Developing Online Loyalty

When I conduct online strategic plans for clients, one of the more common questions I get is, “Can you develop an online loyalty program?  It is working in our physical stores, and we would like it to work on our new website.” 

Though Loyalty programs are commonplace in the physical retail world, it is thought of as “lazy retailing”.  Retailers try to compensate for an average customer experience by implementing a scheme which will incentivise customers to repeat purchase.  Online visitors are not as pliable. 

Loyalty programs are created to “lock in” customers to ensure they do not move to a competitor, thus benefiting from their lifetime value.  In the online space, it is the visitor, who has full control, and is not bound by the physical retail buying motivations i.e. location convenience.

Building Online Loyalty 

There are multiple visitor/customer touchpoints which heavily influence online loyalty. 

Website experiences.  This is a considerable influencer on whether the visitor will either come back or purchase on your site.  This deals with elements such as the copywriting (benefit focused), the intuitive nature of website (usability), look and feel, merchandising of your products (quality images), engagement opportunities (customer reviews) and the list goes on.   

Delivery of the product.  To build loyalty around delivery of the customer order, you need to focus on the three R’s:  getting the right product, to the right place, at the right time.  Sounds simple, however, online businesses normally fail when this is managed to a low standard.  This touchpoint consists of email communication to the customer throughout the fulfillment process (confirming delivery date, back orders), professionally packing the product to ensure breakage is to a minimum, and sending free items (other product samples) to over deliver. 

Direct Marketing.  Implementing a planned value driven communication campaign, needs planning, and resource to properly drive.  You have worked hard to turn a visitor into a customer, now is the time to provide a calculated communication plan to increase the potential of them returning to your website (or coming to one of your physical locations) to purchase again.  There are many effective methods in facilitating sales through direct marketing campaigns:

1) Notification of special products.  Notify your customers of new product lines, new clearance items, new products which are only available online.

2) Provide special pricing to your customers.  This does not have to be all year around, however, by providing customers with pricing (through coupon codes, or providing customers with a link to a hidden page) which “normal visitors” do not have access to, makes them feel special.

3) Education/Building knowledge.  Studies have proven in a market where information gathering is common, an effective education program will build loyalty:

Independent research conducted by Next Century Media entitled “Consumer Education Produces High ROI” included a survey of 200,000 consumers who participated in any online education program finds 20 percent of consumers will purchase a product as a result of their experience, and 94 percent have a more favourable perception of the brand because of the online education experience.

The methods in building online loyalty is an important question to deal with.  There is a fallacy around online businesses.  People think once the website goes live, everything happens automatically.  Only when you are able to effectively automate standard business processes (i.e. order capture, payment, back order, inventory replenishment) should you consider allocating resource around the loyalty building elements.  

New Zealand and Australian businesses have not been able to come to grips with this loyalty concept, which is why online loyalty is scarce.  Building loyalty online needs as much, if not more focus then offline businesses. 

The online business environment is far more dynamic with far less barriers to entry.  The competitor landscape is hyper competitive and always changing. 

The best approach to ensuring a sustainable online business is to build online loyalty.  There are no quick fixes. 

If you do not have the resources to drive your online business, then outsource to an accountable group who can.