Editorial Articles

Many would argue that consumers are still loyal to the brands that they are used to, even with the rapid increase in the number of online stores and the subsequent availability of 101 differently branded products. This means that e-tailers’ strategic focus is on who can offer the top brands at the most competitive price, to get customers to buy from them and not their rivals. This is great news for the savvy consumer, who can shop around for the most cost effective purchase, but not so good for the online store itself as customer loyalty can quickly disappear with just the click of a button.

Logan Tod’s own research reflects this distinct lack of loyalty. The Logan Tod Online Shopping Index 2009 (LTOSI) found that two thirds of consumers cite price as the most important factor when it comes to choosing to spend their money online. Though it’s not all doom and gloom for e-tailers as, when asked why they chose to visit a particular store, 70% of respondents said it was down to having had a previous good experience. Stores that rely on price alone will soon get lost in the price cutting maelstrom.

If your idea of creating loyalty is targeted email then look away now; this tactic may have worked once upon a time, but not anymore. Many consumers sign up to distribution lists unknowingly and, as a result, many simply get filed as spam.

The following simple three step process covers off the key areas e-tailers need to consider when it comes to improving customer loyalty:

Measure
Without measuring levels of loyalty how can you tell how likely your customers are to be loyal and whether or not there is a problem? The re-buy rate is the way to measure this: you need to find out how many of your customers return to make another purchase. Split this out by source to glean real insight, for example there is mounting evidence that search driven customers are less loyal.

Check
The next step is to really look at what is driving loyalty. Is it the range of products available, the special offers/money off vouchers or the level of customer service you provide?

The key here is to actually ask your customers for their opinion. Carry out surveys to find out how they feel about the balance of your site, covering off product, price, presentation, shipping, service, marketing and brand. Identify which elements matter to them most and also allow them to rate you against your main competitors. It’s not rocket science, but can you put your finger on why your customers are or are not loyal?

Fix
So now you have all this information on how your customers are using your site and exactly what will encourage them to be more loyal, what’s next? Develop a plan to fix those areas you are weak in, but before you invest in implementing the changes, check that they actually will make a difference! Things that seem to work on paper often unfortunately do not work in practice, so always factor in a testing period (and then only implement the changes that do work). If you really want to make changes to help increase consumer loyalty, then I would recommend getting started as soon as possible.

Finally, don’t rely on the fact that we appear to be seeing the first green shoots after the recession. The recent economic climate means customers are now more likely to take the time to research their purchases to ensure they are getting the best deal. 70% of those surveyed in our research admit that they will be searching more sites than previous years before committing to a purchase.

Author: Matthew Tod, CEO, Logan Tod & Co.
www.logantod.co.uk
http://twitter.com/LoganTod