Posted November 14, 2013 6:22 pm by with 2 comments

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In the retail business, loyalty is everything. Returning customers are the bread and butter of most businesses and you can’t afford to lose even one. Unfortunately for online shops, customer loyalty is iffy at best.

switching online retailers

The Nielsen Global Survey of Loyalty Sentiment report shows that online retailers come in last by a pretty wide margin.

They surveyed 29,000 Internet respondents in 58 countries across 16 categories and found that people were more likely to be loyal to brands / companies they use everyday such as banks, mobile phone service and cable providers.

I see it a different way. It’s not loyalty that keeps customers hanging on – it’s lack of options coupled with the hassle factor (not to be confused with the Hassle-hoff.) Changing your mobile phone provider often means paying a penalty for ending a contract early or losing upgrade benefits you’ve accrued over time.

Changing banks? Yikes. Think of all the autopayments that would have to be changed and all of the sites that auto pay to your accounts. Too crazy to change.

Cable? My options are so limited where I live, it’s not even worth thinking about.

So let’s forget the bottom half of this chart and look at the top two slots. Supermarket loyalty is usually a combination of distance versus savings. I have 3 different chains within five minutes of my house. I’m mostly loyal to one but I frequently visit the other two when they send me good coupons. To some extend, product availability, shop-ability and personnel all factor into my store choice.

There’s one store where I get the same checkers and baggers every week and so it’s a friendly, welcoming environment. I like that. I also think that’s part of the reason people are likely to switch from one online store to another – most online stores don’t make it personal. I’m not talking about an auto-filler that puts my first name in at the top of an email blast. I’m talking human beings. Who owns the store? Who packs my product? Who can I talk to if I have a problem.

It may not be practical to have this level of communication with all customers but you should have it with your top customers.

Here’s another thought that goes against conventional wisdom. If I have a problem, I want answers fast, so you send me to a generic support email or phone number that will respond within an hour. Nice – ish. I’ve spent the last few days migrating my hosting service to a new server. The process is working fine, no issues, but I’ve had to call in three times to check on a the details. Each time I have to start over and explain who I am and what’s going on and where we are in the process. Even though the operator has access to my history, I still have to keep repeating the story.

What if my provider gave me a single point of contact. He’s only there between 8 and 5 EST but I wouldn’t have to start over every time I called. If I was desperate, I could still dial the usual number but if I want personalized service, it’s there. Just a thought.

Why Switch

When asked why they would switch to another store or brand, 61% of US consumers said they’d switch for a lower price. However, if the lower price resulted in a poor product, they wouldn’t remain loyal. So cheap isn’t always best.

If you can’t keep them with the price, you might keep them with a bonus. 76% of US consumers said they’d be more likely to patronize a store with a loyalty program.

What do they expect from the program? Deep discounts and preferably free products. If I get a coupon for a buy 1 get 1 free meal at a local restaurant, it’s going to be my first choice when I eat out.

Almost half the respondents said that free shipping was an acceptable loyalty bonus but on 25% were interested in exclusives or special events. Even less were interested in special shopping hours for loyalty members. Interesting note, in Asia that’s a huge perk for 36% of the shoppers.

If you’re interested in learning more about customer loyalty, especially outside of the US, visit Nielsen and ask for the free report. They’d be happy to give it to you in return for your contact information.



  • Interesting article. And very ironic, considering it’s rather simple to hold on to customer loyalty if you’re an online business. It’s where marketing automation steps in.

    Since customers do not have access to the “warm personnnel” they do in real stores, the best way to keep them happy and warm is by being in touch. Marketing automation comes in various forms today that can make a customer very happy. It’s no longer restricted to just email automation. You can now tweet to customers, send them linkedin messages, write on their facebook walls and so on. Of course, you also need to decide how much is too much.

    There are products like Agile CRM that lets you pull in data about your customers from everywhere on the web and then tailor communication to them. Once MA is implemented correctly, you can always have returning customers. Take the case of Amazon and other popular online retailers – they dont’ just sit by after you register or make a purchase. They tempt you with further offers and discounts and product suggestions.

  • Mil Bern

    I like this article very much. But its kinda not the right approach to this topic. I guess online stores are not only based on customer loyality. Take for example. (feel free to remove this link if its against the rules).

    I think they make it very approachable to raise your stats in social media for every type of store. Therefore even offline stores (grocery stores) can be very high in customers just by using the right promotional tactics and sites.

    Thanks for this article,