How To Grow Your Business With Returning Customers | #274 Fiona Stevens

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Claus Lauter [00:00:00]:
This is episode two seven four of the ecommerce Coffee Break podcast today. Fiona Stevens, director of marketing@Loyaltylion.com joins me.

Claus Lauter [00:00:07]:
On the show and we talk about.

Claus Lauter [00:00:09]:
How to grow your business with returning customers.

Claus Lauter [00:00:11]:
So let's dive right into it. But before we get started, a big thank you to our sponsors for supporting today's episode.

Claus Lauter [00:00:19]:
Loyalty Lion is a leading loyalty platform helping Shopify brands rocket returning customers with their own loyalty programs. With Loyalty Lion, it's quick and easy to create a program that uses points and rewards to engage shoppers, secure more second purchases, and drive up lifetime value. Loyalty Lion has been increasing returning customer rates for thousands of Shopify stores for over ten years. Visit loyaltylion.com to find out more. Find the link in the show notes.

Claus Lauter [00:00:45]:
Have you heard about Partner Hero? They're experts in support on the ecommerce industry, known for their outstanding team building skills. Their main pillars, quality people and culture, makes them a great fit for your company. Learn more on partnerhero.com or click the link in the show notes.

Claus Lauter [00:01:00]:
This is.

Voice over [00:01:01]:
The e commerce Coffee Break, a top rated Shopify growth podcast dedicated to Shopify merchants and business owners looking to grow their online stores. Learn how to survive in the fast changing e commerce world with your host Klaus Lauter, and get marketing advice you can't find on Google. Welcome to the show.

Claus Lauter [00:01:27]:
Hello and welcome to another episode of the ecommerce Coffee Break podcast. Today we want to talk about strategies on how you increase the number of returning customers, boost customer lifetime value, and decrease churn rates. As you know, ads are getting more expensive. In 2024, tracking will become more difficult than it ever was. And obviously you want to make sure that you have a lot of returning customers because that's the best customer you want to get in your business. So with me on the show, I have Fiona Stevens. She's the director of marketing at Loyalty Lion. With over 15 years of experience in marketing, she has worked in house and agency side across many functions, including pr, SEO, content and mostly important loyalty.

Claus Lauter [00:02:03]:
She has specialized in marketing for the retail and ecommerce space for the past decade. So let's welcome Fiona to the show. Hi Fiona, how are you today?

Fiona Stevens [00:02:10]:
Hi. I'm very good. Thanks so much for having me, Fiona.

Claus Lauter [00:02:13]:
Let's dive right into it. So returning customers obviously is a very important part of every business and more important so than it ever was. A lot of merchants struggle to get the strategy right there. Tell me a bit of what you see when customers come to your clients come to your site, what kind of mistakes they have done in the past.

Fiona Stevens [00:02:32]:
Traditionally, when you're trying to grow a business, when you're perhaps the first year, second year, you're really focused on acquisition. You're focusing on getting your brand out there, you're focusing on trying to get new customers through the door. And it's really easy to forget that actually once you've got a single customer, they could be a returning customer, they could repeat purchase. I think the biggest error is actually not shifting any focus away from acquisition towards retention for quite a long time. Once you're up and running. That's a mistake we see often. And as you've already mentioned, acquisition, focus, it works, it's necessary, but it doesn't work as well as it used to. If I get these stats right back in, I think it's 2013, you lost around $9 per customer that you acquired new.

Fiona Stevens [00:03:16]:
Now it's up to around 29, $30. The cost of acquisition is just increasing all the time. So yes, you need new customers to come through the door, but you need to at some point, and quite an early point, shift that focus towards retention so that you can start bringing customers back who already know your brand, have bought from you once and had quite a good experience. It's going to be far easier to convert those customers again. So yeah, I think the biggest challenge is just realizing when it's time to make that switch and making the switch, not 100% switch, of course, just expanding your focus. Doing that before you're too reliant on discounting, before you become known for there's 25% off every single purchase for both new and returning customers. I think that's the big challenge.

Claus Lauter [00:04:01]:
But stunt about the number that you just said. So it's about $30 to acquire a new customer and a lot of business do not even have the profit margin. So that will be difficult to break even on the second purchase. Now, what are different ways on how to increase your customer rates? Obviously you can have different strategies. And I said discounting is probably not the best thing to do. So what would be your best take on that?

Fiona Stevens [00:04:22]:
Discounting is a necessary evil. Everybody has to do it. It's often the best way to get a new customer in the first time. But we've just witnessed Black Friday and pretty much Black Friday month or Black Friday quarter where people with sourcing discounts over 50%. You really don't want to be doing that because it's going to erode your profit margins over and over again. If you're having to do it all year round, you're going to get yourself in a bit of a pickle. So I think having a way of bringing returning customers back all year round is really important. And those returning customers are far likely to pay full price.

Fiona Stevens [00:04:56]:
So it's a bit of a value exchange. What can you give those returning customers in return for their loyalty and their repeat purchases? And there we get into the realm of things like loyalty points and rewards. And lots of people are members of lots of different loyalty programs and they don't use them properly. But done all right, it's a really good way of keeping in touch with your customers in between those purchases. If you can incentivize them to follow you on social media to make sure you're keeping in touch, if you can incentivize them to share their data, perhaps by filling in points in exchange for a quiz or filling in a profile or something like that, again, you've got another mechanism, you've got more information on them, another mechanism to keep in touch. And that's particularly important as well. Where privacy is becoming a challenge. With cookies changing, with GDPR, with different legislations in different states, it's becoming harder and harder to get information that you can then use to personalize your emails or your sms strategy.

Fiona Stevens [00:05:54]:
So if you can use something like loyalty of points in exchange for completing that profile or taking that quiz, you start gathering that information and it's getting harder and harder to acquire. So again, just having those points or rewards to keep people engaging in between purchases is really effective. I think you can also, going back to the discounting point, you can use a loyalty program or points and rewards and things to replace those discounts. So rather than running a 25% off sale on, say, earth Day, if you're a sustainable fashion company, for example, you could run a double points day or a bonus points day, something like that, which still brings people back. It's high value for them. They can unlock more points if they make a purchase over that period, but it means that you don't have to use a discount and it means that they're building up their points balance really fast, so they're more likely to come back and unlock a reward and make that repeat purchase again sooner.

Claus Lauter [00:06:49]:
I think you gave a very nice example there with Earth Day. Obviously, to get customers back, you need to build up trust. You need to build up loyalty with that. Also, you need to build up a connection between the customer and your brand. Can you give me some examples of customers of yours on how they do that?

Fiona Stevens [00:07:04]:
Yeah, this is actually a growing area of loyalty programs that I'm really enjoying watching. I think, as you say, it's really important to connect with customers emotionally and build up trust. And there's been a lot of bad press over the last couple of years, particularly for beauty and fashion brands, in terms of, well, you say you're being sustainable, you say you're being ethical, but your production bands just haven't caught up. There's a really strong play here in terms of counteracting that greenwashing, I think it's called, and showing that your customers that you are serious about what you claim to support. Some really nice examples we've got. There's a pet food brand called Edgarden Cooper. If you earn enough points to claim a reward, you can claim a reward for yourself, you can get a money off your next purchase voucher, or you could buy a doggy dinner or a dog shelter. You can give back dog lovers everywhere buying dog food for their own pet.

Fiona Stevens [00:07:56]:
If they earn enough points, rather than using the reward themselves, they can use it to support something, a charity, a trust, a fund that they care about. We also have wild nutrition, so they're obviously nutrition brand, but for them, you can redeem your rewards in the form of a charitable donation. And that's to. You can plant trees, you can support an ocean charity. Again, the charities tie closely to the kinds of products they're selling and the impact of the creation of those products, but it allows people to, a, see that the company cares about the same causes, but b, contribute to those causes at the same time.

Claus Lauter [00:08:33]:
I think it's a very interesting development, because beside of discounts or getting points, it sort of makes the customer a hero, something that they can brag about in front of their friends. Who says, I just contributed to something swiss, some course. So, I don't know, planting a tree or something like that, which is a completely different emotional level of binding your customer to your brand. I think the biggest risk, talk me through it, is churn rate losing customers. Tell me a little bit about it. And how do you prevent that?

Fiona Stevens [00:09:02]:
The customers who are at risk of churning, they're really the people that haven't returned to make a repeat purchase in the time frame that you would expect them to. And that time frame is going to be very different for different types of brands. So, for example, if I sell handbags, I'm really only going to expect somebody to come back and buy a handbag once, possibly twice a year. Whereas if I'm selling shampoo, I should be replenishing that once every not depends how much hay you have, but once every maybe one to two months. So you can quite easily see your cohorts and see who is returning and repurchasing in the way that you'd expect and who's dropping off, who's becoming at risk. And you can quite easily catch those at risk people before they churn. So once you've got your segment, that's the time when you want to be encouraging them to come back. You could be introducing them to a new product range that they haven't seen.

Fiona Stevens [00:09:52]:
You could be crediting them with some surprise points that they weren't expecting. It might be that they've actually got a reward they could redeem, but they've just forgotten about it. So you could be using reward available reminder emails to just keep in touch and remind people that you're there. And I think the more people you can get into your loyalty program, and again, you can incentivize account creation with points to get people in. But once they're in, you can send those regular emails, you can schedule monthly point statements or reward available reminders, that kind of thing, to stay top of mind and make sure people don't forget about you. But if you are sort of just getting started and you don't have that yet, then identifying that at risk segment, figuring out how at risk have they actually churned, is it going to be hard to bring them back? Or could you just use something like a bonus points day and then sort of adapting your strategy for each different cohort is a good way to bring them back? I think subscriber churn is probably the biggest problem, especially where you have, again, pet foods, food and beverage, coffee subscriptions. Saw a lot of alcohol subscriptions over the last few years. Anything where you're subscribed to a product, the churn rate is actually incredibly high because more often than not, we sign up to a subscription when there's an offer and then when things get a bit tight, we look at all our subscriptions.

Fiona Stevens [00:11:13]:
I was looking at mine the other day thinking, do I need most of these things to be delivered every single month? Probably not. When you do that inventory, you want to make sure that your subscription stands out as being really high value and that perhaps not just a monthly it arrives at the door, but what additional value are you adding? So we've got brands who have specific subscriber tiers, and if you're in that subscriber tier, you might actually get a free sample of a new product that non subscribers don't get in their box. You might get early access to sales or to new products as they launch. You might get invitations to events or exclusive content, other kind of experience based rewards that come with that subscriber tier. So when somebody's doing that check of do I need this? Do I need that? Which am I going to get rid of? Yours actually stands out as offering something a little bit more special.

Claus Lauter [00:12:05]:
And now a quick break to thank the sponsors of today's episode.

Claus Lauter [00:12:09]:
Tired of watching customer drift away after their first purchase? Then it's time to rocket your returning customer rates and drive six times more second purchases. With loyalty line as a leading loyalty platform in the Shopify space, loyalty line exists to make it as easy as possible for you to launch and manage your own loyalty program. They'll even build your loyalty page for you. With loyalty line, you unlock everything you need to engage shoppers with points and rewards and integrate loyalty data into your email, sms and help desk platforms. You also get a five star support as shown by the customer reviews on the Shopify App Store and G two. Visit loyaltyline.com to find out more and start your loyalty journey. Find the link in the show notes.

Claus Lauter [00:12:49]:
As a prominent player in the e commerce support arena, partner Hero specialize in delivering personalized customer experience solutions with a clear focus on helping you not just meet but exceed your goals and requirements. They have become experts in e commerce support. Their commitment to tailoring solutions to your unique needs ensures that your support experience is nothing short of exceptional. Partner Hero is more than a CX company. They are your partner in success. Visit their website and learn more on partnerhero.com.

Claus Lauter [00:13:15]:
Loyalty lion is around for a long time. It's probably one of the most well known loyalty apps in the e commerce space. Tell me a little bit. I want to touch on the technical side of it coming from the strategy. Now looking how does the day to day work in your app look like for a store manager? For ecommerce manager? For a marketing manager, pretty easy to.

Fiona Stevens [00:13:33]:
Use to be honest, quite straightforward. So you have the flexibility to set up your program as you wish. We actually design your loyalty page for you. So when you onboard a loyalty learn, we'll work with you to say, okay, this is a loyalty page. We know what components are the most important. We know what you need to have on your page. So you let us know your logo, your brand, colors, your fonts, et cetera, icons you want to use and we will design and build your page for you. It's then up to you in the back end and as I said, it's pretty self explanatory, but it's up to you to work with our onboarding team to decide details like well, how many points do you want to give per purchase, how many points do you want to give per action and which actions actually do you want to reward? So you might be heavily focused on Instagram and TikTok on your social media strategy.

Fiona Stevens [00:14:25]:
So you would set up so that you're rewarding X number of points for follows on each of those things. But you might leave off Facebook or Twitter because you're not focused on those channels. You may have a reviews platform, so you would decide how many points you want to reward to incentivize a review or that kind of thing. It's really easy to do and it's up to you how you want to do it, what you want to award points for. Similarly, tiers are very easy to set up. Again, it's your decision what benefits you put in each tier. So you might say, right, bottom tier, I'm going to give free shipping and bonus points days. Then the middle tier I'm going to add on early access to sales and early access to new products.

Fiona Stevens [00:15:09]:
And then for my top tier I'm going to add exclusive access to events or something along those lines. So again, your strategy and what you want to include is yours to decide, but it will obviously be there to guide and support those decisions. But it's very easy to then just build it. In Google platform we have our integrations space, so we integrate with most of the key shopify tools. Klaviyo Akendo attentive and gorgeous are probably our strongest integration, but we integrate with lots of other ESPs and reviews providers and subscription services as well. The connection there is quite simple. Pick the ones that you want to integrate and then it's reporting really. So we've actually just launched some new dashboards, which makes our reporting a whole lot easier.

Fiona Stevens [00:15:56]:
But we wanted to make sure that you've gone to the effort of launching and building a lord's program. You've gone to the effort of managing it. We want you to be able to see the results of that effort really clearly. We want you to be able to prove the value of your program so that when it comes around, you've been running it six months, you can say, look what have achieved? Not well, I'm not really sure. It's another marketing activity that I'm running, but it might be working, it might not. That's a real challenge in most areas of marketing. So we want to make sure that you can prove that value. So you're able to compare your nonmembers with active and non active members.

Fiona Stevens [00:16:34]:
So you can really compare a loyalty program member who is taking advantage of all of your points or rewards with a non active member and with a non member. And then you can do that across lifetime value, repeat purchase rates, all those kinds of things. So you can very quickly start to see, okay, a loyalty program member is spending more, they are purchasing more frequently, they are more valuable, and you're able to see what portion of your revenue as a store can be attributed to your lodge program as well. So I think within the back end, it's really yours for the taking. There's everything from quite an easy setup where you get to design a program using your knowledge of your customer and what they're likely to engage with through to being able to report on that quite effectively.

Claus Lauter [00:17:20]:
I like the fact that you are helping in building the loyalty page because I think that's where people struggle the most with you see all these features, but how do you get it together? And if you have somebody on your site helping with that, I think that's a huge benefit. You touched already on a couple of industries. You talked about pet food, about fashion, who's your perfect customer? Or are there any industries where you would say loyalty is a little bit more difficult than others? Give me an example.

Fiona Stevens [00:17:43]:
It's definitely most suited to stores who have a high repeat purchase rate. As I say, something like a handbag, people will repeat purchase fairly regularly, but you're looking at a slightly longer purchase cycle than some of the more consumables. Does that mean that if I'm a luxury jewelry brand who's only going to sell something once every three years, that a lodge program isn't for me, not necessarily because it's engagement in between those purchases. Yes, we want to increase repeat purchase rates. Yes, we want to get returning customers back as frequently as possible. But even with a luxury brand or a slower purchase cycle, keeping in touch in between purchases, staying top of mind, and showing customers that you have things in common and that you care about the same things is really important so that when they do shop again, it's still with you. I would say everybody. That said, certainly for quicker results, it is the highly repeat purchasable.

Claus Lauter [00:18:44]:
Okay, okay, sounds great. We already touched on the onboarding process, but tell me a little bit about your pricing structure.

Fiona Stevens [00:18:50]:
We have lots of different plans. We do have a free plan on the Shopify App Store where you can start with the basics. Really? As you say, we've been around a while we know what a really basic program looks like and needs to work effectively. There's also a two week free trial. Obviously a loyalty program takes time to set up and manage. So two weeks is perhaps not long enough to see whether things work, but it is long enough to log in, play around, see what building your program will it look like. So yes, free plan available on Shopify. And then our paid plans start from $159 a month and they go up from there.

Fiona Stevens [00:19:25]:
And it's really based on how many orders you're processing a month. So we don't believe in charging by members because you could have 500,000 members, but if only 100,000 of them buy from you that month, then you're paying an awful lot for people who aren't purchasing. So we're based on the number of orders and obviously as the number of orders goes up, so does the fee. But you unlock a whole lot more features the more you invest.

Claus Lauter [00:19:52]:
Makes perfect sense. Before we come to the end of our coffee break today, is there anything that you want to share with our listeners that we haven't touched on yet?

Fiona Stevens [00:19:59]:
Your returning customer rate is obviously for us, it's the pinnacle of your growth. You're having spent more to acquire. You've got these existing customers who already know you, hopefully already trust you. Should be far easier to win them back. So that returning customer rate should be your North Star. But I think it's easy to think of loyalty and loyalty programs as the standalone activity. A bit of an add on, something to come back to you later. And I think the right way to look at it is actually loyalty could be the thing that is adding power to all of your other marketing.

Fiona Stevens [00:20:32]:
So we've already talked about using loyalty points to incentivize social media follows and shares. You could be contributing to your social media strategy. You could be using it to personalize your emails more effectively. You could be using it to improve your help desk experience. If a customer support advisor can see your loyalty status and see your points balance, they can perhaps sweeten a slightly sour situation with some extra points. There's lots of different parts of your marketing strategy that loyalty could actually support rather than it being a separate activity. So I think if you are looking at your returning customer risk, if you're looking at retention or loyalty, don't look at it in a silo is the most important thing.

Claus Lauter [00:21:13]:
Yeah, I think having returning customers should be the goal of every business out there. Because always chasing for new customers, for new buyers, it's not only exhausting and expensive, but it's not really a business, so you need to have people that trust you and come back. Where can people find out more about you guys?

Fiona Stevens [00:21:30]:
If you head to lotteland.com, you can find out everything that you need to know about us. You can also book a time to talk with us as well, and somebody can give you a tour of the platform in a bit more detail.

Claus Lauter [00:21:40]:
Excellent. I will put the links in the show notes and you just one click away. Fiona, thanks so much for your time today. I think it was a very good overview why loyalty and building a program around that is so important and I hope a lot of people will check it out. Thanks so much for your time today.

Fiona Stevens [00:21:53]:
Thank you.

Claus Lauter [00:21:54]:
Van hey Klaus here.

Claus Lauter [00:21:56]:
Thanks for joining me on another episode of the e commerce Coffee Break podcast.

Claus Lauter [00:22:00]:
Before you go, I'd like to ask.

Claus Lauter [00:22:01]:
Two things from you. First, please help me with the algorithm so I can bring more impactful guests on the show. It will make it also easier for others to discover the podcast, simply like comment and subscribe in the app you're using to listen to the podcast and even better if you could leave a rating. Secondly, please take a moment to check out today's episode sponsors. They play a crucial role in keeping the show in our newsletter, available to you for free. Thanks again and I'll catch you in the next episode.

Claus Lauter [00:22:25]:
Have a good one.

Claus Lauter [00:22:26]:
Before you leave, don't forget to visit the sponsor of today's episode. Have you heard about partner Hero? They're experts in support on the e commerce industry, known for their outstanding team building skills. Their main pillars, quality people and culture makes them a great fit for your company. Learn more on partnerhero.com or click the.

Claus Lauter [00:22:42]:
Link in the show notes Loyalty lion is a leading loyalty platform helping Shopify brands rocket, rejoining customers with their own loyalty programs. With Loyalty lion, it's quick and easy to create a program that uses points and rewards to engaged shoppers, secure more second purchases, and drive up lifetime value. Loyaltyline has been increasing returning customer rates for thousands of Shopify stores for over ten years. Visit loyaltyline.com to find out more. Find the link in the show notes.