Customer Retention vs. Customer Loyalty for Ecommerce Brands

When acquiring a new customer costs up to 5 times more than keeping a current one, it’s no wonder the topics of customer retention and loyalty are at the forefront of ecommerce conversations. But, what are the differences between customer retention and customer loyalty and how can businesses ensure consumers will return time and time again? Let’s find out!

What’s the difference between a customer loyalty and customer retention strategy?

Before we get into the details of how to gain customer loyalty, let’s define what customer retention strategy and loyalty actually mean. Customer retention is a measure of whether an existing customer continues to purchase from your brand. Sounds great, right? But, if your brand has the extra edge of customer loyalty — the measure of a customer’s predisposition to select a brand every time, tending to resist competitors — your business has the upper hand when it comes to a customer’s final purchase decision every single time!

Knowing that your loyal customers will choose your brand and not consider competitors is pretty powerful. With this in mind, you might be thinking about how you can obtain this level of loyalty from your existing customers. If so your customer lifecycle and customer lifetime value must be considered.

Customer loyalty, lifecycle and customer lifetime value (CLV)

Understanding the customer lifecycle and customer lifetime value of your brand can be the key to finding where your customers usually drop off, engage with certain tactics and return to purchase. A big part of customer loyalty is fully understanding the customer journey to inspire and convert your audience consistently.

Where Customer Loyalty sits within Customer Lifetime Value.

Reload’s Email Marketing & Customer Lifecycle Lead, Requelle Aiken states, “Customer loyalty can be properly understood through analysing your owned database to predict customer lifetime value, where your customers change buying behaviour or drop off completely. Utilising data segmentation to dive deeper into a brand’s customer journey is recommended as it will identify where your marketing efforts should go to gain customer loyalty.”

How to gain customer loyalty and keep it!

Gaining significant customer loyalty and keeping it is no easy feat. And, it’s no surprise that tactics usually used for customer retention won’t lead to customer loyalty in the long term. When it comes to customer loyalty, your brand needs to think about it in all facets, from organic strategies and paid tactics that align with your core values from the beginning of the customer journey, all the way to re-purchase. Some would say that brands have reached peak customer loyalty when consumers simply recommend their products and services to others. We would tend to agree, but how can you get there?

Customer loyalty from the beginning of the customer journey

Many businesses don’t know that customer loyalty begins right from that first touchpoint. Bhavana Raghunath, Reload’s Senior Paid Performance & Brand Specialist, states “We’re not talking about short-term sales tactics like performance marketing or affiliates. Speaking to the integral values of a brand will stick in people’s minds and is how people will be loyal and stay loyal to build social proof and trust. Organic brand-building and remaining consistent across all channels with values-based messaging is how you will capture your loyal audience right from the start.” .

The long-term impact of brand marketing.

Brand marketing at Reload is all about knowing when you have reached your full marketing potential with short-term tactics. Sustainable growth happens with brand marketing, dedicated to awareness advertisements through platforms such as programmatic, display, video and DVOD. This type of marketing helps to aid in a positive brand experience as customers have the awareness and knowledge to choose your business simply from a values point of view.

Driving consistent customer loyalty revenue

When a brand message is loud and clear, getting your existing customers to continue converting is the next step. When you are an established ecommerce brand it can be assumed that you have a clear database of existing customers who receive special offers, email campaigns and are even part of a loyalty program.

Diving deeper into this database to explore your diverse customer cohorts is the next step in showing why your customers are (or aren’t) loyal. This tactic is called RFM (Recency, Frequency, Monetary) analysis and is used to rank and group customers based on their recent interactions with the brand, allowing you to target specific marketing campaigns toward them.

Example audiences for an RFM campaign, showcasing potential size of segments.

Aiken states “RFM is an omnichannel approach to customer retention and loyalty. It is data-driven in nature, but the communications that come from this style of segmentation is based on human behaviour that tells the customer what they want to hear. Having an emotional connection with a brand is how customer loyalty manifests in the long term, but using data to drive this connection further is how it can help your bottom line.”

Increasing Your Customer Loyalty with Reload

With a specialist team of brand and customer loyalty experts, Reload is ready to help your ecommerce business increase customer lifetime value and gain true, loyal customers for the long-term.