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Fostering Customer Loyalty: A Guide for Growing Shopify Brands

Aug 22, 2023 | 8 minute read

Fostering Customer Loyalty: A Guide for Growing Shopify Brands

Megan Wenzl

Content Marketing Manager

Customer loyalty matters. So much so that 43% of consumers have switched brands in the past six months because of a negative experience. That’s a lot of money companies willingly give their competitors simply because they don’t focus on building customer loyalty.

It also highlights why, in today’s competitive business landscape, building strong and lasting relationships with your shoppers is more important than ever. The reality is, customer loyalty is pivotal for the success and growth of every business, regardless of size or industry. Because of this, every business must strive to consistently meet or surpass their customers’ expectations. If you don’t, customers will stop purchasing from your brand and likely run into the arms of a competitor.

In this blog, we’ll explore the fundamental concepts behind customer loyalty and delve into the strategies and techniques that can help you foster loyalty among your customer base. From understanding the psychology of loyal customers to implementing effective loyalty programs, we’ll cover a wide range of topics that will empower you to build a loyal customer following.

Let’s get started.

What is Customer Loyalty?

Customer loyalty refers to the degree of commitment and attachment a customer feels towards your brand or product. Loyal customers are those that repeatedly engage with – and buy from – your brand over a competitor. They exhibit a preference for your brand, demonstrate trust, and often become brand advocates, actively promoting your business to others. This means they also tend to spend more, make repeat purchases, and are more likely to try new products or services offered by the brand. 

Loyal customers also aren’t easily swayed by price fluctuations or promotions from competitors because their loyalty is rooted in the overall value and experience they receive from your brand. This means that when you have a strong community of loyal customers, the lifetime value of your customers is likely high. Something that’s crucial for the long-term success of your brand. 

Why Customer Loyalty Matters

Businesses that successfully cultivate customer loyalty enjoy a range of benefits. 

These benefits include: 

  • High Customer Lifetime Value: Customer loyalty has a significant impact on customer lifetime value (CLTV), which refers to the total value a customer generates for a business throughout their relationship. Loyal customers tend to have higher CLTV as they continue to make repeat purchases over an extended period. They are less likely to switch to competitors, reducing customer acquisition costs and increasing the potential for upselling and cross-selling opportunities. By cultivating customer loyalty, businesses can maximize CLTV and enhance their overall revenue and profitability.
  • Drives Retention: Similarly, by fostering customer loyalty, businesses can improve customer retention rates, reduce churn, and benefit from the long-term stability and profitability that come with a loyal customer base. Just a 5% increase in customer retention results in a profit increase of 25% to 95%. Not only do loyal customers spend more, though, but they’re more likely to respond to surveys, share zero-party data (ZPD), and participate in your referrals and/or loyalty programs.
  • Reduces Customer Acquisition Costs: Loyal customers act as brand advocates, spreading positive word-of-mouth and referrals. Their advocacy and recommendations can attract new customers at a lower cost compared to traditional marketing efforts. Additionally, loyal customers often require less marketing and promotional incentives to continue their patronage, reducing the overall customer acquisition expenses for the business. In fact, the cost of acquiring new customers is five times higher than the cost of retaining existing customers.

While these are great benefits in ordinary times, the truth is that in this undeniably volatile economic climate, the value of loyal customers is much higher. We know that during uncertain times, customers tend to be more cautious and price-sensitive, making it challenging for businesses to attract new customers solely based on competitive pricing. Our research on loyalty and retention found that 80% of consumers are currently cutting their spending to some degree, with 34% reporting that they are cutting it “significantly”.

However, loyal customers who have developed trust and confidence in a brand are more likely to remain loyal, both in good and uncertain economic times. Their continued support provides stability and a predictable revenue stream, mitigating the negative effects of economic fluctuations. Moreover, loyal customers can act as a buffer, providing valuable feedback and insights to help businesses adapt and navigate through challenging economic conditions. Therefore, prioritizing and nurturing customer loyalty becomes a strategic advantage in maintaining business resilience and sustainability during economic volatility.

How Does Customer Loyalty Affect Your business?

A robust and loyal customer base of devoted followers can do many positive things for your brand. People who genuinely care about your brand and believe the relationship goes both ways will become brand advocates who recommend your business to others. 

You’ve done this yourself: Perhaps a friend was looking for new athletic gear, and you recommended your favorite and most comfortable workout set. You never know when one of your loyal advocates will bring you up in a conversation. If what they say is positive, you may find yourself with a brand-new customer.

Customer loyalty also reduces the marketing costs associated with acquiring new leads. Finding new customers isn’t easy; you’ll need to spend valuable dollars to increase brand awareness, then engage in a lead campaign that brings them in. 

New companies are particularly susceptible to high marketing costs. If a company doesn’t establish a following early, it must rely on advertising to spread the word. Without a strong marketing budget, it may struggle for months (or years) to create a stable revenue stream. The company could go out of business — even if it offers fantastic products or exemplary services.

When you have a loyal following, you’ll see revenue climb at predictable times throughout the year, like the holidays. People spend more money on the brands they love during the holiday season, buying gifts for family and friends. Other holidays, like Valentine’s Day, can also increase sales.

How to Increase Customer Loyalty 

Ashleigh Simpson, CRM Manager at Elephant Room expertly summarizes the value of loyalty when she says, “Customer loyalty is the lifeblood of ecommerce, propelling repeat purchases, glowing reviews, and brand supremacy. By skillfully employing strategies like reviews, surveys, and seamless omnichannel experiences, businesses can supercharge customer satisfaction, amplify lifetime value, and cut down on acquisition costs.”

But how exactly do you increase customer loyalty? Here’s a look:

Leverage the Impact of Reviews

Having a well-defined reviews strategy can have a profound impact on customer loyalty. Reviews provide powerful social proof, effectively building trust among potential customers. When a shopper knows that others have had positive experiences with a product, they get the information they need to make confident purchasing decisions. 

Reviews are especially helpful when they speak to individual customers. With features such as customer attributes when using the right review management platform, shoppers can search for reviews by customers who are similar to them. 

Filtering reviews for socks by wearing them with sneakers

Moreover, beyond establishing trust, reviews also play a pivotal role in fostering a sense of community. By encouraging customers to share their thoughts and opinions, you create an environment where individuals can connect over their shared experiences and build a tight-knit community of satisfied customers. 

Ultimately, this community not only strengthens brand loyalty but also serves as a valuable marketing asset, as positive reviews are shared and spread further through word-of-mouth recommendations.

Personalize the Customer Experience

In today’s competitive business landscape, personalizing the customer experience is crucial for building trust and fostering long-term relationships. This starts with understanding customer needs by implementing a continuous insights strategy, specifically one that collects Zero Party Data (ZPD). Brands can then use that information to do things such as tailoring product recommendations, and executing targeted marketing campaigns that resonate with different customer segments.

An email for a customer with a ring product recommendation based on zero-party data

By delivering personalized experiences, brands can establish a strong emotional connection with their customers, building trust and loyalty over time. When customers feel valued and understood, they are more likely to remain loyal to the brand and become vocal advocates, driving positive word-of-mouth and attracting new customers through organic growth. 

Moreover, personalized experiences have proven to boost conversions, as customers are more likely to make purchases when they feel a brand genuinely understands and caters to their individual preferences and needs.

Create a Referrals Program

Customers want to know that a brand truly values them and appreciates their loyalty. One effective way to demonstrate this is by implementing an incentive-based referrals program.

Referral prompt post-review rewarding the customer to give $10 get $10 if they refer a friend

By offering rewards or benefits for referring others to your brand, you not only show that you care about your customers, but also encourage them to spread the word and become advocates for your business. 

This fosters a stronger sense of connection and trust, ultimately leading to a more loyal and engaged customer base. Referral marketing is also significantly less expensive than other forms which provides an added bonus for brands as they try to conserve and optimize their overall marketing spend. 

Build Strong Customer Loyalty with Okendo

In a competitive marketplace, where consumers have numerous options, customer loyalty is a key differentiating factor. By fostering and nurturing loyal relationships, businesses can create a sustainable competitive advantage, increase customer retention, and ultimately drive long-term profitability and growth.

If your company could improve in the loyalty department, that’s okay — most companies can! Okendo’s comprehensive, all-in-one customer marketing platform can help you build more productive and profitable relationships with your customers. We’re also incredibly excited to announce soon Okendo Loyalty to help you form stronger customer bonds. 

To be an early adopter, sign up here to get first access. 

Learn more about how to build loyalty

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