The Battle for Customer Loyalty Post-COVID

After a year that no one could have predicted, you’re probably ready to set some ambitious goals for 2021 to make up for the momentum you may have lost due to COVID-19 — and then some. One area that should be top of mind is customer loyalty. 

Surveys showed a significant number of people tried new brands, stores, retailers and websites during COVID-19 — largely due to better prices and stock shortages, but also to support local businesses. While some customers may have returned to their pre-COVID shopping habits once prices and stock levels stabilised, others may have realised they preferred a new product or experience and stuck with it.

But whether you’ve gained or lost customers during the COVID-19 reshuffle, you should see 2021 as an opportunity to sharpen your loyalty offer. Not only will your existing customers thank you for it, but you’ll be that much more resilient the next time a ‘black swan’ event comes along and upends the status quo. 

Here, we take a look at exactly how COVID-19 impacted customer loyalty, why it matters and how you can solidify loyalty going forward. 

How COVID-19 impacted customer loyalty

In addition to COVID-related factors like stock shortages and increased discounting, negative shopping experiences also impacted loyalty. 

A survey conducted by Wharton Baker Retailing Center and WisePlum during the first few months of the pandemic found that customers who had a problem along their buying journey were 35% less loyal than those who did not. Unfortunately, customers who were members of a loyalty program were more likely to encounter problems than non-members, probably due to the fact that they’re more frequent shoppers. 

The increased level of online shopping also played a role, according to Paula Courtney, CEO of WisePlum, which conducted the survey. “[T]he majority of the new problems are related to the online experience suggesting that the retailers were not ready for that digital onslaught,” she told Forbes.

Problems related to online shopping, such as having an app or website that was hard to navigate or a poor returns process, were the most damaging to customer loyalty, according to the survey. Requiring customers to provide the original receipt or pay for shipping to make a return were customers’ biggest pet peeves. 

Mina Fader, the managing director of the Wharton Baker Retailing Center, told Forbes that loyalty program members expect retailers to know who they are and not give them a hard time when it comes to making returns. 

“They expect the retailer to use their data and to make returns easier for them,” she said.

Why loyalty matters 

The cost of acquiring new customers is one of the main reasons you should care about loyalty. Some studies estimate that it costs five times more to acquire a new customer than to keep an existing one, probably due to the fact that new customers need to interact with your brand multiple times before they make a purchase (such as seeing a banner ad online, or reading reviews), whereas you simply need to provide existing customers with a positive experience to keep them coming back. 

Studies also show that repeat customers are more engaged. According to the survey conducted by Wharton Baker Retailing Center and WisePlum, loyalty program members whose loyalty has not been damaged due to a negative customer experience are 80% more likely to download a retailers’ app, two times more likely to subscribe to emails and push notifications and three times more likely to engage with a brand on social media, such as Facebook, Instagram and YouTube. 

Repeat customers also tend to buy more than new ones. One statistic suggests you have a 60-70% chance of selling to a customer you already have, while the success rate of selling to a new customer is just 5-20%. Another study shows that repeat customers add 65% more items to cart than first-time customers.

Increasing loyalty is an effective way to grow your business. But how can you do it?

What you can do to solidify customer loyalty

Many retail analysts, somewhat frustratingly, say the key to solidifying loyalty lies in getting the basics right. It sounds a little bit like Retail 101, but it’s worth remembering. Instead of trying to offer the latest virtual try-on service online, focus on smoothing out your checkout, speeding up the pick, pack and delivery process and making returns as easy as possible. 

Some services really are must-haves today — click & collect (if you have a bricks-and-mortar presence) and free returns (if you can afford it) — so prioritise these over nice-to-haves like smart mirrors in changerooms. Don’t forget that problems along the buying journey can damage loyalty, so it’s important to identify potential pitfalls and address them before they happen.  

But let’s assume you’ve got the basics down pat. What else can you do to drive loyalty? Resolving problems quickly when they do arise is one of the most important ways you can satisfy customers and differentiate yourself from the competition. 

According to the survey conducted by Wharton Baker Retailing Center and WisePlum, only 15% of loyalty program members felt their issues were resolved on the first attempt. In fact, they had to contact the retailer four times on average to fix the problem, and even then, only one in two reported complete satisfaction with the resolution of their problem. 

Great customer service built around empathising with people will be your secret weapon in the battle for loyalty post-COVID.