequate site search
  • Lack of trust signals
  • Lack of information/product details

Just because you may not operate online doesn’t mean friction doesn’t exist in your brick and mortar store. There are a number of things that can impact the shopping experience, turning off customers and reducing their desire to return.

For example:

  • Poor parking conditions (space, cleanliness, condition, proximity, access, and parking costs)
  • Approachability of staff (physical barriers, customer volume)
  • Ability to find specific products
  • Staff who aren’t sufficiently knowledgeable
  • Navigation of the store or store layout

Parallels can be drawn between online and in-store friction points. Look closely at your brick and mortar store and talk with your customers to discover ways to improve the shopping experience.


Build Customer Relationships to Improve Retention

Everything You Need to Know About Building Customer Loyalty — Build Customer Relationships

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Countless studies can be found online showing how discounting as a means of driving revenue is a mistake. This piece from FastCompany that shows how frequent discounting trains customers to hold off on purchases until discounts are available.

It’s hard to get back to profitability after that.

Still, retailers tend to use price discounts in hopes driving up profit by increasing the volume of sales. Unfortunately, in the long run you’re just as likely to lose money as you are to gain it.

Rather than risking profit by training customers to watch for repetitive sales, raise the bar on service. Focus on the customer relationship. Teach customers that there’s no place better to shop for the personalized experiences you offer.

It comes down to stepping out from behind the counter and engaging your customers in the same way an eCommerce brand would with live chat and social media. Think about what you can do to create a more engaging experience in a brick and mortar store.

For example:

  • Providing active demos of new products to demonstrate their value
  • Teach employees to ask customers questions and identify their tastes, concerns, needs, and pain points
  • Review customer history whenever possible to follow up on previous visits and tailor the experience when possible
  • Solicit and listen to feedback in a one-on-one setting

People want to shop where they feel welcome and valued. This level of engagement reinforces that feeling and ensures they’ll think of you next time they need something you offer.


Blow Them Away with Service

Everything You Need to Know About Building Customer Loyalty — Quality Customer Service

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Nothing builds a relationship and rapport with customers better than delivering service that goes above and beyond what they expect. Encourage your staff to listen to customers and observe them. Anticipate your customers’ needs, surprise them, and delight them with service.

Think about a time you ordered takeout and the restaurant applied a current promotional code without you asking. Or when a store special ordered a hard-to-find product for you, or took the time to locate it in one of their other locations.

Proactive service wins hearts and minds and grows customer loyalty in spades.


Foster Personal Connections and Get to Know the Customer

Everything You Need to Know About Building Customer Loyalty — Foster Personal Connections

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You eventually come to know who your regular customers are, but have you stopped to think about how long it takes you? Perhaps names and faces come quickly to you but some people on your staff struggle.

Work with your team to engage regular customers and take time to study customer profiles. If you use any kind of CRM for retail, then keep tabs on products they frequently purchase. Take notes that can help fellow employees close the gap.

When everyone is warm, welcoming, and taking the time to personalize engagement, your customers will feel more comfortable returning to shop there. They’ll feel like they’re among family.


Improve Customer Retention and Repeat Sales with Creative Offers

Everything You Need to Know About Building Customer Loyalty — Make Creative Offers

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You can still use discounts and special offers to drive business, but do it strategically to maximize the return. Develop creative promotions that target specific audience segments to have far more of an impact.

For example, try creating promotions that target segments such as:

  • High value customers most likely to return
  • Customers who recently made a second purchase (third and fourth time buyers are increasingly more likely to make a purchase according to SumAll)
  • Customers who previously purchased one or more times but have not purchased in 60-90+ days
  • Remind customers via email and other channels of their reward point accumulations. Offer special rewards for returning business

This is a great opportunity to reconnect with lost customers. Research shows you have as much as a 40% chance to win back a lost customer. That’s a lot higher than the 5 to 20% chance of winning new customers.

Just be sure to create eye-catching visuals for your promotions and special offers that you can use across social media, digital ads, and print.


Create Seamless Online and Offline Experiences

Everything You Need to Know About Building Customer Loyalty — Seamless Experiences

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It’s not easy to compete with the customer’s quest to find the best price online. But, it is possible to retain some of your customers and encourage them to return by transforming your brick and mortar into a click and mortar.

Customers aren’t just looking for the best deal. They also appreciate the convenience that comes from online shopping. According to eCommerce trends cited by BigCommerce, the three main factors influencing a transition to online shopping are price (87%), shipping and the speed of fulfillment (80%), and discount offers (71%).

By switching to an omnichannel model you increase the potential for customers to continue shopping with you rather than using online boutiques and eCommerce marketplaces like Amazon.

Simply put, omnichannel retail means your brand uses all available selling channels to connect customers with your products. This includes in-store, online, social, mobile, and so on. Whether it’s just to implement online ordering for in-store pickup or a complete order and fulfillment system, omnichannel is the new standard retail consumers have come to expect.

Online shopping and research data from Harvard Business Review found that omnichannel customers are not only more loyal to their favorite brand, they also spend more.

According to HBR, omnichannel customers “spent an average of 4% more on every shopping occasion in the store and 10% more online than single-channel customers.”

The data also revealed that consumers of omnichannel brands “logged 23% more repeat shopping trips to the retailer’s stores and were more likely to recommend the brand to family and friends than those who used a single channel.”

The most successful retailers go where their customers go, and with more than half of consumers transitioning to online shopping it’s time to consider an omnichannel strategy.


Establish Personalized Customer Loyalty Programs

Everything You Need to Know About Building Customer Loyalty — Personalized Loyalty Programs

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A loyalty program is a great way to improve customer retention. You want to create a system where customers are rewarded, and those rewards increase based on their activity. This both encourages repeat spending and boosts loyalty.

What you want to avoid is a system that eats into profits too heavily, lacks value, or is too difficult to gain rewards.

You can keep costs down be eliminating physical loyalty cards. Not only will you save yourself the spend on cards and equipment, you add convenience for customers who don’t always carry wallets or cards on them. Instead, use a digital system with easy customer lookup and mobile apps.

You should also tailor rewards to customer types rather than having preset reward tiers. Personalization is a huge draw for online shoppers, so personalizing reward perks that provide discounts and freebies from their favorite items is a major draw.

Kroger and other grocers use similar programs that print coupons specially tailored based on customer purchase history. Kroger’s use of analytics and personalized coupon rewards, which helped drive over 30% growth in digital performance in Q1 of 2017, is often lauded as the industry standard among retailers.

To drive additional repeat business take your personalization to the next level by targeting rewards to high-value customers. Exclusive rewards and promotions for high-value customers give them something to work toward, like a goal, and also make them feel extremely valued.

While Disney is a massive entertainment and hospitality brand, there’s still a lot of retail on the ground at its parks. Annual Pass holders get additional perks on special AP days such as extra discounts. These are great incentives to get them to shop more and encourage existing customers to purchase an annual pass.


Conclusion

Your customers aren’t turning to online marketplaces because they dislike you or because they like another brand more. In most cases, consumers just want a more convenient experience that’s personalized for them — one that keeps them more informed and engaged. If you implement just a few of these ideas, especially changing to an omnichannel approach, you’ll see a measurable lift in customer retention and the lifetime value of your customers.

Top image via wavebreakmedia.