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Building customer loyalty through personalization

Rich Towey
January 10, 2023
10 mins

These days, offering a range of products or services is the first step of truly satisfying your customers.

It’s true – more and more shoppers now expect to buy their items through a personalized experience that meets their individual needs and preferences.

While customers now expect personalization, the good news is that it can play a crucial role in building loyalty around your brand. It's why so many eCommerce managers focus on delivering a seamless and tailored experience that generates repeat purchases.

In this blog, we’ll discuss the role of personalization for online sellers and how eCommerce managers can leverage it to grow their business.

What is the link between personalization and loyalty?

Personalization is the key to customer loyalty for several reasons.

Firstly, it creates a sense of being valued and understood, leading to greater customer satisfaction. Studies find that 84% of customers rate being valued 'as a person and not a number' as important to winning their business.

When you tailor your recommendations of products, services, and interactions to individual preferences, they tell the customer: "we care about you and your needs".

Personalization also increases the effectiveness of your recommendations. If these are irrelevant, they are far more likely to be ignored. If they're personalized, they're more likely to get used.

It's important to note that personalized recommendations can be used to turn occasional customers into loyal ones. For example, if I send a personalized recommendation to a customer who last bought a few months ago, I could get them back into the purchasing mindset.

Lastly, in an era where customers are spoiled for choice, personalization helps businesses stand out. Customers are more likely to remember and return to a brand that provides a unique, personalized experience. Hence, personalization is not just a value-add – it's a necessity for building and maintaining customer loyalty in today's competitive market.

In summary, the link between personalization and loyalty is created by three factors:

  1. Making customers feel valued and understood
  2. Increasing the effectiveness of recommendations that generate repeat purchases
  3. Creating a competitive advantage

Now that we understand the link between personalization and loyalty, let's look into some ways of building it.

Understand your customer

Personalization begins with understanding your customer. When you know your customer's preferences, likes, and dislikes, you can tailor your offering to their unique needs.

That requires data, and lots of it.

To get a better understanding of your customers, use analytics to gather insights from their past browsing and purchasing history.

You can use surveys, polls, and questionnaires to gather extra information about your customers. However, the most important pieces of information relate to what they're actively looking into (browsing) and buying (purchase history).

From here, you can make lots of different recommendations. Here are a few ideas from our team:

  • Recommend 'buying it again' if the product has a short shelf-life (e.g. BBQ coal, cleaning products)
  • Push accessories for a purchase that's recently been made
  • Highlight products that were recently viewed but not purchased

Once you've got your data in order, you can take things to the next level with AI-based recommendations. These use 'lookalike' journeys to recommend products bought by similar customers, e.g. 'Customers also bought...'.

Personalize your communications

Communications and interactions with your customers take lots of different forms. Where possible, tailor them to resonate on a deeper level.

Use your customer's name in your emails, offer personalized product recommendations, and use targeted messaging for promotions that relate to your customer's interests.

Combining these within a communication, like an email, could see your click-through rates and purchases go up. And why wouldn't they? We're living in a time where 52% of consumers say they'll shop elsewhere if they don't receive personalized emails.

See how Netflix uses data to recommend further use of its streaming services on the basis of what the viewer has already engaged with.

You can also use other digital channels to communicate with your customers. Push notifications, chatbots, and social media are some of the best examples.

Offer a personalized shopping experience

Personalizing your communications is a great starting point, but your website is where the real gains come in.

By now, all eCommerce stores should offer a seamless and personalized shopping experience that meets their customer's needs.

Research from Epsilon shows that 80% of consumers are more willing to make a purchase when provided with tailored content and recommendation. For an idea of how this translates to the bottom line, look no further than beauty brand NAVY Hair Care, which increased its revenue by +130% through a personalized shopping experience.

The rewards are clear, but how do you get there?

Here are some ways of tailoring your experience that you'll want to consider:

Personalized product recommendations

Product recommendations based on your customer's browsing and purchasing history are the cornerstone of a personalized experience.

It's also clear to see the bottom-line impact of your investment by seeing how much extra spend or conversions these recommendations drive. See how Mobiles.co.uk cross-sells customers purchasing a mobile device by pushing suitable accessories.

In-depth product filters

Most sites have some function that enables customers to search for products. You should bolster your filters and search options to make it easier for customers to find precisely what they're looking for.

Personalized offers

If there's a specific customer you really want to convert (e.g. a new customer, or a high-spending VIP), you should look to trigger deals when they land on your site.

Overlays are a highly effective for this purpose. Below, we can see how luxury activewear brand Splits59 converts new customers with an introductory deal.

Reward customer loyalty

We've perhaps saved the best piece of advice until last.

Show your customers that you appreciate their loyalty by offering personalized rewards and discounts. Loyalty programs provide an easy way to acknowledge someone's repeat business and tell them how they can unlock the next reward.

These types of activities not only encourage repeat business but also build stronger relationships between your brand and your customers.

Continuously improve your personalization strategy

A final recommendation from us: don’t treat personalization as a static process.

While investing in some of our recommendations, you should continuously gather feedback from your customers and monitor their behavior to improve your strategy.

Use A/B testing to test different versions of your personalization tactics. Work out which areas of your loyalty program are encouraging more purchases. See what resonates best with your customers and make the necessary adjustments.

Final thoughts

We hope you can see that personalization is a powerful tool for building customer loyalty.

By understanding your customers, personalizing their communications, offering a personalized shopping experience, rewarding their loyalty, and continuously improving your strategy, you can build stronger relationships that last for years.

Personalization also makes strong business sense. Communicating with customers on a 1-2-1 level helps eCommerce managers create a competitive advantage to help them stand out in today's crowded marketplace. And we can all agree on the importance of that.

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