Loyalty 2.0 for the Holidays

The holidays are just around the corner, and most merchants have already put a lot of thought into how they’ll try to maximize sales during the annual shopping blitz. But those with their eyes on the real prize will focus not only on sales volumes this holiday season, but also on how many of those shoppers emerge from their purchasing experiences as loyal customers.

Loyalty is the ultimate honor customers bestow on brands, and it's becoming increasingly important in the distracted and fiercely competitive web environment. Returning customers today comprise 40 percent of the customer base, and from 2013 to 2014, sales from repeat buyers rose from 51 percent to 61 percent of total revenues, according to Forrester Research. As e-commerce matures, earning repeat business isn't just a matter of burnishing a brand’s reputation — it’s crucial to survival. With the growth rate for U.S. e-commerce revenues projected to slow to below 10 percent by 2016, competition for digitally savvy shoppers’ loyalty will become increasingly fierce. Furthermore, as mobile devices, social networks and online shopping possibilities proliferate, ever-more-fragmented and distracted experiences are becoming the norm. This means merchants need to work harder than ever to deliver brand messages with lasting power to drive engagement and sales.

There's still time for merchants to integrate brand messaging pathways into their holiday promotions in a way that will not only drive conversions, but coax shoppers to become brand advocates and long-term customers.

Grab New Shoppers
The holidays are a period of exploration as shoppers seek out gifts for friends and family from merchants with whom they might not have previously done business. It’s crucial for retailers to strike while the iron is hot and capitalize on this period of initial goodwill toward a brand by creating numerous opportunities for future engagement. Whether via promotional email lists, SMS alerts, social networks or even app downloads, merchants must relentlessly find ways to encourage and reward such brand engagement.

Merchants should develop succinct but thorough information about opportunities to stay connected with their brands, and then promote the options throughout their e-commerce site. Locations should include pop-up invitations in the global header and footer, within category and index pages, and in the shopping cart.

The engagement needs to extend beyond the e-commerce site as well to include social media pages, mobile platforms and in-store promotional materials. Once shoppers have made the commitment to follow or subscribe, merchants should respond by quickly demonstrating the benefits they’ll receive beyond mere discounts. To encourage a more meaningful relationship with the brand, merchants should consider taking the following steps:

• Devise a “welcome series” for email and SMS subscribers. Rather than a beginning and ending acknowledgement for new subscribers with a single discount offer, merchants should tell a serialized brand story that unfolds over several messages. The leisurely pace gives shoppers repeated opportunities to appreciate and explore the unique product offerings and valuable expert content that's available.
• Put a spotlight on user-contributed content and opportunities for social interaction. By showcasing the voices of brand followers and customers, merchants validate the subscriber’s decision to join the community and demonstrate the brand is filled with like-minded enthusiasts.
• Promote cross-touchpoint facility. Merchants should alert new brand followers to their capabilities for boosting convenience and efficiency in stores and online alike. By showcasing features such as in-store pickup, personal shopping services, mobile apps and other opportunities for seamless interaction, merchants signal that they’re prepared to deliver relevant products and offers wherever shoppers roam.

Chase Down Those Abandoned Carts
Abandoned cart rates tend to rise during the holiday shopping season, often due to shoppers trying to see what the shipping charges are. However, such cart abandonments don’t have to be a dead-end for merchants willing to do a little follow up.

A whopping three-quarters of those who have abandoned carts say they intend to return to the same site to complete their purchase. Clearly, abandoning a cart is now a commonplace part of the shopping journey — not an irredeemable disaster. Merchants should adapt their tactics accordingly and re-engage these consumers.

In order to maximize the effectiveness of recovery campaigns, merchants should do the following:

• Personalize abandoned cart emails. Messages that include a picture of the exact item(s) left behind in the cart had a 25 percent higher transaction rate than those that merely employed a text link back to the brand site, according to Experian.
• Highlight freebies. Message any free shipping offers or free site-to-store services, as well as customer service contact information and value-added content related to the product or category.
• Cap paid retargeting campaigns. To avoid alienating consumers with excessive retargeting contacts, merchants should not only cap the frequency of ads, but they should be sure to stop serving ads to shoppers who go on to convert and to those who haven’t responded to ads within a reasonable timeframe.

Loyalty Clubs Need to Prove Their Value
While it’s smart to spend significant energy engaging new consumers this holiday season, in no way should it come at the expense of existing loyal customers.

Loyalty clubs continue to thrive, with over 90 percent of merchants on Internet Retailer’s Top 500 list offering a “frequent buyer program,” a significant jump from 2013, when just 40 percent of merchants on the list did so. A brand’s most loyal customers need to feel the love during the holidays. They expect top-flight service and an array of perks to reward them for their year-round willingness to spend more than other customers.

Merchants should ensure that their rewards program always delivers the best deal available, especially during the peak holiday season, when other discounts and offers fly fast and furious. That should include, if at all possible, free shipping. The success of Amazon Prime is making shipping charges a thing of the past for more than 45 million people. To compete, sellers should do everything in their power to make free shipping an ongoing club perk.

If free shipping just isn’t an option, then merchants should consider alternatives that still give club members a discount on shipping — and then factor in how members can receive still better offers when periodic sitewide free shipping offers go into effect.

Among the shipping tactics to consider are the following:

• Make it a flat rate for members. Taking the variability out of shipping costs may be enough of an incentive for your customers to join the club. Assigning a flat, low rate for ground delivery eases the purchase process by making total order costs easy to calculate.
• Offer “free” strategically. Rather than defaulting to free shipping all the time, consider offering club members periodic free shipping windows — e.g., for the month of their birthday, for the last two months of the year for holiday gift purchases, or for a “flash sale” style promotion lasting just for a weekend or 12-hour period.
• Sweeten the deal for the holidays. Whatever your default offer, give loyalty program members an even better discount during the peak holiday season — e.g., free expedited shipping, a lower threshold to quality for free ground shipping.

As the online shopping environment becomes more fragmented and crowded, it’s more difficult than ever to capture customers’ attention, much less earn their loyalty … and yet it’s also crucial for survival.

The holiday shopping season offers merchants a key opportunity to begin building lasting relationships with new shoppers and to cement and celebrate the special bonds between brands and their most loyal customers.

Ken Burke is the founder and CEO of MarketLive, an e-commerce software provider. Ken can be reached at ken@marketlive.com.