For Success in Ecommerce
Our team of ecommerce experts outline an effective strategy for increasing and optimising your sales!
What etailer doesn’t dream of doubling or tripling their average shopping cart? |
The Actinic experts have good news for you: it’s possible, it’s within reach, and you don’t necessarily have to wait! We are happy to share this piece of advice with you today: the secret lies in building customer loyalty (or creating a lasting relationship with your customers). Customers making a second purchase on a site may spend up to 3 times as much as a first-time customer. This can go up to five times more for a third purchase.
This is why for top etailers it’s not uncommon that the percentage of their turnover coming from repeat customers can go up to 50%.
If you’re a gambler, there’s another way to see things: you have a 60-70% chance of selling something to a customer who’s already made a purchase on your site, whereas the chances of selling something to a first-time potential customer are between 5 and 10%.
There’s a lot at stake in customer loyalty. Below we’ll detail our experts’ advice and the best practices of our 7,300 online shops!
Follow our 10 tips and make up to £3,580 more in turnover per campaign!
THINGS TO KEEP IN MIND:
1. The percentage of your turnover that comes from loyal customers can reach 50%|
2. 62% of online shoppers return to a site because they’re satisfied with their first purchase
3. A customer shopping on your site for the second time spends 3 times more
4. A loyalty program works by rewarding customers with points or gifts
5. You can dedicate 2-10% of your turnover to loyalty advantages
6. Not all of the rewards you give out will be used, which will help your profit margin.
7. Wake up your customers with a personalised message – this can make up 50% of your sales.
8. Offer subscriptions or recurring purchases.
Customer loyalty: a goldmine of profitability and growth for your ecommerce website
The basics for loyalty programs
Since the beginnings of ecommerce, building loyalty has always happened through loyalty programs, ex: your 10th pizza is free, free plane tickets after buying a certain number of return trips with the same company with a frequent flyer or Gold card…
- How loyalty programs work
Points, points, points…and gifts!
This is one way to summarise how loyalty programs work, which you are probably very familiar with. It’s a simple idea and it works both on the human desire to collect things and to take advantage of special offers, discounts and gifts.
The goal of a loyalty program then is to reward a purchase (for example, £50 spent = 50 points earned, or 2 purchases in a month = 100 bonus points) and to make customers want to come back, not only because you provide quality products and service, but also because they want their gift. This feeling of missing out if you don’t take advantage of an offer encourages buyers to come back to your online shop rather than going to a competitor.
- What offers will work?
The whole art of a loyalty program lies in finding the right balance and the right rewards. The program obviously has to be attractive enough for it to affect buyers. But it also has to be profitable and not only encourage “normal” purchases: your goal here isn’t just to sell, but to sell more, and more often.
Online shoppers are looking for discounts and free items to reward them for spending money on your site. But that’s not all they’re looking for…This is why it’s important to offer incentives as well, for example: free shipping for your next order, exclusive products, private sales, a helpline service, free insurance or warrantee, etc.
In any case, to determine profitability you’ll have to compare the cost of your loyalty program compared to the cost of acquiring customers (the higher it is, the more likely you’ll be able to reward loyal customers) and within your average profit margin. The recommended range is to put between 2 and 10% of your turnover into loyalty rewards, keeping in mind that not all of your customers that collect points will necessarily use them, which means more savings for you.
Another reward option is cashback, which gives your customers cold hard cash in return for loyalty. This is an option worth considering, but with caution, and not without testing an effective loyalty program first.
- Referral Schemes
A loyal customer is also a customer that recommends your site to others. If a customer keeps coming back to your site, it’s probably because he or she is happy with the service, products and prices.
Setting up a referral scheme is a good way to take advantage of this natural behaviour and word of mouth. Referral schemes can be used in addition to loyalty programs, or be connected to them and reward customers whose recommendations lead to sales. It’s common practice to offer a reward to the referrer as well as the referee: the former so that they continue to recommend your online shop to more and more people, the latter so as to eliminate any factors that might prevent them from ordering from your shop and to encourage them to order now.
- Loyalty programs…for a fee?
Amazon is, as always, on the frontier of ecommerce innovation: their program Amazon Prime costs £79 a year, and allows members to benefit from an exclusive status--free shipping for almost all orders, free Kindle ebooks, etc. Launched in 2005, the program not only brings in additional income for the American giant but has also creates a club-like atmosphere and turns shoppers into compulsive shoppers who order more, and more and more often. These prime customers spend twice what “regular” customers do each year.
Other tips to boost your customer loyalty
Customer loyalty is about more than just loyalty cards. Some etailers surprise us with their inventiveness and ability to find those little details that make their customers trust them and want to keep coming back. Here’s an overview of some of the best practices and some tips from our ecommerce experts!
- Take care of new arrivals
This might seem obvious, but it’s something that shouldn’t be overlooked…If you don’t offer your new customers (the ones making their first purchase) quality service and a satisfying experience, they aren’t likely to be drawn in by your loyalty schemes later on. It’s not surprising that 62% of online shoppers state they return to a website if they’re satisfied with their first purchase. To improve your new customers’ first impression, don’t hesitate to use several channels, for example send out a welcome voucher by SMS to your new customers each week.
- Understand your stats
In order to judge if your loyalty program or referral schemes are working, you’ll need to have a handle on your figures. Here’s a good exercise: take your sales figures and make a table with the number of customers that ordered something from your site once, twice, three times etc. Adding up their purchases will help you find out how much they spent and the average shopping cart size for each category. This will give you a lot of valuable insight, and something to compare your future actions and goals to in order to measure your success!
- Use email wisely
We discussed this subject recently in a previous Actinic expert advice on email marketing but following up on unresponsive customers is a good way to build loyalty. Keeping customers who bought something from your website a while ago informed for your new items and sales will increase the chances of reselling them something. When you know that it costs between 2.5 and 3 times less in marketing to sell something to an existing customer than to a first-time customer (for medium to large size shopping carts) there’s no reason not to send out a few extra emails (especially as it’s so simple with the Actinic platform) !
This has proved to be a very effective tool for some of our clients, as Nikki McCluney testifies for her site Nod and a Wink: " Our goal was not only to attract new customers, but also to build relationships that would help transform one-time customers into lasting and loyal ones. Our mailing list grew to 29 times the size within less than a year of the site’s launch! "
Some more email marketing advice: for some etailers newsletters can generate between 40 and 60% of their turnover. It’s important to adapt your offers for customers and prospects so as to make them as specific and effective as possible. In general etailers notice a 15% increase in the shopping cart size when customers subscribe to a newsletter (compared to customers who don’t subscribe).
- Customer data, big data and data analysis help lead to more sales
In ecommerce we just keep coming back to these key words, and not without cause: they contain good potential for increasing your turnover. The goal here is to gather as much information as possible about your customers and prospects so you can offer them the products they want when they want them. Say goodbye to copy and paste marketing campaigns and sending the same thing to your whole customer database, and say hello to an increase in your open rate, click rate and conversion rate!
- Build loyalty by getting your customers to subscribe!
Having repeat customers is the golden dream of a lot of etailers. And over the last few years, this dream has become a reality. With the increasing popularity of packages, ecommerce is opening up to the advantages of subscriptions. This model is especially effective for perishable or disposable products (ex: wine, diapers, razors, food, electronic cigarettes etc.). This model guarantees quality service for your customers and regular income for you!
- Flawless customer service: one of the best card you can play
Online shoppers are always looking to buy at the best price available…but they also tend to flit from site to site with sales. They are also (and above all) looking for excellent service. 34% of buyers consider customer service something that leads to brand loyalty.
Now it's your turn!