How Prioritizing on Brand Loyalty and Positive Customer Experiences can Slash Your Customer Acquisition Costs
Customer retention is crucial for the long-term success and growth of any business in the ecommerce industry, where competition is high, and customers have a wide range of options to choose from. Acquiring new customers is typically more expensive than retaining existing ones. By focusing on customer retention, businesses can save on marketing and sales costs and achieve a higher return on investment.
The success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is 5-20%.
Customer retention and customer loyalty go hand in hand. While customer retention refers to a business’s ability to retain customers over time, customer loyalty refers to a customer’s willingness to repeatedly purchase from a particular brand over its competitors. Businesses that can build strong customer loyalty are more likely to retain their customers over time.
Customer loyalty is the result of a customer’s positive experience and satisfaction, which fosters trust and establishes an emotional connection between the customer and the brand. Loyal customers tend to spend more and make repeat purchases over time, leading to increased revenue for the business. Additionally, happy customers are more likely to refer your brand to friends and family , leading to further growth and reduced customer acquisition costs.
Effective strategies to boost loyalty and retain customers
In today’s competitive market, it’s not enough to just sell a product or service once. Companies must also focus on building brand loyalty to keep customers coming back for more. Let’s discuss some effective strategies to boost brand loyalty.
- Provide excellent customer service
Providing quick and responsive support, easy returns and exchanges, and clear and transparent communication can help businesses build trust with their customers and increase loyalty.
- Offer personalized experiences and create an emotional connection
Personalizing the shopping experience for customers by offering tailored recommendations, personalized product suggestions, personalized promotions and excellent post purchase services can help businesses build a deeper relationship with their customers and increase loyalty.
- Implement loyalty programs
Implementing a loyalty program that rewards customers for repeat purchases, referrals, subscriptions or other actions can incentivize customers to continue buying from the business. Loyalty programs have several benefits that help build positive long term relationships with customers. Listed below are some of the benefits of loyalty programs.
- These programs help retain high value customers who make big value purchases every time they shop
- The exclusive offers and rewards encourage one-time buyers to become repeat customers.
- Marketers can get access to valuable data that help them deliver personalized experiences
- Referral programs are part and parcel of loyalty programs where customers get rewarded when they refer their family and friends to the brand. This way the business can acquire new customers without additional costs.
- It is a means to surprise and delight customers and gain an emotional connection with them. Customers who have a high level of brand affinity are less price sensitive and are also enthusiastic in suggesting the brand to friends and family.
- Loyalty program based events or online fests help to build a community around a brand and paves way to a long lasting relationship with customers.
- Build a brand identity
Building a strong brand identity that resonates with customers can help businesses differentiate themselves from competitors and build customer loyalty.
- Focus on customer feedback
Regularly soliciting and responding to customer feedback can help businesses understand their customers’ needs and preferences, and make improvements to products and services that meet those needs.
- Engage Customers regularly
Engaging with customers through ads, emails, and social media can help businesses build a stronger relationship with their audience and keep them informed about new products, updates, and promotions. It is important to make sure that the email marketing content is personalized, relevant and not too frequent. Gamification elements like offering rewards for completing challenges or reaching certain milestones can be a fun and engaging way to encourage customers to interact with a brand, make repeat purchase and increase loyalty.
- Leverage customer data
By analyzing customer data from the store’s backend or through apps that are installed to the store, businesses can identify customer behavior, engagement and preferences, and use this information to offer personalized experiences and targeted promotions. This can help build stronger relationships with customers and increase loyalty.
Studies show that, Loyal customers are five times more likely to repurchase, five times more likely to forgive a mistake, and four times more likely to refer a business to others.
Post purchase services as an effective way to build brand loyalty
Post-purchase services refer to the activities that a company carries out after a customer has made a purchase. This can include anything from follow-up emails to after-sales support. By providing post-purchase services, companies can create a positive experience for their customers and build long-term relationships with them.
- Customers are more likely to return to a company that has provided them with excellent service. By offering post-purchase services, such as Follow-up emails companies can address any issues or concerns that customers may have and ensure they are satisfied with their purchase.
- When companies go above and beyond to help customers after a purchase, it creates a positive brand image. After-sales support, such as troubleshooting, product training or demo, personalized product offerings, free coupons or surprise gifts, gift message delivery or gift packaging etc. can lead to an increase in brand loyalty and word-of-mouth referrals that help attract new customers.
- By providing post-purchase services, companies can keep customers engaged and remind them of their positive experience with the brand. Proactive communication, weekly newsletters, first hand information to new product offerings and promotions, Social media engagement, Personalized recommendations based on previous purchases all these can encourage customers to make repeat purchases.
- In a crowded marketplace, offering post-purchase services can set a company apart from its competitors. By providing extra value to customers, companies can create a unique selling proposition and build brand affinity.
87% of customers are loyal to brands that provide them with positive experiences, regular engagement and personalized recommendations.
Use customer communication and follow up through direct mail, email, sms, social media, gift message delivery as a medium to set up ad campaigns to showcase products and retarget or re-engage customers
Imagine being able to cultivate lasting relationships with your current customers while simultaneously attracting new ones, all with the help of a single app added to your store.
Kodie is a gift messaging app that can easily integrate into your shopify store’s post-purchase experience and offer free personalized text, photo and video gift messages to your customers. Customers can record or upload personalized videos, create Instagram-style photo messages with cool options to edit photos and add filters, annotations, stickers and more. Customers will never be at a loss for words with Kodie as the amazing text message suggestions or ideas are powered by ChatGPT.
Kodie delivers the gift message directly to the gift recipient’s mobile phone. It not only offers a personalized experience to customers but also delights the gift recipients who are prospective customers by perfectly timing the gift message delivery with the gift package delivery.
77% of customers are likely to stay longer with a brand if they feel a strong emotional connection with the brand.
It is not a mere gift message delivery app, it is a medium that can help merchants improve brand affinity, build brand loyalty and gain attention from new customers all at no cost. It is fully automated and merchants never have to worry about printing a gift message and placing them in the right boxes any more. Rest assured Kodie never interferes with the checkout funnel as the customer’s gift message is added only after a successful purchase.
Wait there’s more.
Kodie creates opportunities to re-engage customers and gift-recipients through brand page ads. This brand page appears after the customer and gift-recipient have viewed the gift message. Store owners can build custom ads or campaigns to bring their brand to life, offer product suggestions and offerings, drive traffic to the store and increase sales.
To fully appreciate the benefits of offering such personalized experiences, building loyalty, retaining customers and engaging customers we need to understand the costs incurred by a business to acquire a new customer.
Customer acquisition and the costs involved
Customer acquisition is the process of attracting new customers to a business or brand. While customer acquisition is essential for business growth, it can also be costly. Customer acquisition costs (CAC) refer to the total cost of acquiring a new customer. This metric is calculated by dividing the total cost by the number of new customers acquired during a specific time period.This cost can include various expenses such as marketing and advertising costs, sales commissions, and overhead costs associated with the acquisition process.
Marketing and advertising costs can include things like paid search ads, social media ads, email marketing campaigns, and print or television ads. The cost of these campaigns can vary widely, depending on the type of campaign and the target audience.
Sales commissions are typically paid to sales representatives who bring in new customers. These commissions can add up quickly, particularly if the sales process is lengthy or complex.
Overhead costs can include things like salaries for customer service representatives, IT support, and other administrative costs.
According to a study by Shopify, an ecommerce store spends 7.5% of their revenue on marketing, with customer acquisition costs accounting for a significant portion of that budget.
So, how can businesses reduce customer acquisition costs?
Best way is to focus on customer experience. By providing excellent customer service and creating a positive customer experience, businesses can retain customers and reduce the need to acquire new customers through costly means. Existing customers will be more than happy to recommend the brand to family and friends free of cost. By offering gift messaging service to customers there is the extra advantage of gaining a new set of contacts and the ability to convert gift recipients into first time buyers at no extra cost.
Targeted marketing can help reduce customer acquisition costs to some extent. By identifying the ideal customer demographic and focusing marketing efforts on this group, businesses can improve the effectiveness of their marketing campaigns while reducing costs associated with targeting a broader audience.
Subscription services can provide a steady stream of revenue and reduce the need for businesses to constantly acquire new customers. By offering subscription services for products or services, businesses can incentivize customers to make repeat purchases and increase loyalty.
Alternate acquisition channels such as referral program, affiliate marketing, influencer marketing and gift messaging apps can also help reduce the costs. These channels can be less expensive than traditional marketing channels and can be effective at reaching new customers. Word-of-mouth referrals are a powerful way to acquire new customers without additional costs. By creating a referral program that rewards customers for referring their friends and family, businesses can incentivize their loyal customers to spread the word about their brand.
Customer acquisition is essential for business growth, but it can also be costly. By focusing on brand loyalty, customer retention, and post purchase services businesses can reduce customer acquisition costs to a great extent while still attracting new customers to their brand.
Kodie’s personalized gift messages help build brand affinity and convert gift recipients into prospective customers absolutely free of cost. Brand pages ads and the related analytics about customer preferences, user count, customer engagement, impressions, reach, click through rates etc. is available at a minimal cost. This is a great way to re-engage customers post purchase and gently nudge customers and gift recipients to make a repeat purchase from the store. First time buyers become loyal customers and bring in new customers ( family, relatives or friends) through Kodie gift messages which becomes a vicious cycle of acquiring new customers.
Learn more about how Kodie works.
Kodie is a one time investment to retain existing customers, improve brand loyalty, constantly acquire new customers and reduce acquisition costs to a bare minimum.