Customer loyalty is more than just a repeat purchase rate, NPS, or a signup rate for your loyalty program. It involves a deep emotional connection between the customer and your brand, built through a combination of rational and emotional factors.
At its core, customer loyalty is driven by the customer's perception of the brand. A recent study discovered that 81% of online shoppers said they need to trust a brand before they buy, and customers who trust a brand are 65% more likely to be loyal, even if a competitor offered better value for money.
The monetary impact of brand loyalty
In the world of ecommerce, customer loyalty is crucial not only because your social following could disappear with an iOS update or a new legislation (please don't take TikTok from us). But also because the data shows repeat customers are more valuable to a company than new customers. They have higher AOV, purchase more frequently, and are more likely to refer others to the brand.
"Customer loyalty is crucial in a world where ads are more expensive than a Lambo. You can't keep filing a leaky bucket. Brands that focus on loyalty and retention will the DTC game in 2023 and beyond."
— Deb Mukherjee, Head of Marketing, Numeral
As brands mature, brands that have built more customer loyalty see more purchases from emails or a loyalty program than traditional marketing methods like social ads.
How should DTC brands build loyalty?
The decision-making process for purchasing a product or service involves both rational and emotional factors. On the rational side, customers consider factors such as price, quality, and convenience. On the emotional side, they consider how the product or service makes them feel. When a customer has a positive emotional experience with a brand, they are more likely to become loyal.
Research has shown that customer loyalty is built when they feel an emotional connection. This emotional connection can be built through a variety of factors, such as:
- Trust - When a brand delivers on its promises and consistently provides high-quality products and services, customers are more likely to trust the brand and become loyal.
- Personalization - Customers want to feel valued and appreciated by the brands they purchase from. When a brand personalizes its messaging, offers, and products to meet the individual needs and preferences of its customers, it can create a stronger emotional connection.
- Shared Values - When a brand communicates its values and actively supports causes that are important to its customers, it can build a deeper emotional connection. According to a survey by Accenture, 62% of Gen Z consumers in the US prefer to buy from companies that stand for a shared purpose or values that reflect their own.
- Positive Experiences - When a brand goes above and beyond to provide exceptional customer service, customers are 3x more likely to buy again. Even if they aren't completely satisfied with the product.
Actions Customers Take When They Have Affinity for a Brand
When customers have an emotional connection to a brand, they tend to take certain actions that demonstrate their loyalty. These actions can include:
- Repeat Purchases - Loyal customers tend to make repeat purchases from the brands they are loyal to. They are willing to pay more for products and services from a brand they trust and feel an emotional connection with.
- Positive Reviews - Loyal customers are more likely to leave positive reviews and feedback for the brands they are loyal to. They want to share their positive experiences with others and help the brand build its reputation.
- Referrals - Loyal customers are more likely to refer their friends and family to the brands they are loyal to. They want to share their positive experiences with others and help the brand grow.
That is why the biggest names in DTC all have a loyalty program for their Shopify stores. Loyalty & rewards experts like Rivo can help DTC brands build these emotional connections with their customers and foster long-term loyalty.
The Role of Emotional Connections in the Purchasing Process
Emotional connections play a significant role in the purchasing process. When a customer has a positive emotional experience with a brand, they are more likely to make a purchase. This emotional experience can be created through a variety of factors, such as:
- Brand Personality - When a brand has a unique personality that resonates with its target audience, it can create an emotional connection that leads to loyalty.
- Storytelling - When a brand tells a compelling story that resonates with its target audience, it can create an emotional connection and encourage loyalty.
- Content - When a brand produces content that connects with its target audience on an emotional level, it can create a deeper connection and foster loyalty.
People are loyal to things for a variety of reasons, ranging from emotional connections to practical considerations. At its core, brand loyalty is about feeling a sense of connection and commitment to a business. This can be driven by many factors, but if your brand isn't doing its best to build relationships with personalized messages, and incentives, there is very little chance a one-time buyer will become a loyal customer. By understanding the psychology of customer loyalty, brands can develop strategies to build strong emotional connections with their customers and foster long-term loyalty.