For retailers, 2022 has been a tumultuous year. Record high inflation, continued supply chain issues and the war in Ukraine have contributed to an uncertain economic environment. Jungle Scout found that 77% of consumers have cut spending this year due to inflation.

Building customer loyalty is crucial for success as consumers tighten their wallets. In this article, we’ll explore the benefits of customer loyalty and offer three ways to boost customer retention during an economic downturn.

Why Retailers Should Prioritize Customer Loyalty 

It can be tempting to cut costs and reduce staff during economic uncertainty. However, many cost-cutting measures hurt the customer experience—driving even the most loyal customers away. Instead, brands should emphasize customer retention.

Loyal customers increase revenue

According to Gartner, 82% of customers prefer to buy from a brand again than choose a new one. But consumers tend to shop around more during uncertain economic times. By focusing on customer relationships, brands can reduce customer acquisition costs and increase lifetime customer value. 

Loyal customers drive referrals 

Referrals are one of the best ways to acquire new customers—especially when marketing budgets are tight. Criteo found that 68% of shoppers are likely to recommend a company based on a good experience. At the same time, 73% are willing to take a chance on a company with positive reviews.

Loyal customers provide valuable feedback

Loyal customers are more likely to give honest feedback about their experiences. Retailers can also collect more data from repeat customers, which helps inform strategy.

3 Ways to Increase Customer Loyalty During Economic Uncertainty 

In a competitive environment, customer loyalty is essential for success. Here are three ways retailers can increase customer retention during an economic downturn. 

1. Ensure a Frictionless Customer Journey 

Today, consumers are omnichannel—78% percent of shoppers use multiple channels before making a final purchase. But whether customers are shopping online, on social media or in stores, they expect a seamless experience.

For retailers, a well-designed customer experience is essential for customer retention. Here are a few factors to consider when evaluating the customer journey. 

Optimize for mobile

Mobile commerce is on the rise as consumers increasingly rely on their smartphones. According to Google Insights, 59% of shoppers consider a brand’s mobile shopping experience when deciding between brands. 

For retailers, optimizing websites and links for smartphones is critical to creating a frictionless customer journey. 

Invest in self-service features

Today, customers expect speed and convenience. Self-service options—such as buy online, pick-up in store, curbside pick-up and cashier-less checkouts—give shoppers better control over their shopping journey. 

Focus on customer service

The customer service experience is essential for customer retention. Qualtrics found that 80% of shoppers switched brands after a negative customer experience. For 43% of those surveyed, one negative experience was enough to change brands.

When considering the customer service experience, speed is key. Eighty-three percent of shoppers expect to interact with a sales associate immediately when they contact a company.

Enhance the return experience

Returns can be a headache for retailers. Yet, the return experience is often a missed opportunity to strengthen customer relationships. 

Seventy-six percent of first-time consumers who had an “easy” or “very easy” return experience would shop at a retailer again. At the same time, 33% of returning customers will stop shopping with a retailer after a poor return experience.

2. Find Creative Ways to Drive Value 

During economic uncertainty, maximizing value for customers is essential. Last year, Salesforce found that “better deals” was the top reason consumers switched brands. 

But steep discounts are unsustainable. The following are some ways retailers can deliver value beyond price cuts:

• Rethink messaging: During the Great Recession, Lego shifted its messaging to promote the durability of its toys. 
  
  
• Offer complimentary products or services: Complimentary services—such as gift wrapping or alterations—are a great way to add value to your customers’ shopping experience. Day Designer—a direct-to-consumer brand that makes daily planners—offers customers free digital downloads. These include goal-setting printables, desktop wallpapers and ZOOM backgrounds.
  
  
• Invest in Buy Now Pay Later (BNPL): During economic uncertainty, BNPL programs benefit customers by reducing the impact of large purchases. A study from Juniper Research found that BNPL users will surpass 900 million worldwide by 2027. 
  
  
• Consider subscription programs: Panera Bread debuted a coffee club subscription program in 2020. For a monthly fee, consumers could access unlimited coffee. The program was a win-win for the restaurant and consumers. By the end of 2021, the Ultimate Sip Club had over 600,000 members. The restaurant recently told RestaurantDive that members spend 11x more than non-members. 

3. Supercharge Your Loyalty Program 

Loyalty programs are vital to customer retention. Today, 56% of consumers are more likely to buy from a brand that has a loyalty program. In addition to increasing revenue, loyalty programs provide retailers with first-hand customer data. 

But establishing a loyalty program does not guarantee that customers will use it. On average, two-thirds of shoppers only redeem loyalty rewards once every three months.

Here are some strategies to enhance your loyalty program: 

• Offer free delivery 
• Offer free online returns or allow longer return windows 
• Provide access to exclusive events, services or collections. For example, REI Co-op members can sell and buy pre-owned outdoor apparel and gear. 
• Allow customers to earn points for other activities besides purchases. This could include referrals, subscribing to your SMS marketing list or following your brand on Instagram. 
• Make rewards easy to redeem. 53% of customers believe their shopping experience would be enhanced if loyalty points were applied automatically at checkout. 

Boost Customer Loyalty with Salesfloor 

Salesfloor is an all-in-one customer experience platform that combines human connection with the power of AI. Today, over 50,000 store employees and customer service agents use Salesfloor to deliver a seamless customer experience.

With tools for clienteling and virtual shopping, Salesfloor connects your online and offline channels. And with predictive customer insights, sales associates provide customers with a more personalized experience. 

Book a demo today to see how Salesfloor helps retailers supercharge customer loyalty.